SYNOPSIS

OF

COMPANY LAW

TOPIC: PRIVATE COMPANY VIS-À-VIS ONE PERSON COMPANY, AND IT’S

PRIVILEGES AND EXEMPTIONS

SUBMITTED BY: SYED RENOBA NISAR

ENROLLMENT NO.: GU17R0389 (5TH SEMESTER)

SUBMITTED TO: PROF. MS ALQAMA ANSARI

GLOCAL LAW SCHOOL

  TITLE:

“PRIVATE COMPANY VIS-À-VIS ONE PERSON COMPANY, IT’S PRIVILEGES AND

EXEMPTIONS”.

 OBJECTIVE OF STUDY:
 To discuss the history of emergence of private company and one person company
 To analyze the various aspects like essential, provisions, privileges and exemptions of
Private and One Person companies.

 RESEARCH PROBLEM:

The main question to address

1) Evolution of One Person Company under the Act.

2) Main features of Private Company and OPC.
3) Procedure for formation of Private Company vis-à-vis OPC.
4) Provisions in relation to Private Company and OPC.
5) Privileges and exemptions of Private Company and OPC.

 HYPOTHESIS:

In this research the researcher might discuss the nature of research which covers Private and One
person Company.

OPC is a hybrid of Sole-Proprietor and Company form of business and has been provided with
relaxed requirements under the Act.

A Private Company is the sole choice for startups or two persons who are planning to start the
company.
  RESEARCH METHODOLOGY:
 Method: the research is descriptive and analytical in nature.
 Sources of data: Secondary and Electronic resources have been used to gather
information about the topic.

Websites, books and articles have been primarily helpful in giving the project a firm structure.

Footnotes have been provided wherever needed to acknowledge the source.

 OVERVIEW:
1) AVTAR SINGH, COMPANY LAW, 17TH EDITION, EBC EXPLORER-
This book states the pros and cons of the Private and One Person Company. Formation
and features of these companies.

Explain meaning and define the companies as-

 Section 2(68) of Companies Act, 2013 defines private companies. According to that, private
companies are those companies whose articles of association restrict the transferability
of shares and prevent the public at large from subscribing to them. This is the basic criterion
that differentiates private companies from public companies.

The Section further says private companies can have a maximum of 200 members (except for One
Person Companies). This number does not include present and former employees who are also
members. Moreover, more than two persons who own shares jointly are treated as a single member.

This definition had previously prescribed a minimum paid-up share capital of Rs. 1lakh for private
companies, but an amendment in 2005 removed this requirement. Private companies can now have
a minimum paid-up capital of any amount.

 Section 2(62) of Companies Act defines a one-person company as a company that has only
one person as to its member.
An OPC would have to file annual returns etc just like a normal company and would also need to
get its accounts audited in same manner.

 CHAPTER SCHEME:

INTRODUCTION TO RESEARCH METHODOLOGY:

 Private company: 2013 Act introduced a change in its definition.

 Rules proposed under the new Act for Private Company increases the limit of number of
members from 50 to 200.
 One Person Company (OPC) is a new concept in India which has been introduced by the
Companies Act 2013.
 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 on brackets.
 Rules proposed under the new Act for OPC’s limit their size to Rs 50lakh in capital and a
turnover of Rs 200lakh.
 As per S 2(62) of Companies Act 2013, OPC means a company which has only one
person as a member.

 BRIEF CONTENT:

PRIVATE COMPANY:

A private company is a very suitable device for carrying on the business of family and a small
scale concerns, as the minimum number of members required to form a private company is only
two[S. 2(68)]. A private company is defined in Section 3(1) (b).

Privileges and Exemptions:

 It can be formed only by two members.

 It can allot shares before the minimum subscription is subscribed for or paid.
 It can start its business immediately after incorporation.
  It need not obtain a certificate of commence business.
 It need not issue or file with the registrar a prospectus or a statement in lieu of prospectus.
 Restriction relating to further issue of capital is not applicable to private companies.
 A private company may issue share capital of any kind and with such voting rights as it
may think fit.
 It need not hold a statutory meeting and need not prepare a statutory report.
 Too persons personally present form the quorum of a meeting of a private company,
unless the articles provide for a large number.
 Poll can be demanded by one. If the number member present in a meeting is not more
than seven and by two persons, if more than seven members are present.
 The minimum number of directors in a private company is only two.
 A private company is not required to keep an index of members. As per rule, if the
number of members exceeds fifty, then the company has to keep an index (in a book or
set of books an alphabetical list of names) of a members, but its members limit is 50.
 Restriction on rights issue of shares i.e., issue of new shares applicable to a public
company are not applicable to a private company.

ONE PERSON COMPANY

As per S 2(62) of Companies Act 2013, OPC means a company which has only one person as a
member

Exemptions available to OPC

OPC has certain privileges which are not available to the Private limited companies. These are as
follows:-

a) Signatures on annual returns- Section 92 of the Companies Act 2013-

It is provided in the Section 92 of the Companies Act provides that annual return in case of
one person company shall be signed by the Secretary of the company and in case there is no
company then by the director of the company.
b) Holding annual general meetings Section 122 of the Companies Act 2013 –
 Section 122 of the Companies Act 2013 provides that the provisions of section 98,100 to
111 are not applicable to One Person Company. Therefore, provisions relating to General
Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are
not applicable to One Person Company. However, for fulfilling the purposes of S.114 of the
Companies Act, 2013, where any business is required to be transacted at an Annual General
Meeting, or other General Meeting of the company by means of an ordinary or special
resolution, it shall be sufficient if the resolution is communicated by the member of the
company and entered in the minutes book which is required to be maintained U/s 118 and
signed and dated by the member and such date shall be deemed to be the date of meeting
under the purposes of Companies Act,2013.
c) Board Meetings and Directors – Section149, 152 & 173 of the Act-
One Person Company needs to have one director. It can have maximum of 15 directors
which can also be increased by passing a special resolution as in case of any other company.
For the purposes of holding board meetings, in case of a OPC 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 a minute book – signed and dated by the member
and such date shall be deemed to have the date of the board meeting for all the purposes
under Companies Act, 2013.
d) Signatures on Financial Statements - Section 134 and 137 of the Act.
The OPC shall file with the RoC a copy of financial statements duly adopted by its members
along with all the documents which are required to be attached to such financial statement,
within 180 days from the closure of the financial year along with cash flow statements. The
financial statement shall be signed by only one director and the annual return shall be signed
by the company secretary and the director, and in case if there is no company secretary then
only by the director.