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COMPANY LAW

PROJECT ON

ONE PERSON COMPANY:


Registration and Procedure

SUBMITTED TO: SUBMITTED BY:


Dr. Rajinder Kaur Akash Negi
05/15, B.A.LL.B.
VIII Semester, Sec- A.

UNIVERSITY INSTITUTE OF LEGAL STUDIES


PANJAB UNIVERSITY
CHANDIGARH

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ACKNOWLEDGEMENT
I want to thanks, first and foremost my professor Dr.
Rajinder kaur for her guidance, support and help anytime when I
required. I thank her for such a co-operative nature.

Further, I want to thanks my friends who supported me &


helped me in making the things required accessible to me.

Akash Negi
05/15, Semester VIII
B.A.LL.B. Sec- A

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TABLE OF CONTENTS

S.NO. PARTICULARS PAGE NO.


01 Introduction 04
02 Process of registration 05
03 Features of OPC 06
04 Membership in OPC 07
05 OPC and its formation 09
06 Exemptions available to OPC 12
07 Impact of OPC in India 14
08 Bibliography 16

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Introduction
‘One Person Company’ (OPC) is a revolutionary concept is a step forward to
facilitate more business friendly corporate regulations in India. The Companies
Act, 2013 aims pave the way for a more modern and dynamic legislation, to
enable growth and greater regulation of the corporate sector in India.

So, for the person wanting to venture alone, the only option was proprietorship,
an onerous task since it is not legally recognized as a separate entity.

OPC will give the young businessman all benefits of a private limited company
which categorically means they will have access to credits, bank loans, limited
liability, legal protection for business, access to market etc. all in the name of a
separate legal entity.

OPC provides a whole new bracket of opportunities for those who look forward
to start their own ventures with a structure of organized business. OPC will give
the young businessman all benefits of a private limited company which
categorically means they will have access to credits, bank loans, limited liability,
legal protection for business, access to market etc all in the name of a separate
legal entity.

Single entrepreneur can manage his business on his own. It can have only one
member at any point of time. It may have only one director but as per the
provisions of section 149 can however appoint more than 15 directors after
passing a special resolution. So, the key difference between OPC and sole
proprietorship is the way the liabilities are treated. For instance, in an OPC the
promoter’s liability is limited in the event of a default or legal issues. Also one
person can take a decision without waiting for other director’s consent and
wasting of time and energy in convincing other directors can be avoided.

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One Person Company (OPC): Process of
Registration

1. Apply for DSC: The first Step is to obtain the Digital Signature Certificate
(DSC) of the proposed Director which required the following documents:

 Address Proof

 Aadhaar card

 PAN card

 Photo

 Email Id

 Phone Number

2. Apply for DIN: Once the Digital Signature Certificate (DSC) is made, the next
step is to apply for the Director Identification Number (DIN) of the proposed
Director in SPICe Form along with the name and the address proof of the director.
Form DIR-3 is the option only available for existing companies. It means with
effect from January 2018, the applicant need not file Form DIR-3 separately. Now
DIN can be applied within SPICe form for up to three directors.

3. Name Approval Application: The next step while incorporating an OPC is to


decide on the name of the Company. The name of the Company will be in the
form of “ABC (OPC) Private Limited”.

There are 2 options available for getting name approved by making application
in Form SPICe 32 or by using RUN Web service of MCA by giving only 1
preferred name along with the significance of keeping that name. However, with
effect from March 23, 2018, Ministry has decided to permit two proposed Names

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and one re-submission (RSUB) while reserving Unique Names (RUN Service)
for the Companies.

Once the name is approved by the MCA we move on to the next step.

4. Documents Required: We have to prepare the following documents which are


required to be submitted to the ROC:

a. The Memorandum of Association (MoA) which are the objects to be followed


by the Company or stating the business for which the company is going to be
incorporated.

b. The Articles of the Association (AoA) which lays down the by-laws on which
the company will operate.

c. Since there are only 1 Director and a member, a nominee on behalf of such
person has to be appointed because in case he becomes incapacitated or dies and
cannot perform his duties the nominee will perform on behalf of the director and
take his place. His consent in Form INC – 3 will be taken along with his PAN
card and Aadhar Card.

d. Proof of the Registered office of the proposed Company along with the proof
of ownership and a NOC from the owner.

e. Affidavit and Consent of the proposed Director of Form INC -9 and DIR – 2
resp.

f. A declaration by the professional certifying that all compliances have been


made.

