ONE PERSON COMPANY

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ONE PERSON COMPANY

The Companies Act of 2013 included a number of previously undiscovered concepts, which
substantially transformed the Indian corporate constitution. The use of the One Person
Company concept was one such crucial element of distinction. As a result, a novel strategy
for starting a firm was recognised. It provided the flexibility that only a corporation form of
business can give, as well as the limited liability protection that partnerships and sole
proprietorships were unable to offer. When the new Companies Act was approved in 2013, a
few other nations had already recognised that individuals might establish a business. China,
Singapore, the United Kingdom, Australia, and the United States were among them.

The 2013 Companies Act significantly changed the Indian corporate constitutional rules by
incorporating a number of novel ideas. The addition of the one person company philosophy
was one such crucial difference. As a result, a novel strategy for starting a firm was
recognised. It provided the limited liability protection that partnerships and sole
proprietorships could not, as well as the adaptability that only a corporation kind of
organisation can. When the new Companies Act was approved in 2013, some other nations
that had previously recognised people's freedom to establish a business had already done so.
They included China, Singapore, the UK, Australia, and the United States in addition to the
former.

Due to the fact that both sole proprietorships and one-person businesses are owned by a
single person, there are some important variances that should be noted. The fundamental
difference between the two seems to be the nature of their separate tasks. Due to the fact that
an OPC is a distinct legal entity from the marketer it represents, it has its own assets and
obligations. The promoter is not personally liable for the accounts payable. Contrarily, sole
proprietorships have a shared ownership structure. As a result, the law permits the linkage
and purchase of the promoter's personal assets in the event that the company's obligations are
not paid.

The following are some fundamental traits of a one-person business:

Private company: Under the Companies Act's Sec 3(1)(c), alone individual may form a
business for any legitimate reason. OPCs are private businesses, it continues. In contrast to
many other private enterprises, OPCs are restricted to a single member or investor.
One way that OPCs vary from many other types of businesses is the requirement that the only
member name a nominee when seeking to register the firm. Since an OPC only has one
member, his death results in the candidate being chosen or rejected as the OPC's only
representative. Since they adhere to the concept of perpetual succession, other businesses do
not suffer this.

 OPCs are expected to have at least one and a limit of two directors (the representative).
They might have up to 15 directors
 OPCs are not expected to have a base measure of settled up share capital under the 2013
Companies Act.
 Special advantages: Under the Companies Act, OPCs are granted a number of rights and
exemptions that are not accessible to other types of organisations.

DETAIL PROVISION APPLICABLE ON OPC

Giving a Name to the OPC –

As per Section 3(1)(c) of the Act, the expression "One Person Company" should be given in
sections underneath the name of the organization.

Directors and members of an OPC –

An OPC may have no more than one representative at any given time.A representative of the
OPC is perceived as the OPC's First Director under Sec 152(1) of the Act up until the
director(s) are properly appointed by the delegate. An individual may just have a place with
one OPC. A top managerial staff for an OPC might remember somewhere in the range of one
to fifteen individuals for completion.To increase the number of directors over 15, the OPC
should adopt a specific resolution to that effect.

Nominee for an OPC –

In the case of death, disability, or the like, an OPC must name one person as the "Nominee"
who will be able to (a) serve as the OPC's representative, (b) buy the OPC's all's stock, (c)
and take on the OPC's all's liabilities.Although , the RoC, the MoA, and the AoA must be
shown prior approval for the candidate to serve as nominee at the time of registration. By
writing to the OPC and the only representative, a candidate may cancel his approval. After
receiving the withdrawal letter and within less than 15 days, the sole representative names a
different individual as a candidate. On the off chance that a characteristic individual who is
an individual from OPC joins one more OPC by ethicalness of being that OPC's candidate,
they are as yet expected to stick to the necessity of taking part in only one OPC for the initial
180 days. i.e., they must cancel their subscription from one or both OPCs within that time
frame.

Annual General Meetings and Board meetings –

OPC is considered to have consented to Section 173 in the event that there is at least one BoD
gathering like clockwork and somewhere around 90 days pass between gatherings. An OPC
with just one board member on the Board is not subject to the requirements of Sections 173
and 174 regarding the quorum for board meetings. An AGM can be held without an OPC.

Financial Statements –

Before being given to the accountant, the OPC financial statements must be approved by the
Board and signed by one Director. OPC accounting records do not absolutely require a Cash
Flow Statement.Within 180 days of the fiscal year's end, a copy of this monetary report and
some other supporting documentation should be recorded with the RoC. If there is an OPC,
the Board's document that is attached to the financial statement has a report that specifically
includes descriptions or remarks by the Board on each qualification, booking system, or
important claim or declaration that the auditor made in his document. OPC yearly returns
must always be approved by the company secretary and the director. If a company secretary
is not present, only the Director's signature is required. An OPC is not required to rotate
auditors after the maximum amount of time has passed.

