PROJECT 1ON ONE PERSON COMPANY

-: Project on:-
One Person Company (OPC)

Submitted to Shyamtanu Pal Sir,

(Faculty Member in Corporate Law)

Submitted by: Ravi Tiwari

Semester: V, Section- C, Roll Number-127

B.A -LL.B

Submitted On: 08.10.2015

Hidayattullah National Law University

Uparwara Post, Abhanpur, New Raipur- 493661 (C.G.)

ACKNOWLEDGEMENT

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I feel highly elated to work on the topic of One person company, because it has significant
importance in the study of how concept of private OPC has evolved and also the history
behind the same, it also emphasis on which has played a significant role in concept of OPC,
the practical realization of this project has obligated the assistance of many persons. I think
my project would be helpful in telling about the basic and historical development of Human
rights around the world.

I would like to thank my family and friends without whose support and encouragement, this
project would not have been a reality.

I take this opportunity to also thank the University and the Vice Chancellor Sir for providing
extensive database resources in the Library and through Internet.

I would be grateful to receive comments and suggestions to further improve this project
report.

Thanking You!

Yours Obediently,

Ravi Tiwari

(SECTION- C, SEMESTER-V, ROLL NO-127)

TABLE OF CONTENTS

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Seria Topics Page No.

l No.
1. Acknowledgment 1
2. Abbreviations 3
4
3. Chapter I- Introduction to research Methodology 5
4. Review Of literature 6
5. Research Methodology 7
6. Research Problem 8
7. Objective 9
8. Hypothesis 10
9. Research Question 11
10. Chapter II- History of Development of one person company 12-13

11. Chapter III- features of one person company 14

12. Chapter IV- Procedure for formation of OPC 15-16

13. Conclusion 23
14. Bibliography 24

ABBREVIATIONS

& And

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Anr. Another

Art. Article

Ed. Edition

P. PageNumber

Para Paragraph

Ors.Others

OPCOnepersoncompany

Chapter I- Introduction to Research Methodology

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One person company is a new concept in India which has been introduced by the
companies act 2013. In the old Companies act 1956 a minimum of two directors and
shareholders were required to form a private limited company.

India, in pursuit of strong economic growth, has introduced one person companies in the
latest piece of legislation to tap the latent entrepreneurial talent by providing them
limited liability. To warn stakeholders of the nature of these companies, the new act
requires them to suffix their names with OPC in brackets.

Rules proposed under the new act for one person companies limit their size to Rs 50 lakh
in capital and a turnover of Rs 200 lakh.

As per Section 2(62) of the Companies Act 2013, One Person Company means a
company which has only one person as a member.

REVIEW OF LITERATURE

1) Ghosh T.P., Companies Act, 2013 ,Tan Prints (India) Pvt Ltd., Haryana-

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This book states the Prons and cons of one person company, limited liability,
automatic succession, Tax implications, trust factor, and compliance cost. An OPC
would have to file annual returns etc just like a
normal company and would also need to get its accounts audited in the same manner.

2) TAXMANNS, A comparative study of Companies act 2013 & Companies act,

1956 , 2014, Tan Prints (India) Pvt Ltd., Haryana -

This book gives a brief history about OPC came into existence, explain meaning and define
it as section 2(62) states , One Person Company means a company which has only one person
as a member. And also different relaxations avaiable to OPCs, like no need to prepare cash
flow statetment.

RESEARCH METHODOLOGY

This research is descriptive and analytical in nature. Secondary and Electronic resources
have been largely used to gather information about the topic.

Websites, books, journals and articles have been primarily helpful in giving this project a
firm structure. Footnotes have been provided wherever needed to acknowledge the
source.

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The material related to the research question has been analysis from several and different
cases; it has not been a lot related to present legislature of 2013, as the term has evolved
is young.

RESEARCH PROBLEM

The main question in mind of researcher is to address

1) Development of one person company

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2) Its connection to the 2013 Act

3) Main features of OPCs.
4) Procedure for formation of OPCs
5) Provision in relation to One person company in the act

OBJECTIVE

To discuss the history of emergence of one person company.

To analyze the various aspects like essential, provision etc of OPCs.

To understand features and procedure of OPCs.

HYPOTHESIS

In this research the researcher might discuss the nature of the research which covers and
related to One person company, basically OPCs means One Person Company means a
company which has only one person as a member specified in section 2(62).