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5. Filing of forms with MCA: All these documents will be attached to SPICe
Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the
professional, and will be uploaded to the MCA site for approval.

After uploading, Form 49A and 49B will be generated for the PAN and TAN
generation of the Company which have to be uploaded to MCA after affixing the
DSC of the proposed Director.

6. Issue of the certificate of Incorporation: On verification, the Registrar of


Companies (ROC) will issue a Certificate of Incorporation and we can commence
our business.

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FEATURES OF A ONE PERSON COMPANY
Here are some general features of a one-person company:

a. Private Company: Section 3(1)(c) of the Companies Act says that a


single person can form a company for any lawful purpose. It further
describes OPCs as private companies.
b. Single Member: OPCs can have only one member or shareholder, unlike
other private companies.
c. Nominee: A unique feature of OPCs that separates it from other kinds of
companies is that the sole member of the company has to mention a
nominee while registering the company.
d. No Perpetual Succession: Since there is only one member in an OPC,
his death will result in the nominee choosing or rejecting to become its
sole member. This does not happen in other companies as they follow the
concept of perpetual succession.
e. Minimum One Director: OPCs need to have minimum one person (the
member) as director. They can have a maximum of 15 directors.
f. No Minimum Paid-Up Share Capital: Companies Act, 2013 has not
prescribed any amount as minimum paid-up capital for OPCs.
g. Special Privileges: OPCs enjoy several privileges and exemptions under
the Companies Act that other kinds of companies do not possess.

 FORMATION OF ONE PERSON COMPANIES

A single person can form an OPC by subscribing his name to the memorandum
of association and fulfilling other requirements prescribed by the Companies
Act, 2013. Such memorandum must state details of a nominee who shall

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become the company’s sole member in case the original member dies or
becomes incapable of entering into contractual relations.

This memorandum and the nominee’s consent to his nomination should be filed
to the Registrar of Companies along with an application of registration. Such
nominee can withdraw his name at any point of time by submission of requisite
applications to the Registrar. His nomination can also later be cancelled by the
member.

 MEMBERSHIP IN ONE PERSON COMPANIES

Only natural persons who are Indian citizens and residents are eligible to form a
one person company in India. The same condition applies to nominees of OPCs.
Further, such a natural person cannot be a member or nominee of more than one
OPC at any point of time.

It is important to note that only natural persons can become members of OPCs.
This does not happen in case of companies wherein companies themselves can
own shares and be members. Further, the law prohibits minors from being
members or nominees of OPCs.

 CONVERSION OF OPC’S INTO OTHER COMPANIES

Rules regulating the formation of one person companies expressly restrict


conversion of OPCs into Section 8 companies, i.e. companies that have
charitable objectives. OPCs also cannot voluntarily convert into other kinds of
companies until the expiry of two years from the date of their incorporation.

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 PRIVILEGES OF ONE PERSON COMPANIES

OPCs enjoy the following privileges and exemptions under the Companies Act:

 They do not have to hold annual general meetings.


 Their financial statements need not include cash flow statements.
 A company secretary is not required to sign annual returns; directors can
also do so.
 Provisions relating to independent directors do not apply to them.
 Their articles can provide for additional grounds for vacation of a
director’s office.
 Several provisions relating to meetings and quorum do not apply to them.
 They can pay more remuneration to directors than compared to other
companies.

 OPC and Its Formation

An OPC is incorporated as a private limited company, where there is only one


member and prohibition in regard to invitation to the public for subscription of
the securities of the company.

An OPC can be form:

Company limited by shares

Company limited by guarantee.

 An OPC limited by shares shall comply with following requirements :


o Shall have minimum [paid up capital of INR 1 Lac
o Restricts the right to transfer its shares

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o Prohibits any invitations to public to subscribe for the securities of
the company.
 An OPC is required to give a legal identity by specifying a name under
which the activities of the business could be carried on. The words ‘One
Person Company’ should be mentioned below the name of the company,
wherever the name is affixed, used or engraved.
 The member of an OPC has to nominate a nominee with the nominees’
written consent, and file it with the Registrar of Companies (RoC). This
nominee in the event of death or in event of any other incapacity shall
become a member of an OPC. The member of an OPC at any time can
change the name of the nominee providing a notice to the RoC in such
manner as prescribed. On account of Death of a member, the nominee is
automatically entitled for all shares and liabilities of OPC.

