One Person Company (OPC) is a new progressive concept which was recommended by the expert committee of Dr . JJ. Irani in the year 2005 under the provisions of the Companies Act,2013. One Person Company registration provides a gamut of opportunities for young professionals who wants to set up a business. A One Person Company provides all the merits provided by the Private Limited company. A One Person company can apply for funds, bank loans, limited liability (one of the important benefits of an OPC), business security. Despite of being a new concept in India, it has managed to be a very successful concept of company not only in India but also among the European countries.
Formation of a company
A company can be formed for legitimate reasons by
a) If it is Public Limited Company, then there has to be seven or more members.
b)For a private limited company there has to be two or more persons.
c)For a one person company there has to be one person which avails the benefits of a private limited company.
by subscribing the names of the members of a company to the memorandum as per the requirements of the companies Act for a company registration in Bangalore and in other major cities:
i)The memorandum of One Person Company shall represent the name of the other person after his prior written consent in the prescribed form, who shall, in case of any death of the subscriber or his inability to contract become company’s member and such written consent of that respective person shall be filed with the registrar during the time of One Person company registration in Bangalore along with its due articles and memorandum.
ii)In case the person wants to drop out the consent, he can do it as the following prescribed ways:
The member of a One Person company can change the name of the other person with due notice as prescribed below:
Any change in the One Person company should be intimated by the registrar by the member of the company in the other person’s name which was nominated as prescribed within the time prescribed
Any change in the name of the person shall not be considered to be altered to the memorandum of articles.
Any company which was formed under the sub-section(1) shall fall under one of these categories
a)a share limited company;
b)Guarantee limited company; or
c)a company with no limits i.e. unlimited company.
Mode of forming a registered company
Seven or more persons form a private limited company or two or more persons shall subscribe their names to the memorandum of association according to the requirements of the companies Act for a company registration in Bangalore form a company with or without liability.
a)a company having the liability of members by the memorandum to the funds if unpaid on the shares.
b) a company having the liability of members the memorandum to the funds undertaken by the memorandum to contribute to the assets of the company
c)a company without any limits of liability on its members.
Section 12 of the Companies Act, 1956 deals with the company registration in India. This section says that a public limited company can be formed by seven people and a private limited company can be formed by two or more persons. This section also declared that any person desiring to start a company should subscribe their names to the memorandum of association for legitimate reasons according to the requirements of the Act for company registration.
According to section 12, after a company registration, the company shall be either a company limited by shares,limited by guarantee, company with no limits.
Companies Act, 2013: Section 3
This section coincides with the companies Act, 1956 section 12 to provide the least number of people required to start a private or public limited company under legitimate reasons by subscribing the names of the members of the company. The memorandum of the One Person Company represent the name of t he member who can become the member of the company in case of death of the other person.
The other person is supposed to give a prior written consent regarding this. The person can also drop out his consent later. Any change in the One Person company should be intimated by the registrar by the member of the company in the other person’s name which was nominated. The companies formed under this section shall be either a company limited by shares, limited by guarantee, company with no limits.
One Person Company (OPC)
The increase in the use of information technology and computers in the service sector, its high time that the entrepreneurial capabilities of the people are given a platform to participate in the economical activity. Such activities can happen in the form of creation of a company by a person. Every entrepreneur is not expected to come up with developing ideas and participating in the market by the association of people. This makes it possible for the entrepreneurs to operate and contribute in an economical domain. To aid this,the committee has recommended the concept of One Person Company so that the owner need not waste his entire time, resource and energy and resources on procedural matters.
The One Person company concept possesses the following characteristics:
a)One Person Company can be registered with one person and one director.
b)Name of another person or director should be nominated in case of the death of the single person or owner of the company. On the event of death of the director, the nominated director will take over the company and will manage all the affairs of the company.
c)OPC shall be appended to the name of the One Person Company in order to distinguish it from other companies.
Scope of section 3 of Companies Act, 2013
A company is a constitutional person which can own properties in its name with separate identity and perpetual existence. This isolates from the definition of shareholders of a company. This status of a constitutional person should be authorized by law by subscribing the name of the company to the memorandum and register the company with the Registrar. A company is capable of being an individual legal entity only with after company registration. The people who have subscribed their names are called as the promoters. There can be a single subscriber only in a One Person Company. The rules of an OPC are listed below:
1) Name of another person or director should be nominated to the memorandum in case of the death of the single person or owner of the company.On the event of death of the director, the nominated director will take over the company and will manage all the affairs of the company. The consent shall be filed to the registrar.
