Presention on
One Person Company ( OPC)
As Per Companies Act, 2013
index
Introduction
Genesis and Global Devlopment
Defination of one person company
Special features of one person company
Privileges to OPC
Incorporation of OPC
Conversion of OPC to Pvt./Public and vice-versa
Few Compliance required to be followed by OPC
Benefits & Limitation
conclusion
intoduction
The introduction of OPC in the legal system is a move that would
encourage corporatization od micro business and entrepreneurship with a
simpler legal regime so that the small enteroreneur is not compelled to
devote considerable time, energy and resources on complex lega
compliances.
With the implementation of the companies Act, 2013, a single national
person can constitute a company, under the one person company (OPC)
consept.
Genesis and global development
One person companies are in existence in certain countries. In India this
consept has been mooted by the Ministry of Coprorate Affairs by allowing
One Person Companies in India in kine with UK, China, USA, Australia,
Singapore, Qatar, Pakistan and several other countries.
It is aright thinking in right direction by the Ministry of Affairs. One
Person Companies have been in existence in UK for several years now.
China allowed formation of OPCs as recent as in 2005. A few other
countries have also given the legal status for OPCs.
Defination as per companies act, 2013
Clause 2(62) defines a OPC as “a company which has only one person
as a member.”
Defference between OPC and Sole proprietorship :
opc sole proprietorship
Owner & Entity are same
Separate Legal Entity
personality
Limited Liability Unlimited Liability
Perpetual succession No Perpetual succession
Loan not the sole responsibility of Loan- sole responsibility of the
the owner owner
Registration required Registration not required
The salient features of opc
Separate Ledal Entity
Incorporated as a private limited company
Must have only one member/shareholder
Should indicate nominee member in the MOA, who shall become member in the
event of death/incapacity of sole member.
The member and nominee should be natural person, Indian Citizen and resident in
India.
One person cannot incorporate more than one OPC.
The salient features of opc
No minor shall become member or nominee.
OPC cannot be incorporated/converted u/s. 8
(i.e. Dormation of companies with charitableobjects)
OPC cannot carry out Non Banking Financial Investment activities.
OPC loss its status if paid capital exceeds Rs. 50 lakhs or average annual turnover is more
than 2 crores in 3 immediate preceding consecutive years.
OPC is required to specifically mention the word “one person company” below the name
wherever it is used.
(i.e. : Vijay Corporate Solution OPC Private Limited)
Privileges available to opc
Limited Liability
Easy Incorporation & conversion procedure
Mandatory rotation of auditors not applicable.
The annual return of a OPC signed by the company secretary (C.S.), or where
there is no (C.S.) , by the director of the company.
The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to
holding of general meetings, shall not apply to a OPC.
Must have at least one director and conduct board meeting once within each half
of the calendar year
Privileges available to opc
No Annual General meeting is required, it shall be sufficient if the
resolution is communicated by the member to the company and entered in
the minutes-book, which will be signed and dated by the member.
{Sec.96(1)&122(3)}
No Board meeting is required, when there is one director, if the resolution
by such director is entered in the minutes-book and signed and dated by
such director.
Financial statements can be signed by one director alone.
Cash Flow statement is not mandatory. {Sec.2(40)}
Incorporation of opc
Obtain Digital Signature Certificate [DSC] for the proposed Director(s)
Obtain Director Identification Number [DIN] for the proposed director(s)
Select suitable Company Name, and make an application Form INC -1 to the
Ministry of Corporate Affairs for availability of name
Draft Memorandum of Association and Articles of Association [MOA & AOA]
Sign and file various documents including MOA & AOA with the Registrar
of Companies electronically
Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty
Scrutiny of documents at Registrar of Companies [ROC]
Receipt of Certificate of Registration/Incorporation from ROC
conversion
Conversion from private to opc
Average Annual If, any Paid up Capital
Turnover* Rs. 2 conditions Rs. 50 lakhs or
cr. Or less. fulfilled. less.
Obtain ‘NoObjection’ inwriting from Members & Creditors.
Pass a special resolution In the general meeting.
File copy of the special resolution with the R.O.C. in Form No. M.G.T . 14 within 30 days from the
date of passing such resolution.
File an application in Form [Link].6 for its conversion into One Person Company a long required
documents.
On being satisfied the ROC shall issue the certificate.
Conversion from opc to pvt. Ltd/public ltd
(mandatory)
Average Annual If, any Paid up
Turnover* > Conditios Capital > Rs.
Rs. 2 cr. fulfilled. 50 lakhs
OPC convert itself, within 6 months from fulfillment of any of the above conditions, into
either a Private or Public company inaccordancewiththeprovisionsofsection18oftheAct.
1. Alter its memorandum and articles by passing a resolution inaccordancewithsub-
section(3)ofsection122oftheAct.
2. File form No. INC – 5 to ROC, within 60 days from the date ofexceedingtheabovelimit.
Few compliance
Directors {Sec. 152(1), 149(1)a & (1)b}
Annual Return (sec. 92)
Financial statement, Board’s report, etc.(Sec. 134)
Copy of Financial statement to be filled with Registrars.
Meetings of Board (Sec. 173)
Appointment of directors (Sec. 152)
Contract by one person company (Sec. 193)
benefits
Limited Liability Protection to Directors and Shareholder.
Legal Status & Social Recognition
Complete Control Of The Company With The Single Owner
Helps for Testing of business model and enables Funding.
Easy to Get Loan from Banks.
Easy To Manage and Freedom Compliances.
Limitation of opc
Minimum authorized share capital of Rs.1lakh is required.
Incorporation cost is high, requires more paper work and time
consuming.
Tax rate: 30 %, and also applicability of Minimum alternate tax and
Dividend Distribution tax.
Professiona llike CA or CS’s help is required.
Company Audit and Annual compliance to ROC.
conclusion
The concept of OPC is still in its nascent stages in India and would
require some more time to mature and to be fully accepted by the
business world. With passage of time, the OPC mode of business
organization is all set to become the most preferred form of business
organization specially for small entrepreneurs.
The One Person Company concept holds a bright future for small
traders, entrepreneurs with low risk taking capacity, artisans and
other service providers.
Conclusion
An OPC as a business structure doesn’t seem efficient from tax
perspective as an OPC would be treated as a company and be
subject to a higher rate of tax compared to a Sole Proprietorship.
Since an OPC is a company, there would be an incidence of tax
(dividend distribution tax) while distribution of dividend.
It would be premature to comment on the success or failure of this
new business model just yet, as it is yet to be put to test. It remains
to be seen if OPC would become popular business model for
entrepreneurs wanting to go it alone.
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