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One Person Company
What do you mean by One person Company?
One person company is new concept in India under the Companies Act, 2013. Section 2(62) of the Companies Act, 2013 defines that “One Person Company” means a company which has only one person as a member.
Is One Person Company (OPC) preferred for small business?
Yes, One Person Company (hereinafter referred to as OPC) is preferred for small business. The concept of OPC is basically to eradicate the limitation of sole proprietorship, which is actually the most popular form for small businesses, such as unlimited liability, no legal form etc.
Why prefer one person company (OPC) over others forms of companies?
Answer is simple; only one person is required in OPC. You don’t need another person. If you are independently want to commence your business without involving any other person then One Person Company (OPC) is idle choice for you.
When OPC concept wasn’t introduced in India, the above categories of people usually choose Proprietorship as their form of business. Proprietorship has many disadvantages like
- Cannot Take Investments
- No Legal Existence
- Unlimited Liabilities
And many other as well. Further proprietorship as form of business also not considered trustworthy. One Person Company (OPC) is a solution for all the above problems. Therefore, to make the above category of businesses more organised, OPC was introduced.
“Therefore, start-ups should use OPC as their form of business to make your business more organised and more valuable”.
Why Funding is not a problem for One Person Company (OPC)?
Yes, it is true. Funding is not a problem for One Person Company (OPC) subject to if you have a good business idea and business plan.
The Reserve Bank of India (RBI) has instructed banks to increase the funding made to priority sectors, viz agriculture and small scale industries. Eligible priority sector lending –
| Manufacturing Sector | ||
|---|---|---|
| Enterprises | Investment in Plant & Machinery | |
| Do not exceed 25 lakhs rupees | A company is a distinct legal person. | |
| Small Enterprises | More than 25 Lakhs but does not exceed 5 crores | |
| Service Sector | ||
|---|---|---|
| Enterprises | Investment in Plant & Machinery | |
| Do not exceed 25 lakhs rupees | Do not exceed 10 lakhs rupees. | |
| Small Enterprises | More than 10 Lakhs but does not exceed 2 crores | |
One Person Company coming under any of above category may fall under priority sector lending. There is enormous scope for One Person Companies to leverage benefits of priority sector lending.
How to name OPC?
One person company is required to identify in its name in bracket as “One Person Company” after its name.
Definition of One Person company as per Companies Act-2013?
Section 3(1)(c) of the Companies Act, 2013 provides that where the company to be formed is to be One Person Company that is to say, a private company, the company may be formed by one person subscribing his name to a memorandum and complying with the requirements of this Act in respect of registration.
what are the types of OPC?
One Person Company formed under section 3 may be either –
- a company limited by shares; or
- a company limited by guarantee; or
- an unlimited company.
In case, you are registered as OPC and if your
- Paid up share capital exceeds 50 lakhs or;
- Average annual turnover exceeds 2 crores
Then it has to convert itself within 6 months from the date on which any of the above condition is fulfilled. This requirement is as per rule 6 of Companies (incorporation) rules, 2014.
Who is eligible to act as a member of OPC?
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
A person can be a member in how many OPC?
A person can be member in only one OPC.
What is the requirement as to the minimum and maximum number of directors in an OPC ?
In terms of section 149(1), a One Person Company needs to have minimum of one director. It can have directors up to a maximum of 15 which can also be increased by passing a special resolution as in case of any other company.
Can a private Company get itself converted into OPC?
Yes, the private company can convert itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.
What if an member of OPC becomes a member of another OPC by virtue of nominee in that other OPC?
Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days by informing ROC in a prescribed form.
