One Person Company - A new concept to be familiarized with

Greetings Folks,

“One Person Company” (abbreviated as OPC) is a new concept introduced u/s 2(62) of the Companies Act 2013. Such concept has been introduced so that those proprietors who wish to carry out their business in systematic manner can do so by incorporating a OPC. As the name suggests, a one person company is formed with only one person as its member. Since such companies have only one member, these companies enjoy certain privileges or exemptions as compared to other companies.

Salient Features:

a. A One Person Company can be incorporated as a private limited company only.

b. There can have only one member at any point of time.

c. OPC may have only one director.

d. The words “One Person Company” must be mentioned in brackets below the name of the company.

e. Exemption is available from holding Board Meetings (in case of only one director) and General Meetings.

Special Provisions and Exemptions available to a One Person Company:

Incorporation and related matters (Refer Sections 3, 4, 12)

a. An OPC is incorporated as a private limited company with only one person as its member.

b. The memorandum of OPC shall indicate the name of the other person, who shall, in the event of the member’s death or his incapacity to contract become the member of the company (known as nominee).

c. Prior written consent from the other person should be obtained and the consent should be filed with Registrar of Companies at the time of incorporation along with the memorandum and Articles.

d. Person is entitled to withdraw his consent and in that case member is required to nominate some other person.

e. Member of OPC may at any time change the name of such other person by indicating it in the memorandum or by giving notice in such manner as may be prescribed. Such change should be intimated to the company by the member and the company in turn will intimate to the Registrar.

f. Any such change in the name of the person shall not be deemed to be an alteration of the memorandum.

g. The words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

h. Only natural persons can become member of OPC.

Annual Return

(Refer Section 92)

The annual return of an OPC shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

General Meetings

(Refer Section 122)

a. The provisions of Section 98 and Sections 100 to 111, more specifically given below, shall not apply to a OPC.

b. Provisions regarding calling of an Extra-Ordinary General Meeting by the Board or Tribunal do not apply to a OPC.

c. All provisions regarding annual general meetings like notice period, contents of notice, explanatory statement, quorum requirements, proxies, voting etc. do not apply to a OPC.

d. It shall be sufficient compliance if all resolutions, ordinary or special, required to be passed by an OPC at any general meeting, are communicated by the member to the company and entered in the minutes book, signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.

Board of Directors and Board Meetings

(Refer Sections 149, 152 and 173):

a. A OPC needs to have minimum of one director. It can have directors up to a maximum of fifteen which can also be increased by passing a special resolution as in case of any other company.

b. If the Articles of Association do not contain the name of the first director, member of the one person company will be deemed to be the first director till the time director(s) is duly appointed by following provisions of law.

c. For the purposes of holding Board Meetings, in case of a one person Company 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 the minutes-book, signed and dated by the member and such date shall be deemed to be the date of the Board Meeting for all the purposes under this Act.

d. For other One Person Companies, atleast one Board Meeting must be held in each half of the calender year and the gap between the two meetings should not be less than ninety days.

Financial Statements

(Refer Sections 134 and 137)

a. The financial statements of a one person company can be signed by one director alone.

b. Board’s report to be annexed to financial statements may only contain explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.

c. Cash Flow Statement is not a mandatory part of financial statements for a One Person Company. [Section 2(40)]

d. Financial statements of a one person company needs to be filed with the Registrar, after they are duly adopted by the member, within 180 days of closure of financial year along with all necessary documents.

Contract by a One Person Company

(Refer Section 193):

In case a One Person Company enters into any contract, not in the ordinary course of business, with its sole member who is also a director, then such contract must:

- either be in writing, or

- entered in the Memorandum, or

- recorded in the minutes of the meeting held for the first time after entering of the contract

In case of any queries you may contact me on mahershi@akvassociate.com,

CA Mahershi Vijayvergia

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