In this blogpost, Sonal Srivastava, Student, Amity Law School, Lucknow, writes about what is a one person company, who can incorporate a OPC, features of a OPC and the procedure for incorporation.
OPC or ‘one person company’ is defined in section 2(62) of the Companies Act, 2013 as a company which has only one person as a member. According to section 2(68) of the Act, it is the sub- domain of a private company.
Who Can Incorporate OPC?
According to Rule 3 of the Companies (Incorporation) Rules 2014, only a natural person who is the citizen and resident of India can-
Incorporate one person company and as well as shall be a nominee for the sole member of a one-person company.
Features of One Person Company
- Minimum paid-up share capital is 1 lakh.
- OPC can either be a company limited by share/company limited by guarantee or an unlimited company.
- The words ‘one person company’ need to be mentioned in brackets below the name of One Person Company, for example- Srivastava Company Ltd
(One Person Company)
- One Person Company should mention the name of the nominee/other person in the memorandum of association, with his prior written consent and the same should be filed with the registrar at the time of incorporation.
- Maximum Director- 15, minimum Director- 1.
- OPC need not hold AGM ( Annual General Meeting)
- Registrar should be informed about all the contracts entered by the OPC.
Procedure for Incorporation of OPC
- DIN (Director Identification Number) and Digital Signature Certificate– First of all, the sole shareholder/director should get Director Identification Number from the Ministry of Corporate Affairs and also get Digital Signature Certificate.
- Name of the Company– The second step involves the sole shareholder to apply for the name of the company.
- Consent of the Nominee– The subscriber to the memorandum of ‘one person company’ shall nominate a person, after obtaining written consent of such person, who shall, in the event of subscriber’s death or his incapacity to contract, become the member of that one person company. [1]
- Incorporation- Form INC- 2 is the form for incorporation of ‘one person company’ which has to be submitted to the registrar along with the following attachments-
- Memorandum of Association
- Articles of Association
- Proof of identity of the member and the nominee.
- Residential proof of the member and the nominee.
- A copy of PAN card of member and nominee.
- Consent of nominee in form INC- 3.
- An affidavit from the subscriber and first director to the memorandum in Form INC-9.
- List of all the companies (specifying their CIN) having the same registered office address, if any.
- Specimen signature in form INC- 10.
- Entrenched articles of association.
- Proof of registered office address.
- Copies of the utility bills. (not older than 2 months)
- Proof that the company is permitted to use the address as the registered office of the company if the same is owned by any other entity/person.
- Consent from the director.
- Optional attachments.
- Final Incorporation Certificate– After doing all the formalities, the subscriber shall receive the final incorporation certificate from the registrar of the companies. The business can be commenced henceforth.
- E– filing– the subscriber can also do e-filing for the incorporation of the company by filling e- form INC-2 and attaching other relevant documents.
Conversion of One Person Company to Private Limited or Public Company
According to Rule 3(7) of the Companies (Incorporation) Rules, 2014, a person company cannot voluntarily convert into any other kind of company unless two years have expired from the date of incorporation. After two years from the date of incorporation, one person company may convert into any other company even without threshold limit.
The threshold limit is an exception to the above rule that is if the paid-up share capital exceeds fifty lakh rupees or the annual turnover during the relevant period exceeds two crore rupees then it shall cease to be a one person company. (Rule 6(1) of the Companies (Incorporation) Rules 2014) and get converted into a private or public company.
After this, the one person company shall within sixty days from the date of applicability gives notice to the registrar that it has ceased to be “one person company” and that now it is required to convert itself into a private company by virtue of its exceeding paid up share capital.
Such one person company shall be required to convert itself, within six months of the date on which its paid up share capital has increased beyond fifty lakh rupees or the last date of relevant period during which its annual average turnover exceeds two crore rupees as the case may be, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act.
The conversion shall be done after making necessary alterations in the memorandum and article of association and also by giving notice to the registrar in Form INC- 5.
Conversion of Private Company into One Person Company
A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakh rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting. The company shall obtain NO objection certificate, and such resolution shall be filed with the registrar of companies within 30 days in Form no. MGT14.
The company shall file an application in form no. INC 6 for its conversion into ‘one person company’. On satisfaction and compliance with requirements, the registrar shall issue the certificate.
Conclusion
Thus, it can be concluded that the concept of ‘one person company’ was brought into action with the aim to encourage small scale industries and companies and, therefore, the process of incorporation of the same is kept simple so that the company can be incorporated by the subscriber without facing much difficulties.
[1] Advanced Company Law and Practice, the Institute of Company Secretaries of India
