Meaning of One Person Company (OPC)
Earlier under the Companies Act, 1956, we need to have at least seven persons to form a public company and two persons to form a private limited company. There was no concept of One Person Company. The concept of One Person Company [OPC] is a new form of business, introduced by The Companies Act, 2013, thereby enabling Entrepreneur carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework.
One Person Company is a mixture of Sole-Proprietor and Company form of business and has been provided with concessional requirements under the Act. The introduction of OPC in the legal system is a move that would encourage corporatization of micro businesses and entrepreneurship with a simpler legal regime so that the small entrepreneur is not compelled to devote considerable time, energy and resources on complex legal compliances. One person companies are in existence in certain countries.
Features of One Person Company
- Only One Shareholder:- Only a natural person, who is a citizen of India, can incorporate a one person company. The term resident in India means a person who has stayed in India for a period of 182 days or more during the immediately preceding one calendar year.
- Director:- A one person company can have a minimum of one director, the sole shareholder can himself be the sole director. The company can have a maximum of 15 directors.
- Nominee for the shareholder:- The memorandum of OPC shall indicate the name of the other person who has given his consent in the prescribed form (INC 3) to be so named and who shall, in the event of the member becoming incapacitated due to death or incapacity to contract, become the member of the company. The written consent of such other person shall also be filed along with the incorporation documents while forming OPC.
- Not more than one OPC per person:- A person is allowed to incorporate only one OPC and a person cannot become nominee in more than one OPC.
Nominee in case of One Person Company
To ensure that the one person company remains alive even after the death or incapacity of contract of the sole member, Companies Act, 2013, has made it mandatory that the sole member has to indicate the name of another person, who will become the member in the case of death or incapacity to contract of sole member i.e. nominee shareholder in the MOA.
Written consent of the other person in the prescribed form i.e. INC 3 should be taken. INC 3 has to be filed up electronically by downloading it from MCA site. After check form, if everything found to be correct then take a printout of the form and sign it before attaching it to form INC 2. Along with form INC 3, Documentary proof of the nominee shareholder i.e. PAN card, Identity proof, and the residential proof is also required to be filed. Only an Indian citizen who is resident in India can become a nominee in one person company.
Change of Nominee by the Sole Owner
If the sole member or one Person Company or the person who has created one person company wants to change the name of the person nominated by him/her for any reason then they can do so by intimating it to the one person company along with written consent of new nominee shareholder in the form INC 3. Documentary proofs of the new nominee shall also be filed along with the form INC 3. The company is also required to file e-form INC 4 with written consent of new nominee shareholder in form INC 3 along with required attachments within 30 days of receipt of intimation of the change.
Change of Nominee in case nominee has withdrawn his/her consent
If the nominee shareholder who has given his/her written consent at the time of incorporation of the company, wants to withdraw his/her consent he/she can do so by intimating it to the sole member and to the one person company. After receiving such consent for withdrawal, the sole member shall nominate another person as the nominee shareholder within 15 days of receiving the notice of withdrawal of consent. At the same time, the sole member is also required to intimate the same in writing to the one person company along with the written consent of the new nominee in form INC 3 and documentary proof of PAN Card, Identity card and residential address of the new nominee.
On receipt of the notice of withdrawal, the one person company shall file the withdrawal of consent and the intimation of the name of another person nominated by the sole member in form INC 4 along with consent of new nominee in form INC 3 and fees as provided in the companies (registration offices and fees) Rules, 2014.
Documentary proofs of nominee such as PAN Card, identity proof, and the residential proof is required to be filed along with form INC 4.