One Person Company- Alternate of private company with lesser compliances

Introduced in Companies Act,2013, under the recommendations of J J IRANI COMMITTEE, One Person Company means a company formed by one person only. It is a new vehicle enabling a sole proprietorship to enter a corporate framework and to operate and contribute effectively,

Characteristics

  1. ONE SHAREHOLDER
  • Natural Person
  • Resident in India for a period of not less than 182 days immediately preceding one calendar year.
  • Indian Citizen
  1. NOMINEE FOR THE SHAREHOLDER
  • In case of Death /Incapacity of Original Shareholder
  • Natural Person
  • Resident in India
  • Indian Citizen
  1. DIRECTOR
  • Minimum one Director
  • Maximum Fifteen Directors

Terms/Essentials of OPC

  • Not more than one OPC or NOMINEE of more than one OPC.
  • No minor to be the member or nominee of OPC
  • No conversion to Section 8 Company.
  • No Non Banking Financing /Investment Activities including investment in securities of any Body Corporate.
  • No conversion into any kind of Company until the expiry of two years from Date of Incorporation.

NOTE: EXCEPT in case the threshold limit increases beyond Fifty Lacs or its Average Annual Turnover Exceeds Two Crores during Relevant Period.

  • No invitation to public for Subscription of Shares of the Company.

Advantages of OPC

  • Easy Transferability of Shares
  • Separate Legal Entity
  • Perpetual Succession
  • Limited Liability
  • Less Compliances

Documents Required for Registering OPC

  • Scanned Copy of Pan/Passport/(Foreign Nationals & NRIs)
  • Scanned Copy of Voter ID Card/Passport/Driving License.
  • Scanned Copy of Latest Bank Statement/Telephone Bill (For Director & Registered Office).
  • Scanned Passport size Photograph.
  • Specimen Signature.
  • Scanned Copy of Notarized Rent Agreement (Sales Deed/Property Deed in case of Owner).
  • Scanned Copy of No Objection Certificate from Property Owner.

Steps to incorporate an OPC

  • Application for DIN in form DIR-3 and DSC.
  • Search for Company’s name availability.
  • Application for name availability.
  • Drafting of MOA & MOA.
  • Fining of E-forms with ROC.
  • Payment of ROC fees and Stamp Duty.
  • Verification of documents/forms by ROC.
  • Issue of COI by ROC.

Under Section 2(62) of Companies Act, 2013, OPC is defined with Exemptions in various Sections which are as follows:

  • Section 96(Holding AGMs)
  • Section 2(40)(Preparing Cash Flow Statements)
  • Section 98 (Power of Tribunal to call meetings
  • Section 100 (Calling EGMs)
  • Section 101 (Notice of meetings)
  • Section 102(Statement to annexed to notice)
  • Section 103(Quorum for meetings)
  • Section 104(Chairman of meetings)
  • Section105 (Proxies)
  • Section106 (Restriction on voting rights)
  • Section 107 (Voting by show of hands)
  • Section 108 (Voting through Electronic Means)
  • Section 109 (Demand for Poll)
  • Section 110 (Postal Ballot)
  • Section 111 (Circulation of Member’s Resolution)
  • In case OPC does not have a CS, Annual Return of the Company to be signed by Director of the Company.

While the idea of OPC looks Promising, doing business in OPC structure, may result in

Higher tax implications as Sole Proprietors are taxed at the rates applicable to individuals i.e. different rates for different slabs of income and

Dividend Distribution Tax while distributing dividend.

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