2)The person can drop out his consent in any case in a prescribed way
3)The name of the person nominated by the director of the company shall be changed at any time in the prescribed manner.
4)Any change in the member should be informed to the company and the company should notify the registrar in any case.
5)The change in the name of the nominated person shall not be considered to be altered in the memorandum.
Relevant rules issued under Companies Act, 2013
According to the provisions of the Companies Act, only a natural Indian citizen and an Indian resident is eligible for a One Person Company registration, be a nominee for a One Person Company.
1)”Resident of India” means a person who has stayed in India for at least a period of one hundred and eighty two days in the immediately preceding calendar year.
2)A person can register only one, One Person company and can be a nominee for only a single one person company.
3)A minor can neither become a member of a One Person Company nor can hold any share of the company.
4)If there is any minor member of the company, then such company cannot be registered according to section 8 of the Act.
5)Such companies cannot involve in any non-banking fund investment of securities of any corporate.
6)A company cannot convert into another type of a company within two years of company registration except for the fact of increase in the paid-up capital up to fifty lakh rupees or turn over exceeds two crore rupees.
Nomination by the subscriber or member of One Person Company
1)Name of another person or director should be nominated to the memorandum in case of the death of the single person or owner of the company.On the event of death of the director, the nominated director will take over the company and will manage all the affairs of the company. The consent shall be filed to the registrar.
2)The name of the nominated person should be mentioned in the memorandum of the one person company in Form No. INC.2 along with the written consent of the nominee along with the prescribed fee will be filed to the registrar at the time of company registration.
3) The person can drop out his consent in any case in a prescribed way
i) The member shall nominate another person not less than fifteen days after receiving the withdrawal notice. This nomination should be intimated to the company along with the written consent of the nominated person.
4)Once the company receives a notice of withdrawal it should be filed with the registrar not less than thirty days along with the prescribed fees as mentioned in the Companies Act.
5)The subscriber of the one person company shall be notified the change of the name of the nominated person along with the reason which could be either death of the original member or inability of the nominated person to function.
6)If the member of the one person company expires or is found to be incapable, then the nominated person becomes the member of the company and this cessation of membership of the original member shall be filed with the registrar not less than fifteen days of such cessation along with the prescribed fee.
If any member of the one person company violates the law of , then the company and the member has to pay a fine amount of ten thousand rupees which starts from thousand rupees from day one and continues.
Conversion of One Person company into private or public limited companies
1)A one person company cannot continue to be one if the paid up capital of the company is more than fifty lakh rupees or if the annual turn over is more than one crore.
2)The day when the one person company has increased its paid up capital more than fifty lakhs and turnover up to one lakh, it will be asked to get converted either into a private company of two or more members and two directors or a public limited company with seven members within six months of time.
3)The one person company can change its bye laws after the conversion of the company according to the section 122, sub-section 3.
4)After the conversion of a one person company into a private limited company or a public limited company, the one person company shall inform the registrar within sixty days of conversion.
5) If any member of the one person company violates the law of ,then the company and the member has to pay a fine amount of ten thousand rupees which starts from thousand rupees from day one and continues.
6)A one person company can convert into another type of a company by forming two members and two directors as a private limited company or with seven members and three directors and maintaining its paid up capital and the yearly turnover with due compliance.
7)Conversion of a private company into a one person company
1)Any private company which has a paid up capital of fifty lakh rupees or with a turn over of two crores in two years after the company registration shall convert into a one person company by passing a resolution in the meeting.
2)The company before making any such resolution shall get a no objection letter from all the members and directors of the company.
3)After making such resolution the company should submit the file to the registrar within thirty days of deciding.
4)The company shall should submit an application for conversion to the registrar along with the prescribed fee attached with the following documents:
i)The directors, members and all the important authorities are supposed to give a written consent of declaration for the conversion of the private limited company from one type to another and state that the paid-up capital is fifty lakh rupees and the turnover is less than two crore rupees.
ii)A list of all the members and the investors.
iii)The records of the profit and loss of the company along with the recent sheet of audited balance.
iv)A copy of consent along with a no objection letter from the investors.
5)The registrar shall issue the certificate of due conversion if he is satisfied and if the applicant has fulfilled all the requirement criteria.