Overview

The Companies Act, 2013 (“Act”) has introduced a new type of entity to the existing list (public and private limited company) i.e. One Person Company (“OPC”). OPC is defined under Sub-Section (62) of Section 2 of the Act, means a company which has only one member. The incorporation of OPC and matters incidental thereto are covered under Chapter II of the Act. It is relevant to note here that sub-section (62) of Section 2 and Section 3 of the Act have been notified vide Notification dated 26th March 2014 and came into force w.e.f 1st April 2014. Furthermore, the related rules have also been notified and came into force simultaneously.

The salient features of such company can be summarised as under:

• OPC can be incorporated as a private limited company;
• It can have only one member at any point of time;
• Name shall be suffixed with ‘OPC’ or ‘One Person Company’;
• It can have only one director;
• The exemption has been granted to OPC from holding Board Meetings ( in case of only one director), one meeting of the Board of Directors should be conducted in each half of a calendar year and gap between the two meetings is not less than ninety days;
• Exemption from holding General Meetings [see Section 96]
• Such company is not required to prepare cash flow statement [see Section 2(40)];

Eligibility Criteria for incorporating a OPC

Only a natural person who is an Indian Citizen and resident in India ( 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)

• shall be eligible to incorporate a OPC;
• shall be nominee for the sole member of a OPC

Procedural Aspects embedded with OPC [ see Rule 4 of Chapter II]

• The memorandum of OPC shall indicate the name of other person (nominee) who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that OPC;
• Prior written consent of nominated person shall be obtained [Form INC 3];
• The consent of the nominated person shall be filed with concerned Registrar of Companies;
• Nominated person is entitled to withdraw his consent;
• The sole member shall nominate another person as nominee within fifteen days of the receipt of the notice of withdrawal;
• The changes pertaining to withdrawal of consent and nomination of other person shall be filed by the company within 30 days of receipt of notice of withdrawal of consent[INC 4];

Restrictions [see Rule 3 of Chapter II]

• No person shall be eligible to incorporate more than a OPC or become nominee in more than one such company;
• No minor shall become member or nominee of one person company or can hold share with beneficial interest;
• Such company cannot b incorporated or converted in to a company under Section 8 of the Act [Section 8- Formation of companies with charitable purpose (erstwhile Section 25 of the Companies Act, 1956)];
• Such company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates;
• Such company can be converted voluntarily into any kind of company (for instance public or private) after the expiry of two years from the date of its incorporation, except in case paid up share capital is increased beyond 50 lakhs or its average annual turnover during the relevant period exceeds two crore rupees.