ONE PERSON COMPANY

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ONE PERSON COMPANY

To encourage unorganized proprietorship business to enter into organized corporate world, the concept of “One Person Company” was recommended by JJ Irani Committee. The One Person Company is an advancement of sole proprietorship form of business. 

There’s is only one person who acts as a member and a minimum of one director who is having full control over the company. It is registered under the regulations of Ministry of Corporate Affairs (MCA).OPC shall be mentioned in brackets below the name of such company, e.g. XYZ (OPC) Private Limited.

To understand one person company definition, we first need to get into the identity it creates. A registration provides corporate status and many benefits to the members and directors. In the case of a Private company, at least two members are required which is not the same in the case of OPC. To eliminate this drawback and allow a single person to reap the advantages of One Person Company, this sort of a company structure is introduced through the Companies Act, 2013. One Person Company registration is simplified with online filing and process.

One Person Company feature is such that it has only one shareholder who owns 100% stake of the company. To maintain the character of perpetuity, the appointment of the nominee is compulsory, who will take place of the owner in case of death or his inability. One person company is a type of Private Limited Company.

Naming Criteria of a One Person Company

  1. Just like any other company, the name of an OPC should have a short, unique and meaningful name shall not be identical with or too nearly resembles the name of an existing company.
  1. Nocompany shall have a name which, in the opinion of Central Government, is undesirable or the name proposed resembles any connection with Government or State patronage, unless prior approval of the Central Government is obtained.
  1. The name should not be such that its use by the company will constitute on offence under any law.
  1. The name should not be illegal or offensive.
  1. The name should not be misleading for the public.
  2. Most importantly, The Companies Act 2013 provides that the words “One Person Company” or “OPC” shall be mentioned in brackets in the name of such company, wherever its name is printed, affixed or engraved, therefore, total suffix will be “(OPC) Private Limited” in case of One Person Company.

Eligibility for registering a One Person Company

  1. Only a natural person who is a resident of India can be a sole shareholder.
  1. Any company or LLP or partnership firm with financial activities cannot register an OPC.
  1. Member of OPC cannot incorporate any other OPC but can be a nominee in another OPC.
  1. Nominee must be appointed during registration.
  2. When paid up share capital of the company exceeds Rs. 50 lakhs or average annual turnover of immediately preceding 3 financial year exceeds Rs. 2 crore, then OPC must be converted into Private/Public Limited Company.

Minimum requirements of an OPC

  1. Minimum 1 member
  2. Minimum 1 nominee
  3. Minimum 1 director

Maximum requirements of an OPC

  1. Maximum 1 member
  2. Maximum 1 nominee
  3. Maximum 15 directors
DOCUMENTS/DETAILS REQUIRED FOR INCORPORATION OF ONE PERSON COMPANY

Following documents of the Proposed Director/Nominee is required: 

  1. Two identity proof documents – Copy of Aadhaar Card/ Voter ID Card/ PAN Card (compulsory),
  1. One address proof document of registered office (like water, telephone, mobile bill or copy of bank pass book or net banking statement mentioning address of the applicant),
  1. Address Proof Document for Registered Address of the OPC: Any utility bill like water bill, electricity bill, property tax receipts or Gas Bill etc. is compulsory required for incorporation of an OPC.
  1. Passport size photo of the proposed director & nominee,
  1. NOC from Landlord. 

Also some other notable points are :- 

  • Authorised and paid-up Share Capital: capital can be taken as low as Rs. 1,00,000/- and as high as per the requirement.
  • Activities of the proposed Company: List of proposed activities of the OPC under incorporation.
  • Proposed Name of the OPC: a name of the company (name must be unique & not in general nature)and there should not be any existing company exits similar or same to the proposed name.
DOCUMENTS/DETAILS REQUIRED FOR GST REGISTRATION OF ONE PERSON COMPANY (OPC) AFTER INCORPORATION
  1. Utility Bill: Only utility bill as Electricity Bill is required or latest Property Tax Receipts is required, either of two is mandatory for GST.
  1. Rent Agreement: Notarised Rent Agreement or proper Lease Deed between owner of the property and one person company (signed by Director of the OPC as representative of the OPC) is also required.
  2. Board Resolution: Board resolution for GST Registration and person authorised in the GST (if more than one director or authorised person is other than single director) is mandatorily required.
ADVANTAGES
  1. OPC will bring the unorganized sector of proprietorship into the organized version of a private limited company. Various small and medium enterprises, doing business as sole proprietors, might enter into the corporate domain. Proprietors always have unlimited liability. If such a proprietor does business through an OPC, then liability of the member is limited.
  1. An OPC has Pvt. Ltd. business structure and enjoys corporate status in society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations.
  1. On the demise of the original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member.
  2. It is easier for a company rather than proprietor to get loans from banks.

 

DISADVANTAGES
  1. OPC can have minimum or maximum of 1 Member.
  2. A minor shall not be eligible to become a member or nominee of the OPC or can hold share with beneficial interest.
  3. Only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate, be a nominee and be the sole member of a OPC. No NRIs are allowed.
EXEMPTIONS FOR A PRIVATE LIMITED COMPANY

Following compliances are not required to be done by an OPC related to meetings  & other compliances:-

  1. Sign on annual returns.
  2. Hold Annual General Meetings and Board Meetings.
  3. Sign on Financial Statements.
  4. Option to dispense with the requirement of holding an AGM.
  5. Power of Tribunal to call meetings of members.
  6. Calling of extraordinary general meeting.
  7. Notice of meeting.
  8. Statement to be annexed to notice.
  9. Quorum for meetings.
  10. Chairman of meetings.
  11. Proxies
  12. Restriction on voting rights.
  13. Voting by show of hands.
  14. Voting through electronic means.
  15. Demand for poll.
  16. Postal ballot.
  17. Circulation of members’ resolution.

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