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One Person Company (OPC) / One Man Company in India: Brief Notes

What is a One Person Company (OPC) or a One Man Company?

It is a registered company who has only one shareholder. It is a private company.
Provisions of OPC under the erstwhile Companies Act 1956

There was no separate provision(s) for one-man /one person companies in the Companies Act, 1956. Earlier under the provisions of the Companies Act, 1956, it requires a Public Company to have atleast 7 members(shareholders) and a Private Company to have atleast 2 members(shareholders) and a Producer Company to have atleast 5 members(shareholders). And therefore a company having a single member was not allowed to have the existence of a registered company.

Provisions under the Companies Act 2013

 - Definition

Section 2(62) of the Act, defines a “One Person Company” as a company which has only one person as a member.

 - OPC is a Private Company 

A One Person Company is treated as a Private Company. {Sec 3 (1)(c)}

 - Eligibility of the member

As per Rule 3 of the Companies (Incorporation) Rules, 2014, all the following criteria must be complied to be the member of an OPC;

 (a) a natural person
 (b) an Indian citizen 
 (c) resident in India
 (d) not a minor

 - Joint holders considered as single member

Joint Holder of share(s) would not constitute double membership, in case more than one person is holding some shares jointly as joint holders for that shares then they will be treated as single member and they can form a one person company. 

 - Name of the company

The words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved. [2nd Proviso of Section 12(3)]

 - Director

A one person company shall have at least one director. [Sec. 149 (1)(a)]

First Director - In case of a OPC an individual being member shall be deemed to be its first director
until the director(s) is duly appointed by the member. [Sec. 152 (1)] 

 - Board Meeting

Every one person company shall have to at least hold one meeting of the Board of Directors in each half of a calendar year and the gap between the two meetings is not less than ninety days. 

In case the one person company has only only one director on its Board, the above provisions are not applicable. [Sec. 173 (5)] 

 - Annual General Meeting

One Person Companies are not be required to hold Annual General Meeting. 

 - Nominee of OPC

During the incorporation of the OPC, a nominee is selected by the single member of the company.

The name of the nominee, is required to be mentioned in the memorandum, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company.

The nominee must give his written consent in Form No. INC 3 to become the nominee of the company and such consent shall be filed with the Registrar at the time of incorporation of the OPC along with its memorandum and articles.

This nominee may withdraw his consent at any time. Likewise the only member of OPC may also at any time change the name of such nominee by giving notice, and the name of the new person has to be indicated in the memorandum. The company has to intimate in Form No. INC 4 the change to ROC within 30days from receipt of withdrawal notice. Such change in the name of the person shall not be deemed to be an alteration of the memorandum.

As per Rule 3 of the Companies (Incorporation) Rules, 2014, all the following criteria must be complied to be the nominee of the sole member of an OPC :

 (a) a natural person
 (b) an Indian citizen 
 (c) resident in India 
 (d) not a minor

 - Not more than 1 OPC per person / Not to be nominee in more than 1 OPC

A person is allowed to incorporate only one OPC and also allowed to become nominee in one OPC. - Rule 3(2) of the Companies (Incorporation) Rules, 2014

 - Signing of Annual Return

In case of OPC, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company. [Proviso to Section 92(1)]

 - Signing of Financial Statements

The financial statement, including consolidated financial statement, if any, as approved by the Board of Directors shall be signed on behalf of the Board by only by one director, for submission to the auditor for his report thereon.

 - Restriction in carrying on certain activities

An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates.

 - Cease to be One Person Company - Cases

In case the paid up share capital of an OPC exceeds INR 50 lacs or its average annual turnover during the relevant period exceeds INR 2 crores, it shall cease to be entitled to continue as an OPC. [Rule 6 of the companies (Incorporation) Rules, 2014]

This concept of one person company is great initiative from Ministry of Corporate Affairs and is a welcoming approach for various businessmen as it would give them to establish a company without requiring any other person in the board of the company and as a shareholder of the company.

First One Person Company (OPC) incorporated in India 

The first One Person Company in India was incorporated on 28th April 2014 at Delhi under RoC-Delhi jurisdiction. The company name is "VIJAY CORPORATE SOLUTIONS OPC PRIVATE LIMITED" having CIN: U93000DL2014OPC267546. Mr. VIJAY KUMAR SHARMA is the only Director and Shareholder of the Company.

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