Contract among member and OPC:

Unless the agreement is in writing, in the event that an OPC goes into an agreement with its
only representative, the director, the OPC will guarantee that the conditions of the
agreement/offer are completely consolidated in the OPC's update or enlisted in the principal
Board meeting that follows the execution of the agreement. The aforementioned standard is
improper, nonetheless, if the agreements were made by the corporation as part of regular
business operations. Any such agreement shall be notified to the RoC inside 15 days after the
approval date and shall be recorded in the OPC Board's minute book in line with sec 193(1).
Incorporating an OPC –

As per the Act, OPC can be framed as a boundless OPC with share capital, a boundless OPC
without share capital, a boundless OPC with share capital and a boundless OPC with share
capital confined by shares, restricted by assurance, and restricted by shares.

Conversion of OPC into a Public Company or a Private Company –

To completely consent to the change and to make any essential adjustments beyond it, the
OPC will modify its update and articles in accordance with passage (3) of Sec 122 of the Act.
By expanding the base expected number of directors and investors to two or seven and a few,
individually, while keeping up with the base degree of compensation capital commanded by
the Act for these kinds of corporate elements, and by complying with Section 18 of the Act's
transformation guidelines, an OPC that is certainly not a corporate substance recorded under
Section 8 of the Act might be changed over into a Private or Public Company.

For a One-Person firm to switch from a public company over completely to a confidential
one as determined in Section 8 of the demonstration, the e-structure No. INC 6 should be
submitted. Alongside the help costs as framed in the Companies (Registration workplaces
and expenses guidelines, 2014), the structure should likewise be given the extension of
various papers, including a rundown of banks, revised MoA and AoA, as of late examined
monetary records, and other related reports.The consent and certifications of the previously
mentioned structure might be changed after the enlistment center confirms that it is happy
with the pre-satisfaction. essential's Considering that all the previously mentioned
prerequisites are fulfilled, it tends to be contended that the one-individual business has
complete opportunity to change itself from a one-individual to a private or public
organization whenever, except for the exemption showed and recorded under segment 8 of
the demonstration. To do this, the base number of two or seven individuals and three chiefs,
as fitting, should be raised.

Conversion of Private Limited Company to OPC -

A private business that wasn't formed as a corporation under Section 8 of the Act could
change its status to a OPC by passing a special resolution at the annual assembly. The
organization must submit its application in Form No. INC.6 together with the following
supporting documents and the service costs specified in the Companies (Registration offices
and fees) Rules, 2014: - The board of directors of the company must certify in an affidavit
taken under oath that all representatives and creditors of the company have given their own
approval to the transformation of the list of delegates and the list of creditors.

SPICe-based incorporation (Without filling RUN)

To serve as a member and nominee of an OPC, a natural person must be an Indian citizen and
a resident of India.

For the aforementioned reasons, a person is considered to be an Indian resident if they spent
at least 102 days there during the most recent fiscal year.

Procedure of Incorporation of One Person Company

Stakeholders can use the SPICe form (INC-32) - Simplified Proforma for Incorporating
Company Electronically (SPICe) - with eMoA (INC-33), eAOA, and Name Reservation to
apply for the incorporation of a new company in order to receive five different services
(Name Reservation, Allotment of DIN, Incorporation of New Company, Allotment of PAN,
and Allotment of Name) (INC-34).In the case that the eMoA and eAoA are not applicable,
users must submit the pdf versions of the MoA and AoA. Reserving a name independently
prior to filing SPICe is not required. One name for the potential company may be submitted
through SPICe (INC-32).

An OPC must become a private or public company if its average annual income over the
three most recent financial years surpassed two crore rupees or if its paid-up share capital
exceeded fifty lakh rupees.
FORM INC 4

eForm INC-4 must be submitted in accordance with Section 3(1) of the Companies Act of
2013 and Rules 4(4), (5), and (6) of the Companies (Incorporation) Rules of 2014, which are
reproduced for your reference.

The company must submit form INC-4 if an OPC member loses membership owing to death,
inability to participate into a contract, or a change in ownership. The user is required to
complete the same form with details about the new OPC member.

If the candidate withdraws their consent or the member advises them of a change in the
nomination, Form INC-4 must also be delivered.
INC 5
An individual company's statement that its share capital or income exceeded the limit by
more than Rs. 50 lakh The OPC must submit form INC-5 to RoC notifying RoC that a
conversion into a private or public company is necessary if the threshold restrictions are
exceeded.

Form INC-5 must be submitted within sixty days of the threshold limitations being violated.
INC 6

In accordance with Section 18 of the Companies Act of 2013 and Rules 6 and 7(4) of the
Companies (Incorporation) Rules of 2014, e-Form INC-6 must be submitted.

An OPC cannot become a private or public firm without submitting Form INC-6. The private
business must furthermore complete form INC-6 in order to become an OPC. When a private
company converts to an OPC, neither the paid-up share capital nor the average annual
revenue of the company may exceed fifty lakh rupees.

The corporation must have one member at the time of conversion into OPC, and it must also
name one nominee to act in the member's place in the case of his or her decease or
incapacitation.