When only one person is a member of a Private Company, it is a One Person Company (OPC). Only a natural person who is an Indian citizen and resident in India can incorporate an OPC.A person can incorporate only 1 OPC.
What is the form for reservation of name?
Form No. INC 1 should be used for making an application for reservation of name, along with a fee of Rs. 1,000.
To whom and in what form should an application for incorporation of an OPC be filed?
The application is in Form No. INC 2. It should be filed with the Registrar in whose jurisdiction the registered office of the company shall be situated along with the prescribed fee (which is dependent on the nominal share capital of the Company). Please note that the member will have to nominate an other person along with a prior written consent form in Form No. INC 3.
Who is the ‘other person’/’nominee’?
Such nominee is one who will, in the case of the subscriber’s death or his incapacity to contract, become the member of the OPC. Such nominee must be a natural person. He must be an Indian citizen and a resident in India.
In how many OPCs can a person be nominated by the sole member?
A person can be nominated only in 1 OPC.
Can such other person withdraw his consent? What is the process?
Yes, such other person can withdraw his consent by giving a notice in writing to such sole member and to the OPC. Within 30 days of receiving the withdrawal notice from the nominee, the OPC should file such notice with the Registrar. The OPC should also intimate to the Registrar the name of a new nominee in Form No INC 4 along with prescribed fee and the written consent of such new nominee in Form No.INC 3.
Alternatively, a member also has the right to change the nominee.
What happens upon the death of the member of an OPC?
If the sole member of an OPC dies or becomes incapable of contracting, his nominee becomes the member of such OPC. Within 15 days of becoming member, the member must nominate another person who will become the member in case of death or incapacity to contract of the member. The OPC must then intimate the Registrar of such cessation and new nomination in Form No INC 4 along with prescribed fee within 30 days of the change in membership and with the consent of new nominee in Form No.INC 3.
If a nominee becomes a member of an OPC while he is a member in another OPC, he should decide within 180 days as to which OPC to be a member of.
Will a change in the name of the other person in the Memorandum amount to alteration of the Memorandum?
No, it shall not amount to an alteration of the Memorandum.
Can a minor hold beneficial interest in an OPC?
How should the name of the OPC be displayed?
The words ‘‘One Person Company’’ should be mentioned in brackets below the name of the OPC wherever the name of the OPC is printed, affixed or engraved.
How many Directors can an OPC have?
An OPC can have a minimum of 1 Director and a maximum of 15 Directors.
Who can sign the Annual Returns of an OPC?
The Annual Return has to be signed by the company secretary. If there is no company secretary, then the Director of the Company should sign it.
Should an OPC hold regular Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs)?
It is not mandatory for OPCs to hold AGMs and EGMs.
How often should an OPC conduct Board meetings?
An OPC should conduct at least one Board meeting in each half of a calendar year. The gap between the two meetings should not be less than 90 days. But if the OPC has only 1 Director, then it is not mandatory to conduct Board Meeting at such intervals.
Can the Tribunal call meetings of members of OPCs?
No, a tribunal cannot call meetings of members etc.
How will an OPC pass resolutions?
It is enough if the resolution is communicated by the member to the Company and entered in the minutes-book, signed and dated by the member. A meeting of the board of Directors shall also be conducted in a similar manner.
What should financial statements of an OPC include? And who should sign the statement?
- Balance sheet;
- a profit and loss account, or in the case of a not-for-profit company, an income and expenditure account for the financial year;
- a statement of changes in equity, if applicable; and
- any explanatory note annexed to or forming part of any document referred above
Note, cash flow statement for the financial year need not be attached.
The Director of the OPC should sign the financial statements and then submit it to the auditor for his report.
Copies of the financial statements along with all the required documents meed to be filed with the Registrar within 180 days from the closure of the financial year.
What does the report of Board of Directors refer to?
The report of the Board of Directors attached to the financial statement means a report containing explanations or comments by the Board against every remark made by the auditor in his report.
Who is the First Director of an OPC?
The sole member of the OPC shall be the first director until such time the member appoints the director or directors.
Can the member of the OPC enter into contract with the OPC? If yes, what are the compliances?
Yes, the member of the OPC can enter into contract with the OPC. Ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first Board meeting of the OPC held after entering into contract.
However, the above does not apply to contracts entered into by the OPC in the ordinary course of its business. The OPC has to record details of every contract entered into by it in the minutes of the Board meeting and inform the Registrar within 15 days of the date of approval by the Board of Directors.
Can an OPC carry out Non-Banking Financial Investment?
No, an OPC cannot carry out Non-Banking Financial Investment activities.
Can an OPC convert into any other kind of Company? What are the requirements for conversion?
An OPC can convert voluntarily into any kind of Company only if 2 years has expired from the date of incorporation of the OPC. If within those two years the OPC’s paid up share capital exceeds Rs.50 lakh or if its average annual turnover during the relevant period exceeds Rs. 2 crore, then the OPC can convert itself.
- Minimum number of members required for a private company: 2
- Minimum number of directors required for a private company: 2
- Minimum number of members required for a public company: 7
- Minimum number of directors required for a public company: 3
Note that the OPC has to alter it Memorandum give effect to the conversion. Within 60 days of exceeding the threshold limit, the OPC has to give a notice to the Registrar in Form No.INC 5 informing it that it has ceased to be an OPC and is now required to convert itself into a private or public company. The OPC has to maintain the minimum paid-up capital according to the class of company it is getting converted into.
What is the per-requisite for a private company to convert itself into an OPC? What is the process of conversion?
Any private company which has a paid up share capital of Rs. 50 lakh or less, or, with an average annual turnover during the relevant period of Rs. 2 crore or less, may convert itself into an OPC.
- Obtain a ‘No Objection’ in writing from members and creditors;
- Pass a special resolution in a general meeting;
- File an application in Form No. INC 6 for its conversion into OPC along with prescribed fees.
The OPC has to file a copy of the special resolution with the Registrar within 30 days from date of passing such resolution in Form No. MGT 14.
What are the documents to be attached along with Form No. INC 6 for conversion?
- Declaration/affidavit by the Directors confirming that (i) all members and creditors of the company have given their consent for conversion, (ii) the paid up share capital company is Rs. 50 lakh or less, or, average annual turnover is less than Rs. 2 crore, as the case may be;
- List of members and list of creditors;
- Latest Audited Balance Sheet and the Profit and Loss Account; and
- Copy of No Objection letter of secured creditors
Is there a penalty for an OPC contravening the rules?
Such defaulter (OPC or any officer of such Company that contravenes the provisions of the Companies (Incorporation) Rules, 2014) shall be punishable with fine up to Rs. 10,000 and a further fine up to Rs. 1000 for every day the default continues.
When does an OPC cease to exist as an OPC?
An OPC ceases to be an OPC when its paid up share capital exceeds Rs. 50 lakh or if its average annual turnover during the preceding three consecutive years exceeds Rs. 2 crore.
Can an OPC be incorporated or converted into a Section 8 Company?