Incorporation of a One Person Company – Company Registration in Madurai

Incorporation of a company:

Both sole member and nominee shall be natural persons, Indian citizens, and residents in India

Only a natural person who is an Indian citizen and resident in India-

• Shall be eligible for incorporation 0f a one person company;
• Shall be a nominee for the sole member of a one-person company.

The term resident 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 calendar year.

One person can be member/nominee in only one OPC:

No person shall be eligible for incorporation of more than a one-person company or become the nominee in more than one such company.

Where a natural person, being a member in one person company in accordance with this rule becomes a member in another such company by virtue of his being a nominee in that one person company, such person shall meet the eligibility criteria specified above within a period of one hundred and eighty days.

Minor cannot be member/nominee of OPC:

No minor shall become member or nominee of the one person company or can hold shares with beneficial interest.

Prohibited activities:

Under Section 8 of the act, such companies cannot be made incorporation or convert into a company.

Non-banking financial investment activities like investment in securities cannot be carried out by such companies.

No voluntary conversion into any other type of company before the expiry of 2 years:

No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of one person company, except when threshold limit (paid-up share capital) has increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.

Nomination by the subscriber or member of one Person Company:

No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of one person company, except when threshold limit (paid-up share capital) has increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.

Nomination by the subscriber or member of one Person Company:

Nomination:

The subscriber to the memorandum of a one-person company shall nominate a person, after obtaining the prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that one person company.

In the memorandum of one person company, the name of the person who is being nominated have to be mentioned in that and such nomination will be in Form.No.INC.2 along with the consent of such nominee obtained in Form.No.INC.3 and fee as provided in the companies shall be filed with the registrar at the time of incorporation of the company along with the memorandum and articles.

Withdrawal of consent by nominee:

The person who is nominated by the member or a subscriber of a one-person company may withdraw his consent by giving a notice in writing to such a sole member and to the one person company.

Within fifteen days from the notice of withdrawal, the sole member needs to nominate another person as a nominee and send an intimation of such nomination in writing to the company along with the written consent of such other person so nominated in Form.No.INC3.

The company has to file with the registrar about the notice of withdrawal of consent and the intimation of the name of another person who is nominated by the some member in Form.No.INC.4 along with the fee as provided in the companies and the written consent of such other person so nominated in Form.No.INC 3 within thirty days of the receipt of the notice of withdrawal.

Change of nominee by sole member:

The member or the subscriber of a one-person company may change the name of the person nominated by him at any time for any reasons including the incapacity to contract of nominee or in case of death and nominate another person after obtaining the prior consent of such another person in Form.No.INC.3.

The company shall file with the registrar, a notice of change in Form.No.INC4 along with the fee as provided in the companies incorporation and with the written consent of the new nominee in the Form.No.INC.3 within 30 days of receipt of intimation of the change.

Death of sole member:

Sole member of One Person Company ceases to be the member in the event of death or incapacity to contract and his nominees become the member of such one person company incorporation, those members have to nominated within fifteen days of becoming member, a person who shall in the event of incapacity to contractor in death become the member of such company, and the company can file with the registrar on intimation of such nomination and cessation in Form.No.INC.4 along with the fee as provided in the companies within 30 days of the change in membership and with the prior written consent of the person so nominated in Form.No.INC3.

One Person Company to convert itself into a public company or a private company in certain cases:

Compulsory conversion of OPC:

It would cease to be entitled to continue as a one person company where the paid-up share capital of one person company exceeds fifty lakh rupees or its average turnover during the relevant period exceeds 2 crore rupees.

The relevant period is the term which means the period immediately preceding three consecutive financial years.

This kind of OPC is required to convert itself within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees as the case may be, into either a private limited company with a minimum of two directors and two members or a public company with at least seven members and three directors in accordance with the provision of section 18 of the act.

OPC can alter its articles and memorandum by passing a resolution in accordance with sub-section (3) of section 122 of the act to give effect to the conversion and to make the necessary changes incidental thereto.

The one person company can give a notice to the registrar in Form.No.INC.5 within a period of sixty days from the date of applicability of the above provisions. It is to inform that it has ceased to be a one-person company incorporation and that it is now required to convert it into a public or a private company by virtue of its paid-up share capital or average annual turnover, having exceeded the threshold limit laid down above.

If an officer or the one person company contravenes the provision of these rules, then the particular OPC or an officer of the company would be punishable with the fine amount which may extend up to ten thousand rupees and further, the fine may extend to thousand rupees for every after the first during which such contravention continues during the incorporation of one person company.

Voluntary conversion of OPC:

After increasing the number of directors and members, one person company can easily get converted into the private or public company.

Members can be increased from two to seven and the directors also from two to three as the case may be; this may be done by maintaining the minimum paid-up capital as per the requirements of the act for such class of company incorporation and by making the due compliance of section 18 of the act of conversion.

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