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EXEMPTIONS AVAILABLE TO OPC
OPC has certain privileges which are not available to the Private limited
companies. These are as follows:-

a) Signatures on annual returns- Section 92 of the Companies Act 2013-


It is provided in the Section 92 of the Companies Act provides that annual
return in case of one person company shall be signed by the Secretary of
the company and in case there is no company then by the director of the
company.
b) Holding annual general meetings Section 122 of the Companies Act
2013 –
Section 122 of the Companies Act 2013 provides that the provisions of
section 98,100 to 111 are not applicable to One Person Company.
Therefore, provisions relating to General Meetings, Extra Ordinary
General Meeting and Notice Convening to General Meeting are not
applicable to One Person Company. However, for fulfilling the purposes
of S.114 of the Companies Act,2013, where any business is required to be
transacted at an Annual General Meeting, or other General Meeting of the
company by means of an ordinary or special resolution, it shall be sufficient
if the resolution is communicated by the member of the company and
entered in the minutes book which is required to be maintained U/s 118
and signed and dated by the member and such date shall be deemed to be
the date of meeting under the purposes of Companies Act,2013.
c) Board Meetings and Directors – Section149, 152 & 173 of the Act
One Person Company needs to have one director. It can have maximum of
15 directors which can also be increased by passing a special resolution as
in case of any other company.

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For the purposes of holding board meetings, in case of a OPC which has only
One director, it shall be sufficient compliance if all resolutions required to be
passed by such a company at a board meeting are entered in a minute book –
signed and dated by the member and such date shall be deemed to have the
date of the board meeting for all the purposes under Companies Act, 2013.

 Signatures on Financial Statements - Section 134 and 137 of


the Act. The OPC shall file with the RoC a copy of financial statements
duly adopted by its members along with all the documents which are
required to be attached to such financial statement, within 180 days from
the closure of the financial year along with cash flow statements. The
financial statement shall be signed by only one director and the annual
return shall be signed by the company secretary and the director, and in
case if there is no company secretary then only by the director.

 Contracts by One Person Company – Section 193 of the Act.

The new Companies Act, 2013 gives special attention to the contracts which
will be entered by One Person Company. If the company fails to comply with
the provisions as to providing the information to the RoC then it shall be liable
for punishment of fine which will be not less than twenty thousand rupees and
extend to one lakh rupees and the imprisonment for a term which may extend
up to 6 months.

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 Impact of OPC in India

As the concept of OPC is very new in India, it will take time for OPC to work
with efficiency. But when the time will pass OPC will come up with a sparkling
future and it will be the most successful business concept. The reason behind this
is that one person can form a company without any shareholder if the member is
willing to add shareholders; all he needs to do is to modify the Memorandum of
Association and file it before Roc. Small entrepreneurs will grow in Indian
entrepreneurship, be it weaver, traders, artisans, small to mid level entrepreneurs,
OPC is a bright future for them to grow and to get recognition globally. Foreign
Investors will be dealing with one member to establish a corporate relationship
and not with a score of shareholders/directors where there are more chances for
disparity in Ideas, concepts etc for a business to grow. Any foreign company who
wishes to establish in India through an Investment, through a merger or through
a Joint venture will have to just lock the deal with the member of an OPC, and
the venture will be expected to start sooner with more effective results. In
upcoming years the impact of an OPC will be remarkable and it is a promising
future for Indian Entrepreneurship. Expectedly, there will be good Foreign
Investments, Joint Ventures, and Mergers etc. An OPC is doing well in European
Countries, In United States, and Australia the same is resulting in strengthening
the economy of the countries. In India when the expert committee of Dr. JJ Irani
proposed the concept of an OPC, it was solely aimed for the structured organized
business, with a different legal entity altogether and to organize the private sector
of the entrepreneurship, which indeed is expected to be done, along with a
significant growth in Indian Economy benefiting the country on the Global Level.

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CONCLUSION
Thus, I would like to conclude by saying that limited liability of OPC shall
encourage many traders or sole proprietor to come up with new companies. There
will be less chance of frauds and misrepresentation as there will be one member
only. It will be helpful economically also for India as it many weavers, traders
will come up with Company as they will be able to work as entrepreneur.

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Bibliography

 Singh Avtar, Company Law, Allahabad Law Agency


 www.Indiankanoon.com
 www.Indiacode.com

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