Introduction
The
Upper House of Parliament (Rajya Sabha) on August 8th, 2013, passed the
Companies Bill, 2012 with some amendments.
The
Minister of State (Independent Charge) of The Ministry of Corporate Affairs,
Shri Sachin Pilot, replying to the debate, on Companies Bill, 2012, held in
Rajya Sabha on 6-8 August 2013, said the following in respect of concept of
one-person company:
“The intent behind
having this new initiative is the fact that in India we have a lot of people
who are artisans, craftsmen, weavers and they work as Individual workers, we
want these people to have the same rights, the same credit facilities, the same
recognition as companies without having the multiplicity of Compliances. A
simple artisan or a craftsmen working in any part of our country should be able
to avail the benefits of having an Incorporation without having the complexity
of the lot of disclosures, and audit, and reporting that large companies do. So
we made a distinction between a limited company and a one-person company which
is a new initiative, and I am hopeful that this initiative will take ground in
India and encourage a lot of young people, a lot of craftsmen, weavers,
artisans to take this advantage of having access to banks, access to credit
facilities.”
With the introduction of concept of One Person Company
(hereinafter “OPC”) in Companies Act, 2013 individuals doing
business as sole proprietors will now be able to avail the benefits of limited
liability without a second person to form a company.
Definition
1.
As per Section 2(62)(3) of the 2013 Act, OPC means a company which has
only one person as member.
2.
As
per rule 6 of The Companies (Incorporation) Rules, 2014, OPC needs to convert
itself into a public company or a private company in certain cases.-
Where the paid
up share capital of an One Person Company exceeds fifty lakh rupees or its
average annual turnover during the relevant period* exceeds
two crore rupees, it shall cease to be entitled to continue as a OPC.
We can extract Two
condition which needs to be fulfilled for a Company to get the privilege of One
Person Company. i.e,
a)
It has only One person as member.
b)
The paid up share capital of an OPC does not exceeds fifty lakh rupees or
its average annual turnover during the relevant period* does not
exceeds two crore rupees.
*"relevant
period" means the period of immediately preceding three consecutive
financial years.
Procedure
for Incorporation of One Person Company - A Practical approach
In terms of section 3(1) (c) of the Companies Act, 2013
an OPC may be formed for any lawful purpose by one person and it is a Private
Company. Salient features in relation to incorporation include:
·
There must be one natural person as member, one natural person as
Nominee and at least One Director to incorporate an OPC. Member and Director
can be the same person.
·
Application for getting Digital Signature, with any of DSC Vender i.e. E
Mudra/ Siffy/ TCS etc, who are known as Certifying Agencies who are duly
appointed office of the Controller of Certification Agencies (CCA) under the
provisions of IT Act, 2000.
·
Making Application for allotment of Director Identification Number
(DIN) in E-Form DIR 3, along with attachments i.e, PAN card and copy of address
proof. ID and Address Proof Shall be certified by Practicing CA/CS/CMA.
·
Making Application for reservation of name in E-Form INC-1 to Registrar
of Companies. The Applicant can give maximum six names in order of preference. The
proposed names for the company given in E-Form INC-1, shall end with, OPC Private
Limited or Private Limited OPC. For Example XYZ Construction OPC Private
Limited or XYZ Construction Private Limited OPC.
·
Once the Name is approved by Registrar of Companies, draft MOA and AOA.
In MOA, the Seven clause mainly i.e. Name Clause, Registered Office Clause,
Main Object Clause, Liability Clause, Capital Clause, Subscribers Clause and
Nominee Clause will have to take into consideration.
·
Filing of E-Form INC-2, i.e, Application for Incorporation of an “OPC”
needs to be filed within 60 Days from the date on which the application for
Reservation of name was made.
·
The
Subscriber to the memorandum 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 his incapacity to contract become the member of the
company. Consent of such nominee Shall be obtained in Form No INC.3 and shall
be attached in E-Form No INC.2.
