One person company (OPC) is a new form of business introduced by Companies Act, 2013. It is hybrid form of business where a sole proprietorship concern can get a corporate outlook.
A single shareholder who can also be the sole director can start an OPC.
OPC gets the status of a separate legal entity.
OPC has to comply with fewer rules and regulations when compared to other forms of companies.
The sole shareholder gets to enjoy the limited liability feature of a company.
No minimum capital is required to start an OPC.
OPC is suitable only for small businesses, OPC can have maximum Paid up share capital of Rs.50Lakhs or Turnover of Rs.2 Crores. Otherwise OPC need to be converted into Private Ltd Company.
One Person Company cannot be incorporated or converted into a company under Section 8 of the Act.
One Person Company cannot carry out Non – Banking Financial Investment activities including investment in securities of anybody corporate.
Procedure for registration
Incorporating a company is now easier and less time consuming with the introduction of INC29 form.
A Director and a nominee are required to incorporate a OPC.
A nominee is a person who takes over the company in the event of death or incapacity of the promoter.
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.
Only a natural person who is an Indian citizen and a resident in India is eligible to incorporate a One Person Company or be a nominee member.
The OPC shall inform ROC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.
Form INC-5 shall be filed within sixty days of exceeding threshold limits.
A person can be member in only one OPC.
In such a case, such person shall meet the criteria of being a member in only one OPC within a period of one hundred and eighty days i.e., he/she shall withdraw his membership from either of the OPC’s within one hundred and eighty days.
The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.
Company’s proposed name should be unique i.e., it should not be identical to any existing name. Names that infringe others’ rights, trademarks or patents are likely to be rejected by ROC.
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