The Companies Act, 2013 introduced a revolutionary concept, and since then, the thought has changed the way several companies do business. The concept is that of 1 Person Company (OPC), and it had been recommended in 2005, by a committee headed by Dr JJ Irani. the concept of OPCs was genuinely groundbreaking because it helped provide investors with a superb opportunity to require power into their own hands and gave them several benefits. It gave young entrepreneurs benefits that a standard Private company could avail, while, at the identical time, providing them with added tax and HR benefits.
Here’s a glance at everything you would like to understand about Person Companies and why they’re so useful.
Concept of One Person Company
As per Section 2(62) of the businesses Act, 2013, a 1 Person Company is defined as any company with only one member. Section 3 of the Act, also clarifies that an OPC are considered a non-public Company when it involves legal matters. Hence, all rules which must be held in situ for a personal company is additionally valid for an OPC. The lone exception to the existing law is that an OPC can only be formed by a “Natural Indian” living in India.. Also, another law states that one particular individual cannot create quite 5 OPCs in his or her name.
Formation and Features of the corporate
An OPC is made the identical way as a non-public company, with the sole difference being that it’s just one member and is prohibited from inviting members from the general public to be an element of it.
Features of an OPC are as follows:
An OPC is also formed as either of the two:
- Limited by Guarantee
- Limited by Shares
- If shares limit the OPC, then it should have an inside capital of a minimum of Rs 1 lakh and will have the ability to limit share transfers. it’ll also not be allowed to ask people to buy it.
- An OPC must have a legally registered name, under which it operates and therefore the term; One Person Company must be mentioned wherever the name of the corporate is employed.
- An OPC member must consent to the nomination of another and file the nominee’s name with the Registrar of Companies.
- If the founding member dies or is forced to resign due to unforeseen circumstances, this nominee will lead the OPC. By contacting the Registrar of Companies, the member can change the name of the nominee whenever he or she wants. If a member dies while in office, all of the OPC’s assets and liabilities are automatically transferred to the nominee.
Exemptions Available for One Person Company
An OPC enjoys several privileges and immunities that
\ Private companies aren’t eligible to receive. Here’s a glance at the exemptions an OPC receives.
- As per Section 92 of the businesses Act, 2013, states that annual returns of an OPC, must be signed by either the corporate secretary or the director.
- According to Section 122(1) of the businesses Act, 2013, it’s stated that laws mentioned in S.98, S.100 to S.111 won’t be applicable to OPCs and hence, the laws that govern General Body Meetings and Executive Meetings needn’t be followed by them.
- Any resolution made after a gathering needs just to be recorded by the OPC’s member in an exceedingly record or logbook and this book must be maintained and duly signed by the member as per Section U/s 118.
- An OPC requires only one Director to function and might have a maximum of 15. this will be increased further by filing a resolution.
- Compliance regulations for Board Meetings are met if decisions moved are registered in an exceedingly written record which is acknowledged and recorded by the member.
- An OPC should send the Registrar copies of their financial statements with the specified documents a minimum of before 180 days have passed after the closing of a year.These statements have to be attested by the Director or Company Secretary.
- Failure to befits the principles listed above will lead to the One Person Company getting penalized by the Registrar of Companies. it’ll be penalized for an amount between Rs 20,000 and Rs 1 Lakh and a six-month term, betting on the severity of the error.
Benefits of an OPC
- Limited Liability – Liability is treated differently in an OPC because it may be a separate entity, then shareholder liability is proscribed to the payment of subscription money. Hence, the member’s personal assets aren’t in danger.
- Smooth Succession- because the name of the nominee is created during the creation of the OPC, succession laws are simple. within the event of the death of a member, all the shares and investments of the OPC are handed right down to the nominee. there’s no need for any lengthy procedure or submission of will as is that the case with sole proprietorships.
- Easier Compliances – a 1 Person Company has more relaxed and fewer binding compliance regulations. This dramatically reduces paperwork related to running the corporate and hence, reduces the load on the HR department.
- Helps in organising the unorganised proprietorship by giving it the identical position of a non-public company. This provides better banking facilities to such companies. It also helps such companies have better status and recognition with relevance other companies.
Many successful stories and examples may be found in One Person Company.Let your company be one in every of them. Get expert advice from finaxis professionals in registering your One Person Company.