One Person Company (OPC) provisions under Companies Act, 2013

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One Person Company (OPC) provisions under
Companies Act, 2013
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• We all are aware of the basic concept that
  incorporation of any private company needs
  minimum of 2 directors and 2 members. Whereas,
  incorporation of any public company needs minimum
  of 3 directors and 7 members. The said minimum
  required was a major hurdle for any person who
  individually wants to incorporate a company.
  Introduction of the Companies Act, 2013 came up
  with the solution for the same. The said solution
  was in the form of the new concept of One Person
  Company. One Person Company is a type of
  company that is incorporated and managed by one
  person. Accordingly, the founder of the company
  is both the director as well as the shareholder
  of the company. In the present article let us
  understand the concept of a One Person Company
  along with relevant Frequently Asked
  Questions.

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• One Person Company, its eligibility criteria
  under Companies Act, 2013 and other provisions
  Section 2(62) of the Companies Act, 2013 defines
  a One Person Company as a company which has
  only one person as a member. Simplifying thereof,
  a One Person Company can be formed by only one
  member and one director. Importantly, the member
  and director can be the same person. Provisions
  of section 3 of the Companies Act, 2013 state
  that One Person Company is also a private limited
  company. Meaning thereby that all the
  characteristics of the private limited company
  will apply to One Person Company.

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• As per rule 3 of the Companies (Incorporation)
  Rules, 2014, the following are the basic
  eligibility criteria 1. One Person Company
  shall be incorporated by only a natural person
  who is an Indian citizen and resident in India
  2. The nominee for the sole member of the One
  Person Company should also be a natural person
  who is an Indian citizen and resident in India.
  Notably, resident in India (above) means a
  person who has stayed in India for a period of
  not less than 120 days during the immediately
  preceding Financial Year. Further, a natural
  person Shall not be a member of more than one
  One Person Company at any point of time and
  Shall not be a nominee of more than one One
  Person Company. Other important points The
  words One Person Company needs to be mentioned
  in brackets below the name of the company,
  wherever, the name of the company is printed/
  affixed/ engraved. Minor cannot become a member
  or the nominee of a One Person Company. Minor
  also cannot hold share with beneficial interest.
  One Person Company cannot be incorporated/
  converted into a company under section 8 (i.e.
  Formation of Companies with Charitable Objects,
  etc.) of the Companies Act, 2013. One Person
  Company cannot carry out non-banking financial
  investment activity (including investment in
  securities of any body corporates).

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• Nominee under One Person Company As per proviso
  to section 3(1) of the Companies Act, 2013, it is
  mandatory that the memorandum of One Person
  Company should indicate the name of the other
  person (i.e. nominee) with his prior consent. The
  nominee comes into action on account of 1. The
  subscribers death or 2. Incapacity of the
  subscriber to contract. On triggering any of the
  above situations, the nominee will become a
  member of the company. Once, the nominee becomes
  a member of the company, then, such a new member
  is required to nominate a new nominee within a
  period of 15 days. Nominee vis-à-vis filing with
  the Registrar Consent of the nominee in Form
  INC-3 Nomination is to be mentioned in Form
  INC-32 Memorandum of One Person Company should
  mention the name of the nominee Appropriate fees
  as per Companies (Registration Offices and fees)
  Rules, 2014 to be paid. Compliance exemption
  available to One Person Company Following are
  some of the important compliance exemption
  benefit available to One Person Company 1. It
  is not mandatory to include a cash flow
  statement in the financial statement of One
  Person Company Section 2(40) of the Companies
  Act, 2013 2. The annual return of One Person
  Company can be signed by the company secretary
  or director of the same proviso to section 92(1)
  of the Companies Act, 2013 3. One Person
  Company is exempt from holding an annual general
  meeting section 96(1) of the Companies Act,
  2013

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• 4. One Person Company is also exempt from
  following all the below provisions a. Power of
  Tribunal to call meetings of members, etc.
  (Section 98) b. Calling of extraordinary general
  meeting (Section 100) c. Notice of meeting
  (Section 101) d. Statement to be annexed to
  notice (Section 102) e. Quorum for the meeting
  (Section 103) f. Chairman of meeting (Section
  104) g. Proxies (Section 105) h. Restrictions
  on voting rights (Section 106) i. Voting by show
  of hands (Section 107) j. Voting through
  electronic means (Section 108) k. Demand for the
  poll (Section 109) l. Postal ballot (Section
  110) m. Circulation of members resolution
  (Section 111). Pre-requisite for One Person
  Company registration Following are the minimum
  pre-requisite which need to be satisfied for One
  Person Company registration 1. Minimum 1
  director who must be an Indian resident 2.
  Minimum 1 shareholder Please, note director and
  shareholder can be the same person. 3. Minimum 1
  nominee 4. Minimum authorized share capital of
  INR 1 Lakhs.

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• Steps for registering One Person Company 
  Following are the simple steps for registering a
  One Person Company STEP 1 Apply for and
  obtain Digital Signature Certificate (DSC) STEP
  2 Apply for and obtain Director Identification
  Number (DIN) STEP 3 Apply for approval of the
  name. Notably, the RUN service is to be used to
  check the availability of the name. Name of the
  One Person Company can be applied through SPICe
  (INC-32). STEP 4 Apply for incorporation of
  One Person Company Fill the Form No. INC-32
  (SPICe) for incorporation of One Person
  Company. Such application should be filed within
  20 days from the date of approval of name (RUN)
  SPICe-MOA and SPICe-AOA should be attached to the
  SPICe form. STEP 5 Post verification of all the
  forms and documents, the Registrar of Companies
  may issue a registration certificate. FAQs on One
  Person Company (OPC) provisions under Companies
  Act, 2013 Important Frequently Asked Questions
  with regard to One Person Company are
  highlighted hereunder

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• FAQs on One Person Company (OPC) provisions under
  Companies Act, 2013 Important Frequently Asked
  Questions with regard to One Person Company are
  highlighted hereunder 1. What is one person
  company? In simple terms, One Person Company is a
  company which has only one person as a member. A
  natural person, being an Indian Citizen, is
  eligible to incorporate One Person Company. 2. Is
  it mandatory for a member of OPC to appoint a
  nominee? The member of the One Person Company
  must mandatorily appoint a nominee. 3. Which is
  better OPC or Pvt Ltd? One Person Company (OPC)
  can be said to be better as various exemptions
  are available to OPC as compared to Pvt. Ltd.
  Compliance requirements of OPC is also much less
  than that in Pvt. Ltd.4. Is OPC a private
  company? One Person Company is incorporated as a
  Private Limited company where there is only one
  member and there is a prohibition with regard to
  an invitation to the public for the subscription
  of the securities of the company. 5. What is
  disadvantage of OPC? Suitable only for small
  businesses lack of perpetual succession NRI
  restricted from incorporating OPC etc. are some
  of the disadvantages of OPC. 6. Is Amazon a one
  person company? Amazon began being a one person
  company. 7. Can OPC issue shares? One Person
  Company is prohibited from issuing/ allotting
  shares to anyone other than its sole member.
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