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ONE PERSON COMPANY

PROLOGUE

The Companies Act, 2013 classifies companies on the basis of their number of members into One Person Company, private company and public company.

As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member.

Section 3(1)(c) lays down that a company may be formed for any lawful purpose by one person, where the company to be formed is to be One Person Company that is to say, a private company.

One Person Company is a kind of private company having only one member. A One person company shall have a minimum of one director.

COMPANIES (INCORPORATION) RULES, 2014 - ONE PERSON COMPANY

ELIGIBILITY

ü Only a natural person who is an Indian citizen and resident in India-

ü Shall be eligible to incorporate a One Person Company;

ü Shall be a nominee for the sole member of a One Person Company.

Explanation-For the purposes of this rule, the term "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.

ü No person shall be eligible to incorporate more than a One Person Company or become nominee in more than one such company.

ü Where a natural person, being member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company.

CONDITIONS

ü No minor shall become member or nominee of the One Person Company or can hold share with beneficial interest.

ü Such Company cannot be incorporated or converted into a company under section 8 of the Act.

ü Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates.

ü No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, 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.

PRIVILEGES OF A ONE PERSON COMPANY

ü The financial statement, with respect to One Person Company, may not include the cash flow statement;

ü Financial assistance can be taken by the member from the OPC for purchase of or subscribing to its own shares

ü The annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company. In other words it need not be signed by a company secretary in practice.

ü Need not hold annual general meeting

ü Need not prepare a report on Annual General Meeting

ü Where there is only one director on the Board of Director of a One Person Company and any business is required to be transacted at the meeting of the Board of Directors of the 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 purposes under this Act.

ü Financial statement and Board’s report can be signed only by one director

ü Need not prepare a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors;

ü In case of a One Person Company, Board’s report shall mean only a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.

ü One person company need not to have more than one director on its Board.

ü Need not to appoint Independent directors on its Board

ü Retirement by rotation is not applicable.

ü Additional grounds for disqualification for appointment as a director may be specified by way of articles.

ü It is required to hold at least one meeting of the Board of Directors in each half of a calendar year and the gap between the two meetings should not be less than ninety days. For an OPC having only 1 director, the provisions of section 173 (Meetings of board) and section 174 (Quorum for meetings of Board) will not apply.

ü The provisions relating to contract of employment with managing or whole-time directors does not apply to a One Person Company

THE NEW CONCEPT WOULD BOOST THE CONFIDENCE OF SMALL ENTREPRENEURS.

CHECKLIST ON ONE PERSON COMPANY

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