The concept of One Person Company [OPC] is a new vehicle/form of business, introduced by
The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the

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business in the Sole-Proprietor form of business to enter into a Corporate Framework.

One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has
been provided with concessional/relaxed requirements under the Act.

So basics we dealt here becuase till now it is not clear and introduce the concept only.

RESEARCH QUESTION

1. Has there been new introduction of OPCs its need?

2. Has Formation of OPCs?
3. Is there any other essentials important to discuss?

Chapter II- Development of one person company

The concept of One Person Company [OPC] is a new vehicle/form of business, introduced by
The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the
business in the Sole-Proprietor form of business to enter into a Corporate Framework.
One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has
been provided with concessional/relaxed requirements under the Act1.

1 http://www.onepersoncompany.in/

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A new concept of 'One Person Company' has been introduced in India for the first time
through the Companies Act 2013. Seen in historical perspective, it is a radical change.
Originally, a company as a distinct form of business organization emerged from the need to
pool resources for undertaking large ventures that were not feasible for one individual or a
small group of individuals to finance. The word company is derived from the Latin word
compagnia and is made up of the two words cum meaning together and panis meaning bread;
it represents a family sharing a common fortune. Seen in etymological context, therefore, the
concept of a One Person Company appears counterintuitive and an oxymoron.

An Entrepreneur is an individual who chooses to go into business by himself. Often

entrepreneur decide to stay a One Person to keep decisions and quality of work under control.
The global changes given a chance to an individual to participate into economic activity and
these activities may take place through the creation of an economic person by the company
law.

With increasing use of information technology and computers, emergence of the service
sector, it is the time that the entrepreneurial capabilities of the people are given an outlet for
participation in economic activity; such economic activity may take place through the
creation of an economic person in the form of a Company.

Background

On 2nd December 2004, the Government of India constituted an Expert Committee on

Company Law under the Chairmanship of Dr. J.J Irani to make recommendations on various
Company Law issues2.

2 http://taxguru.in/company-law/person-company-highlight.html

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The Irani expert committee recommended the formation of One Person Company (OPC)
for the very first time in the Indian History in the year 2005. The committee has suggested
that such an entity may be provided with the simpler legal regime through exemptions so that
the single entrepreneur is not compelled to fritter away time, energy, and resources on
procedural matters.

The concept of One Person Company (OPC) is a new form of business introduced by
theCompanies Act 2013 thereby enabling Entrepreneur(s) carrying on the business in the sole
proprietor form of business to enter into a corporate framework.

In simple words we may say that One Person Company is a hybrid of Sole proprietor and
Company form of business, and has been provided with concessional / relaxed requirements
under the Act.

A one person company is a paradigm shift in the Indian corporate regime, bringing it at par
with global standards,

Meaning

As the name suggests, a One Person Company is a form of private company with separate
legal entity which 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.

Definition

As per Section 2(62) of the Companies Act 2013, One Person Company means a company
which has only one person as a member3.

3 TAXMANNS (2014). A comparative study of Companies act 2013 & Companies act, 1956 . Tan Prints (India) Pvt Ltd.,
Haryana ISBN 98-93-5071-321-1

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Chapter III- Procedure of formation of OPCs

Procedure for the formation of One Person Company4

1 Obtain Digital Signature Certificate (DSC) for the proposed director(s).

2 Obtain Director Identification Number (DIN) for the proposed director(s).

3 Select suitable company name and make application in FORM INC-1 to the Ministry
of Corporate Office for availability of name.

4 After approval of name, FORM INC-2 shall be filed for incorporation of One Person
Company within 60 days of filing FORM INC-1.

5 Draft Memorandum of Association and Articles of Association.

6 Sign and file various documents including Memorandum of Association and Articles of
Association with the Registrar of Companies electronically.

7 Payment of requisite fee to Ministry of Corporate Affairs and also stamp duty.

8 Scrutiny of documents by the Registrar of Companies.

4 http://taxguru.in/company-law/person-company-highlight.html

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9 Receipt of Certificate of Registration or Incorporation from the Registrar of Companies.

10 Enjoy the status of One Person Company.

RElAXATIONS5

1) No need to prepare cash flow statement.[section 2(40)]

2) Annual return can be signed by director not necessary by company secretary(section

92)

3) There is no necessity for an annual gerenal meeting (section 96)

4) Financial statements can be filed within six months from close of financial year as
against 30 days (section 37)

Chapter IV- Fetures of one person company

Salient Features of One Person Company (OPC)6

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

o It has only One Person as a member / share holder.