·
The name of the person
nominated shall be mentioned in the seventh clause of memorandum of association
of OPC.
Attachments of E-Form
No INC.2.
·
Memorandum of Association. (Format Prescribed in Table A of Schedule I
of Companies Act, 2013). Only Change is replace point no 7 and 8 with point No
6 of the said table.
·
Articles of Association.
·
Identity Proof and Residential proof of the member and the nominee.
·
Copy of PAN card of the member and the nominee.
·
Consent of Nominee in Form NO. INC-3. (After filling Form INC-3, take
print out and get it signed by the Nominee and attached the signed scanned copy
in E –Form INC-2).
·
Affidavit from the subscriber and first Director to the memorandum in
Form NO. INC-9.
·
List of all the companies (specifying their CIN) having the same
registered office address, if any.
·
Specimen Signature in Form No. INC-10 by subscriber to the memorandum.
·
Proof of Registered Office address (Conveyance/ Lease deed/Rent
Agreement etc. along with rent receipts).
·
Copies of the utility bills of Registered Office address (not older than
two months).
·
Consent from Director in Form DIR-2.
·
The company can file form INC-22 within 30 days once form INC-2 is
registered, in case the address of correspondence and registered office address
are not same in form INC-2.
Application
for Commencement of Business Certificate
a) Upload of E-Form INC-21, anytime within
6 months from the date of incorporation.
Mandatory Point to be
mentioned in Articles of Association of a One Person Company. The Points are inclusive
and not exhaustive.
a) The company is a “One person Company
within the meaning of Section 2(62) of the
Companies Act, 2013 and
accordingly:
Limits the
number of its member to one person.
b)
Share Certificate :
Every
share certificate shall be issued under the seal of the company, which shall be
affixed in the presence of and signed by one director or a person authorized by
the Board of Directors of the company for the purpose and the Company
Secretary, or any other person authorized by the Board for the purpose.
c)
Transmission Of Shares:
i.
On the death of the sole member, the person nominated
by such member shall be the person recognised by the company as having title to
all the shares of the member;
ii.
The nominee on becoming entitled to
such shares in case of the member’s death shall be informed of such event by
the Board of the company;
iii.
Such nominee
shall be entitled to the same dividends and other rights and liabilities
to which such sole member of the
company was entitled or liable;
iv.
On becoming
member, such nominee shall nominate any other person with the prior written
consent of such person who, shall in the event of the death of the member,
become the member of the company.
d) General Meetings
i.
The
resolution required to be passed at the general meetings of the company shall
be deemed to have been passed if the resolution is agreed upon by the sole
member and communicated to the company and entered in the minutes book
maintained under section 118;
ii.
Such minutes book
shall be signed and dated by the member;
iii.
The resolution shall
become effective from the date of signing such minutes
by
the sole member.
Points/Conditions to be
noted while incorporating a One Person Company
·
A person can be member in only one OPC.
·
No person shall be eligible to incorporate more than an OPC or become
nominee in more than one such company.
·
Only a natural person, who is an Indian citizen and resident in India*, shall be eligible to incorporate an OPC.
·
Only a natural person, who is an Indian citizen and resident in India*, shall be a nominee for the sole member of an OPC.
·
Minor
cannot become member or nominee of the OPC or can hold share with beneficial
interest.
·
OPC cannot be incorporated or converted into
a Section 8 company.
·
OPC cannot carry out Non-Banking Financial
Investment activities including investment in securities of any body
corporates.
·
OPC
cannot convert voluntarily into any kind of company unless two years have
expired from the date of incorporation of OPC, except threshold limit (paid up
share capital) is increased beyond fifty lakh rupees or its average annual
turnover during the relevant period exceeds two crore rupees.
