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ONE PERSON COMPANY (OPC)

COMPANIES ACT, 2013 Passed in Lok Sabha on 18th December, 2012 Passed in Rajya Sabha on 8th August, 2013 Received Ascent of President 29th August, 2013. The act has 470 clauses and 7 schedules as against 658 Sections and 15 schedules in the existing Companies Act, 1956. The entire act has been divided into 29 chapters.

INTRODUCTION
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. This will not only enable individual capabilities to contribute economic growth, but also generate employment opportunity. One Person Company of sole-proprietor and company form of business has been provided with concessional /relaxed requirements under the Companies Act; 2013.With the implementation of the Companies Act, 2013, a single national person can constitute a Company, under the One Person Company (OPC) concept.

DEFINITION
As per provision of section 2(62) of the Companies Act, 2013 defined (62) “one person company” means a company which has only one person as member.

FORMATION OF OPC [Rule 3]
·         Only a natural person who is an Indian citizen and resident in India­­-
–       shall be eligible to incorporate a One Person Company;
–       shall be a nominee for the sole member of a One Person Company.
The term “resident in India” means a person who has stayed in India for a period of not less 182 days immediately proceeding one calendar year.

STAGES OF INCORPORATION OF OPC

·         Name reservation: Form INC-1 shall be filed for name availability.
·         Incorporate OPC: After name approval, form INC-2 shall be filed for incorporation of the OPC within 60 days of filing form INC-1.
·         Form DIR-12 shall be filed along with (linked) form INC-2 except when promoter is the sole director of the OPC.
·         The company shall file form INC-22 within 30 days once form INC-2 is registered in case the address of correspondence and registered office address are not same.

SALIENT FEATURES OF OPC
·         One person cannot incorporate more than one OPC or become nominee in more than one OPC.
·         No minor shall become member or nominee of the One Person Company or hold share with beneficial interest.
·         No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
·         It must have only one member at any point of time and may have only one director.

 PRIVILEGES AVAILABLE TO OPC
·         The most significant reason for shareholders to incorporate the ‘single-person company’ is certainly the desire for the limited liability.
·         Businesses currently run under the proprietorship model could get converted into OPCs without any difficulty.
·         Mandatory rotation of auditor after expiry of maximum term is not applicable.
·         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.
·         The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general meetings, shall not apply to a One Person Company.
·         Minimum authorized share capital required for One Person Company having share capital is Rs. 1,00,000/-.
·         Minimum and maximum number of members for One Person Company is one only.

PROHIBITED ACTIVITIES
·         Such Company cannot be incorporate or converted into a company under section 8 of the Act.
·         Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporate.

ONE PERSON COMPANY TO CONVERT ITSELF INTO A PUBLIC COMPANY OR A PRIVATE COMPANY IN CERTAIN CASES (RULE 6)

1. Compulsory conversion of OPC
·         Where the paid up share capital of an One Person Company exceeds Rs. 50 lacs or its average annual turnover exceeds Rs. 2 crores immediately preceding three consecutive financial year;
·         Such OPC shall required to convert itself, into either private company or public company in accordance with the provision of section 18 of the Act within 6 month of the date as mention above.
·         The OPC shall alter its memorandum and articles by passing a resolution in accordance with section 122(3) of the Act to give effect to the conversion and to make necessary changes incidental thereto;
·         The OPC shall within period of sixty days from the date of applicability of above provisions, give a notice to the Registrar in Form No. INC. 5informing that it has ceased to be a OPC and that it is now required to convert itself into a private company by virtue of its paid up share capital or average annual turnover, having exceeded the threshold limit laid down above.

2. Voluntary conversion of OPC
·         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 by maintaining the minimum paid up capital as per requirements of the Act for such class of company and by making due compliance of section 18 of the Act for conversion.

CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY [RULE 7]
·         A Private company other than a company registered under section 8 of the Act having paid up share capital upto Rs. 50 lacs or average annual turnover during the relevant period upto Rs. 2 crore may convert itself into One Person Company by passing a special resolution in general meeting.
·         Before passing such resolution the company shall obtain No Objection in writing from members and creditors.
·         The one person company shall file copy of the special resolution with the Registrar of companies (ROC) within 30 days from the date of passing such resolution in Form No. MGT 14.
·         The Company shall file an application in Form No. INC. 6 for its conversion into One Person Company along with fees specified, by attaching following documents, namely:-
–       the directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital of the company is Rs. 50 lacs or less or average annual turnover is less than Rs. 2 crore or less, as the case may be;
–       the list of members and list of creditors;
–       the latest Audited Balance Sheet and the Profit and Loss Account; and
–       the copy of No Objection letter of secured creditors.
·         On being satisfied and compiled with requirements stated herein the Registrar shall issue the Certificate.


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