5 TAXMANNS (2014). A comparative study of Companies act 2013 & Companies act, 1956 . Tan Prints (India) Pvt Ltd.,
Haryana ISBN 98-93-5071-321-1

6 http://taxguru.in/company-law/person-company-highlight.html

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o It must have a minimum of one director, the sole shareholder can himself be the sole
Director. The company may have a maximum of Fifteen Directors.

o 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.

o The minimum paid up share capital is ` 1 Lakh.

o The word One Person Company must be mention in brackets below the name of the
company to distinguish it from other forms of companies.

o It need not to hold any Annual General Meeting (AGM) in every year.

o The provision regarding calling of an extra ordinary general meeting by the board or
tribunal do not apply to One Person Company.

o All provisions regarding Annual General Meetings like notice period, contents of notice,
explanatory statement, quorum requirements, proxies, voting etc. do not apply to One
Person Company.

o The Memorandum of One Person Company shall indicate the name of the other
person/nominee, who shall, in the event of the subscribers death or his incapability to

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contract become the member of the company, till the date of transmission of shares to
legal heirs.

o The written consent shall be filed with the Registrar at the time of Incorporation of the
One Person Company along with its Memorandum of Association & Articles of
Association.

o The nominee/other person can withdraw his consent at any time.

o The nominee may be change at any time, by notice to the other person & intimate the
same to the company. Then the company should intimate the same to the Registrar.

o The Financial Statements of a One Person Company consist of The Profit & Loss
Account, Balance Sheet, Notes to Account. The Cash Flow Statement may not include in
the Financial Statements.

o Only one director is sufficient to sign the Financial Statements / Directors Report.

o One Person Company should file the copy of the financial statements with Registrar with
in a period of 180 days from the closure of Financial Year.

o The Annual return of a One Person Company shall be signed by the Company Secretary,
or where there is no Company Secretary, by the director of the company.

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o It should inform to the Registrar about every contract entered and also should record in the
minutes of the meeting within 15 days from the date of approval by the Board of
Directors.

o A person shall not be eligible to incorporate more than One Person Company or become
nominee in more than one such company.

o A minor cannot become a member or nominee of the One Person Company or can hold
share with beneficial interest.

o One Person Company cannot carry out NON Banking Financial Investment activities
including investment in securities of anybody corporate.

o All the businesses to be transacted at the meeting of the Board shall be entered into
minutes book maintained under section 118.

o One Person Company cannot voluntarily converted into any kind of company unless two
years have been expired from the date of incorporation except in case its paid up share
capital exceeds ` 50 Lakhs or its average turnover during the relevant period exceeds ` 2
Crores.

Important features are7

7 http://www.onepersoncompany.in/

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1. Only One Shareholder:

Only a natural person, who is an Indian citizen and resident in India shall be eligible
to incorporate a One Person Company. Explanation: The term "Resident in India"
means a person who has stayed in India for a period of not less than 182 days during
the immediately preceding one calendar year.

2.. Nominee for the Shareholder:

The Shareholder shall nominate another person who shall become the shareholders in
case of death/incapacity of the original shareholder. Such nominee shall give his/her
consent and such consent for being appointed as the Nominee for the sole
Shareholder. Only a natural person, who is an Indian citizen and resident in India
shall be a nominee for the sole member of a One Person Company.

3.. Director:
Must have a minimum of One Director, the Sole Shareholder can himself be the Sole
Director. The Company may have a maximum number of 15 directors.

CONCLUSION

From the above discussion now we clear with development of one person company and its
inclusio in company act 2013, its meaning and concept. Features of OPCs and procedure for
formation of one person company.however, look at the rationale behind this introduction.
Since time immemorial borrowing has been considered a risky, dangerous job everywhere in
the world. If a loan was not repaid, the lenders had draconian rights.If the business is unable
to pay its liabilities, the individual has to pay such liabilities off in the case of sole
proprietorship; and the individual is not responsible for such liabilities in the case of a one
person company.

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BIBLIOGRAPHY

Ghosh T.P.(2013). Companies Act, 2013 .Tan Prints (India) Pvt Ltd., Haryana ISBN
978-93-5071-344-0

TAXMANNS (2014). A comparative study of Companies act 2013 & Companies

act, 1956 . Tan Prints (India) Pvt Ltd., Haryana ISBN 98-93-5071-321-1

**********

Thank You

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