One Person Company (OPC)

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The revolutionary new concept of 'One Person Company' (OPC) has been introduced by the Companies Act, 2013. This concept of OPC was first recommended by the expert committee of Dr. JJ Irani in 2005.

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.

Though the concept of OPC is new in India but it is a very successful form of business in UK and several European countries since a very long time now.

Section 2 sub-section 62 of companies’ act 2013 defines one person company as a company which has only one person as a member.

Q. Who can incorporate one person company?

Þ Only "NATURALLY-BORN" Indian who is also a resident of India is eligible to incorporate an OPC.

Meaning thereby, the advantages of an OPC can only be obtained by those INDIANs who are naturally born and also a resident of India. At the same, it shall also be worth mentioning that a person cannot form more than 5 OPC's.

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.

Q. What are the salient features of one Person Company?

Þ The concept of ‘One Person Company’ may be introduced in the Act with following characteristics:-

a) OPC may be registered as a private Company with one member and may also have at least one director;

 b) Adequate safeguards in case of death/disability of the sole person should be provided 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.

c) Letters ‘OPC’ to be suffixed with the name of One Person Companies to distinguish it from other companies;

 Q. In which category OPC can be formed or registered?

           Section 3 classifies OPC as a Private Company for all the legal purposes with only one member. All the provisions related to the private company are applicable to an OPC, unless otherwise expressly excluded.

Þ       An OPC can be formed under any of below categories:

•  Company limited by guarantee.
•  Company limited by shares

           An OPC limited by shares shall comply with following requirements:

•  Shall have minimum paid up capital of INR 1 Lakh.
•  Restricts the right to transfer its shares.
•  Prohibits any invitations to public to subscribe for the securities of the company.

Q. What are the relaxations that OPC can only enjoy?

Þ Companies act 2013 provides additional relaxation or flexibility to one person companies. Some of them are enlisted as under.

1.      OPC should have one minimum director. It can have maximum numbers of directors up to 15 which can also be increased above by passing special resolution.

2.      Where an OPC has only 1 director, the date on which the resolution is signed and dated by such director is considered as the date of the board meeting.

3.      Provisions of board meeting, quorum and interest director shall not apply to OPC.

4.      OPC need not hold an AGM.

5.      Provisions relating to notice, explanatory statement, EGM, quorum, voting, chairman, poll, proxies, postal ballot.

6.      NCLT’s power of calling for EGM does not apply to OPC.

7.      Financial Statements can be signed by only one director

8.      Financial Statements are to be filed with ROC within 180 days from the end of FY. It should be signed by company secretary and in case there is no company secretary it can be signed by director.

9.      OPC can contract with the sole member who is a director

Q. what will be the consequences of failing to comply with the provisions?

ÞIf 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 upto 6 months.