One Person Company – Company Registration in Madurai

One Person Company(OPC)

With increasing the use of information technology and computers, emergence of the service sector, it is time that the entrepreneurial capabilities of the people are given an outlet for participation in economic activity. Such economic activity may plays as a vital role in the innovation of an economic person in the form of a firm or a company. Yet it would not be reasonable to except that every entrepreneur who is capable of developing his ideas and participating in the market place should do it through an association of persons. To facilitate this, the Committee recommends that the law should recognize the formation of single person economic entity in the form of ‘One Person Company‘. It also known as an OPC. Such an entity may be provided with a simpler regime through the exemptions so that the single entrepreneur is not compelled to fritter away his time, energy and resources on procedural matters.

The Concept of ‘One Person Company’may be introduced in the Act with following characteristic:-

• OPC may be registered as a private company with one member and may also have at least one director.
• Appropriate protections in case of death/disability of the sole person should be offered through appointment of another individual as Nominee Director. On the demise of the original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member.
• Letter’s OPC to be like a suffix with the name of the one person companies to differentiate it from other companies.

Scope of Section 3 of Companies Act, 2013

A company is a juristic person with the separate identity and perpetual succession with the right to own properties in its own name. It is different from the owners who are called as shareholders. Its status as juristic person has to be recognised in law and therefore person desirous to form a company have to subscribe to a memorandum and register the company with the Registrar of companies. Only when the company is registered, it can attain the status of a juristic entity. Normally the subscribers are called ‘promoters’. The requirements under section 3 of the 2013 Act for a formation of private and public companies are the same as was under section 12 of the 1956 Act. In so far as an OPC is concerned, even though it will be private company, there can be only one subscriber. Provision to Section 3 of the 2013 Act contains special provisions relating formation of a One Person Company, which is enumerated below.

• The memorandum of an OPC is to mention the name of the person, with his prior consent, who shall become the member of the company in the event of the subscriber’s death or incapacity to contract. The written consent of the person so nominated is to be filed with the Registrar.
• The person so nominated shall have to the right to withdraw his consent in manner prescribed.
• A member of the OPC may change the name of the person so nominated at any time after following the prescribed procedure.
• The member has a duty to intimate to the company about the change in the name of the person so nominated. And the company has a duty to intimate the Registrar of such change.
• The change in name of the person so nominated shall not be deemed to be an alteration of the memorandum.

Characteristic of OPC

• Only a individual person who is an Indian Citizen and who resident in India, shall be eligible to incorporate a One Person Company. And also he shall be a nominee for the sole member of a one person Company. For the reference of this Rule, the term “resident in India” means a person who has stayed and belonged to India for a time period not less than 182 days during the immediately preceding one year.
• No one shall be eligible to incorporate more than a one person company or become nominee in more than one such company.
• Where a natural person, being member in an OPC 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 in sub-rule (2) within a period six months.
• The person below 18 years shall not become a member or a nominee of the One Person Company or can maintain shares with beneficial interest.
• Such company cannot be incorporated or converted into a company under the section 8 of the Act.
• Any company shall not be convert voluntarily into any other kind of company unless two years have expired from the date of incorporation of an OPC, except threshold limit(paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.

Certain cases of Nomination by the subscriber or member of OPC

• For the purpose first provision to sub-section (1) of section 3, the subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining 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.
• The name of the person nominated under sub-rule (1) shall be mentioned in the memorandum of an OPC and such nomination in Form No.INC.2 along with the consent of such nominee obtained in Form. No. INC.3 and fee as obtained in the 2014 Act and shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles.
• The person elected or selected by the subscriber or member of a One Person Company may, dismiss his consent by giving a notice in writing to such individual member and to the one person company. The sole member shall also nominate another person as nominee within fifteen days of the receipt of the dismiss of membership and shall send an intimation of such nomination in writing to the company along with the written agreement of such other person so fixed in Form.No.INC.3.
• The company within one month of receipt of the notice of withdrawal of written agreement under sub-rule (3) file with the Registrar, a notice of such withdrawal of an agreement and the notification of the name of another person nominated by the individual member in Form  No INC. 4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the written agreement of such another person so nominated in Form.No.INC.3.
• The subscriber or member of a one person company may, by notification in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee or nominate another person after obtaining the prior written statement of such another person in Form.No.INC.3
• Where the individual member of an OPC spreads to be the member in the event of death or incapacity to contract and his nominee becomes the member of such one person company, such new member shall nominate and appoint within 15 days of becoming member, a person who shall in case of his death or his illness to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form.No.4 along with the fee as mentioned in the Companies Act.

Penalty

If an OPC or any officer of such company differences the provisions of these rules, an OPC or any officer of the one person company shall be punishable with fine which may maximum to ten thousand rupees and with a further fine which may increase to one thousand rupees minimum for every day after the first during which such infringement continues.

OPC for convert itself into a public company or a private company

• Where the paid up share initial payment of an One Person Company maximum of fifty lakh rupees or its approximate yearly turnover during the appropriate time period does not greater than two crore rupees, it shall cease to be entitled to continue as a One Person Company.
• Such One Person Company shall be needed to literate itself, within six months of the date on which its paid up share capital is maximum of beyond fifty lakh rupees or the last day of the specified time period during which its average annual turnover exceed two crore rupees as the case may be , into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act.
• The One Person Company shall change its memorandum and articles by passing a resolution with respect of  sub-section (3) of section 122 of the Act to provide the effect to the conversion and to make required changes incidental thereto.
• The one person company shall within the period of sixty days from the date of applicability of sub-rule (1), provide a notice to the Registrar in the Form. No. INC.5 informing that it has ceased to be a One Person Company and that it is now wanted to convert itself into a private company or a public company by virtue of its paid up share capital , having increasing the threshold limit down in Sub-Rule(1).
• Any officer of official persons of the OPC differentiates the provisions of these rules, one person company or any official person of the OPC shall be punishable with fine for every day after the first during the infringement of continues.
• A One person company can get itself converted into a private or public company after increasing the minimum number of members and directors to two or minimum of seven members and two or three directors as the case may be, and maintaining the minimum paid-up capital as per the requirements of the Act for such class of company and by making due compliance of section 18 of the Act for conversion.

Alteration of private company to One Person Company

• Private Company or a company registered under section 8 of the Act , which is having the paid up share capital of fifty lakh rupees or annual turnover during the appropriate time period is two crore rupees or less may change itself into one person company by passing a special resolution in the general meeting
• The company shall obtain No objection in writing from members and creditors , but before passing such resolution.
• The one person company shall apply the copy of the special resolution with the Registrar of Companies within one month from the date of passing such resolution in Form.No.MGT.14.
• The company shall apply an registration application in Form.No.Inc.6 for its alteration into one person company along with required fees as mentioned in the Companies (Registration offices and fees) Rules,2014, by attaching the following documents.
• The directors of the company shall provide a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their written statement for conversion, the paid up share capital company is fifty lakh rupees or less or average annual turnover is less than two crore rupees and the list of members and the list of creditors. And also the latest Audited Balance Sheet and the Profit and the Loss Account and the copy of No Objection letter of secured creditors.
• On being satisfied and complied with requirements mentioned herein the Registrar shall distribute the certificate.

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