·
Where
the sole member of OPC ceases
to be the member in the event of death or incapacity to contract and his
nominee becomes the member of such One Person Company, such new member shall
nominate within fifteen days of becoming member, a person who shall in the
event of his death or his incapacity to contract become the member of such company,
and the company shall file with the Registrar an intimation of such cessation
and nomination in Form No INC.4, within thirty days of the change in membership
and with the prior written consent of the person so nominated in Form No.INC.3.
·
The
words ‘‘One Person Company” must be mentioned in brackets below the name of
such company, wherever its name is printed, affixed or engraved. [Second
proviso to Section 12(3)].
*
Resident in India" means a person who has stayed in India for a period of
not less than one hundred and eighty two days during the immediately preceding
one calendar year
Compliances
Sec
2(68) of the 2013 Act defines Private Company which includes OPC. Thus all
those provisions which are applicable to Private Companies are applicable to
OPCs. However, OPCs are provided with certain exemptions in Companies Act, 2013
Act which are as follows:
·
OPC
is not required to prepare cash flow statement as a part of financial
statement. [Section 2(40)]
·
In
case an OPC does not have a company secretary, the annual return can be signed
by the director of the company. [Proviso to section 92(1)]
·
An
OPC is not required to hold an annual general meeting. [Section 96(1)]
·
The provisions of section 98 and sections 100 to 111 (both inclusive)
shall not apply to an OPC -[Section 122(1)]
(a) Section 98:
Power of Tribunal to call meetings of members, etc.
(b) Section 100:
Calling of extraordinary general meeting
(c) Section 101:
Notice of meeting
(d) Section 102:
Statement to be annexed to notice
(e) Section 103:
Quorum for meetings
(f) Section 104:
Chairman of meetings
(g) Section 105:
Proxies
(h) Section 106:
Restriction on voting rights
(i) Section 107:
Voting by show of hands
(j) Section 108:
Voting through electronic means
(k) Section 109:
Demand for poll
(l) Section 110:
Postal ballot
(m) Section 111:
Circulation of members’ resolution
·
An
OPC must conduct at least 1 meeting of the board of directors in each half of a
calendar year with a gap of at least 90 days between the 2 meetings.
·
For
the purposes of section 114 (Ordinary and Special Resolution ), any business
which is required to be transacted at an annual general meeting or other
general meeting of a company by means of an ordinary or special resolution, it
shall be sufficient if, in case of One Person Company, the resolution is
communicated by the member to the company and entered in the minutes-book
required to be maintained under section 118 and signed and dated by the member
and such date shall be deemed to be the date of the meeting for all the
purposes under this Act. [Section 122(3)].
·
Where
there is only one director on the Board of Director of a One Person Company,
any business which is required to be transacted at the meeting of the Board of
Directors of a company, it shall be sufficient if, in case of such One Person
Company, the resolution by such director is entered in the minutes-book
required to be maintained under section 118 and signed and dated by such
director and such date shall be deemed to be the date of the meeting of the
Board of Directors for all the purposes under Companies Act, 2013. [Section
122(4)].
·
The financial statement, including consolidated financial statement, if
any, shall be approved by the Board of Directors before they are signed on
behalf of the Board, by one director in the case of a One Person Company, for
submission to the auditor for his report thereon.
[Section 134(1)].
·
One Person Company shall file a copy of the financial statements duly
adopted by its member, along with all the documents which are required to be
attached to such financial statements, within one hundred eighty days from the
closure of the financial year. [Third Proviso to
Section 137(1)].
·
For
an OPC having only 1 director, the provisions to section 174 (Quorum for
meetings of board) will not apply. [Proviso to Section 173(5)]
Disclaimer: Statements and opinions expressed in
articles are those of the author’s personal views. While every care has been
taken in the compilation of this information and every attempt made to present
up-to-date and accurate information, we cannot guarantee that inaccuracies will
not occur.
The Author is an Associate Member
of the Institute of Company Secretaries of India.
KUNDAN KUMAR MISHRA
cskundanmishra@gmail.com.
