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Saturday, 15 September 2018

One Person Company

OPC (One Person Company) , Sec 2(62) of Companies act 2013 and Rule 3 of Companies Rules 2014.

One person company is a classification of a private company. The Concept was recommended by Dr. J.J. Irani in the year 2005 to encourage small entrepreneurs. It has few legal formalities to operate so it is economical for small entrepreneurs to choose this form of business.

A single person can incorporate OPC. Legal and financial liability is. Limited.

Apart from India now this concept of OPC has been already introduced in U.K, China, Singapore, Pakistan etc.

One person company meaning and process to register
One Person Company


According to the rule 3 of companies rules 2014,only a natural person who is resident of india is eligible to incorporate one person company and shall be eligible to become nominee of the sole member of one person company.

A natural person is considered resident of India if he has stayed for minimum 182 days during the immediately preceding one calendar year.

At any point of time, a natural person shall not be a member of more than one person company and that person also shall not be a nominee of more than one person company.

When a natural person is a member in one person company and a nominee in another one person company and if he becomes also a member after incapability of sole member in another one person company then it means he is now member in both one person companies which is not allowed as per companies act 2013 then he should only be a member in only a one person company. Companies act, 2013 allows 180 days to meet the criteria. Conclusion is that in 180 days , he should make arrangements in such a way that he is a member in not more than a one person company.

No minor is eligible to be a member and for nominee in one person company. Also he cannot be a beneficiary in one person company.

One person company cannot be incorporated or converted into a company under section 8 of the companies act 2013.

Section 8 is related with non-profit companies. Non profit company is a company ,objective of which is not to earn profit.

One person company cannot carry out non banking financial investment activities. It cannot invest in securities of a body corporate also.

What are non-banking financial activities?

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).

Credit: RBI definitions

For conversion of one person company into another type of company, two years must be completed from the date of incorporation but if paid-up share capital exceeds 50 lacs or average annual turnover exceeds 2 crore rupees then such one person company is eligible to convert itself into another company at any point of time. Completion of two years is not mandatory in this case.

Section 193(1) clearly states that if one person company enters into a contract with the member of such company and such member is also a director of such company unless contract is in writing, all terms and offers of the contract shall be recorded in memorandum or shall be recorded in the minutes of the first meeting held after entering into a contract. of Board of directors.

Above provision is not applicable if contract is entered in due course of business.

Also company shall inform to registrar about all contracts entered into within 15 days of the date of approval by board of directors.

Member of one person company shall be considered first director of one person company unless another director is appointed by the member according to the provisions.

The person who will subscribe memorandum of association shall nominate a person after obtaining his consent to become nominee in writing. This consent shall be obtained in the form INC-3.

Application shall be filled in the form INC-32 to registrar with the fees along with INC-3, Memorandum and Articles of Association.

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