One
Person Company (hereinafter called as OPC) is a form of business, introduced by
companies act, 2013 was first recommended by the expert committee of Dr. JJ
Irani in 2005, enabling sole proprietors to enter into corporate world. It is
like forming a company with the soul of proprietorship and privileges of a Private
Limited Company, OPC is a hybrid form of business consisting features of a sole
proprietorship and a Private Limited Company. with concessional obligations. OPC
has only one shareholder/member that give him power to run the business of the
company solely on his decision, i.e., OPC gives MONOPOLY IN MANAGEMENT.
Important Concepts behind OPC
One Shareholder/Member: This is the main concept behind
OPC, that only a natural person who is resident in India and citizen of India
can form an OPC.
Nominee: This is also one of the very
important concepts behind OPC. In case of death or inability to contract of the
sole member of OPC, the nominee appointed will take over the management of OPC.
Only natural person who is the citizen of India and a resident in India (i.e. here resident in India means a person who has
stayed in India for a period not less than 182 days during the immediately
preceding one calendar year) shall be a nominee for the sole member of OPC.
The name
of the person nominated shall be mentioned in the memorandum of OPC and such
nomination is require to be filled with the ROC in Form no. INC 2 along with consent of such nominee in
form no. INC 3 at the time of incorporation along with its memorandum and
articles. Change in the name of the nominee can be done by the company on the
event of death, incapacity etc. of the nominee in Form no. INC 4.
The
nominee should be appointed at the time of incorporation of OPC with his prior written
consent, the nominee cannot be appointed as nominee or member of more than one
OPC at the same time and if appointed, he has to choose in which OPC he wishes
to continue within a period of 6 months.
Compliances: OPC has been given vast
relaxation from legal compliances which are very less than compliance to be
done by a Private or Public Co.
OPC can
only be incorporated as a Private Ltd Co. It can have only one person as its
shareholder/member. Minimum paid up share capital required is Rs. 1,00,000. If
the AOA do not contain the name of the first director, member of the OPC will
be deemed to be the first director till the time director(s) is duly appointed.
The
subscriber to the MOA of an OPC shall nominate a person, after obtaining prior
written consent of such person, who shall, in the event of the subscriber’s
death or incapacity to contract, become the member of that OPC. Only one
director is sufficient to sign the Financial Statement/Director’s Report.
A person
shall not be eligible to incorporate more than one OPC or become nominee in
more than one such company. A minor cannot become a member or nominee of the
OPC or can hold share with beneficial interest. OPC can be incorporated for
charitable purpose.
Privileges of OPC
1.
It
enjoys the status of being a separate
legal entity from its member.
2.
Having
the limited liability shrinks the
liability of the member to the extent of unpaid amount of shares held by him.
3.
It
evolves lesser legal obligations
along with lots of exemptions has been provided to OPC in the law.
4.
OPC
does not require holding Annual
General Meeting.
5.
OPC
does not require filling cash flow
statement with financial statements.
6.
Compulsory
rotation of Auditor after expiry of maximum term is not applicable.
7.
OPC
can have maximum number of 15 Directors.
This can help in better decision making.
Prohibitions on the formation of
OPC
1.
It
is mandatory to file financial
statements including balance sheet, profit and loss account by OPC.
2.
OPC
needs to pay tax at the rate of 30%
which is quite high.
3.
Where
the paid up share capital of an OPC exceeds 50 lakh rupees or its average
annual turnover exceeds during the relevant periods exceeds 2 crore rupees, than
it ceases to be entitled as OPC and has to be mandatory convert into private or public company within six month from the
date of such increase (here relevant periods means the period of immediately preceding
three consecutive financial years).
4.
The
sole member of OPC cannot become
member in more than one such co.
5.
OPC
cannot carry out Non Banking Financial
activities and cannot make investment in securities of anybody corporate.
6.
Minor cannot become a member or
nominee of any OPC, not even can hold shares with beneficial interest.
Compiled
by:Mohd. Sharjeel Awaisi ( Company
Secretary, CA Finalist )
