No, a person cannot be a nominee in more than one OPC (One Person Company) at a time. This restriction is in accordance with the Companies Act, 2013.
In the ever-changing business environment of India, OPCs have gained popularity as a preferred choice among entrepreneurs. This particular company structure allows one to single-handedly incorporate and operate a company with limited liability and various advantages. Understanding the significance of the nominee in an OPC is essential. The nominee serves as the caretaker of the One Person Company registration and acts towards its perpetual success and improvement. This article discusses the meaning of a nominee in an Indian OPC and its importance in maintaining the easy working and continuity of the enterprise.
Overview of One Person Company
A One-Person Company (OPC) comprises a business that can be launched with only one person. An entity termed an OPC merges the benefits of a limited liability company with a sole proprietorship. An OPC’s primary goal is to provide entrepreneurs and small business holders who wish to operate their companies like corporations without recruiting more shareholders a legal identity.
Nominee of OPC – Roles and Duties
A nominee is a vital component of the OPC. One director is required to suggest a nominee for a particular organisation to register a one-person corporation. Based on the circumstances, the Ministry of Corporate Affairs will select different businesses before issuing a candidate consent form. The process is followed while commencing a company with only one person. A few significant pointers on the role of a nominee in OPC are-
- The nominee in OPC is the legal representative, completing the necessary documentation and adhering to regulations, primarily representing the company’s interests.
- An OPC nominee is subject to various duties and rights. They can opt to step down as a nominee by dispatching the member with a formal notice of their resignation.
- If a member passes away or becomes incapable, the sole member of the OPC designates a nominee to undertake management of the company. This secures stakeholders’ interests and ensures the smooth continuation of business operations.
- Nominees are responsible for approving court documents and managing secretarial work.
- During unknown circumstances, the nominee protects the interests of all parties concerned, including employees, shareholders, and creditors.
Eligibility to be a Nominee in OPC
Some requisites must be satisfied to be considered as a nominee of the OPC.
- You must be at least 18 years old to be considered of legal age.
- You must be an Indian citizen.
You must meet these requirements to be considered for a nominated role at OPC. Picking a competent, dependable, and trustworthy person to undertake the nominee’s activities is critical.
Nomination for an OPC
The shareholder and sole director must designate a successor during the OPC formation process in case of dissolution or incapacity. Called a “nominee,” this nominated person is critical to maintaining the OPC’s continuity and stability.
In the event that the sole director dies or becomes incapacitated, this candidate, who plays a key role, will take control of the business.
It must be noted that succession under personal law differs from the nominee clause in the OPC. Instead, it is a specific necessity laid down in the Companies Act 2013.
What Happens When a Nomination Permits One OPC Member to Join Another OPC?
A person who is a member of an OPC and becomes a nominee in another entity must conform to the requirements to be a member of just one organization within 180 days, implying that the person must revoke their membership in one of the organizations within that time duration.
One person cannot introduce more than one OPC or become a nominee in more than one OPC. If an OPC member becomes a member in another OPC due to his being a nominee in that OPC, then within 180 days, he must satisfy the requirement of being a Member in 1 OPC.
Benefits of Having a Nominee in an OPC
A nominee in an Indian OPC offers several advantages to the business owner as well as the company. Let’s explore some of these advantages:
- Limited Liability: The nominee safeguards the interests of the company’s creditors and different stakeholders, restricting their liability and protecting their investments.
- Confidentiality: The nominee’s identity can be kept secret, which may be favourable for individuals who desire to maintain their privacy while running the business.
- Business Continuity: Having a nominee makes sure the company can keep running even without the sole member. This gives peace of mind and stability to everyone involved.
- Flexibility: The sole member can change the nomination while they’re alive, allowing them to adjust to new preferences or situations.
Procedure of Withdrawal or Demise of a Nominee or Member of the OPC
An individual nominated by an underwriter or a member of an OPC may withdraw his consent by written intimation to that sole member and the OPC.
The Sole Member shall nominate another individual as a proxy within fifteen days of receiving notice of withdrawal and shall dispatch a written record to the Company of this nomination along with the written consent of such individual so nominated in Form No. INC 3.
The company must submit a notice of withdrawal of consent to the Registrar, along with the name of the other person nominated by the sole partner, in Form No. INC-4, within thirty days of obtaining the notice of withdrawal of consent. The filing must also include the specified fee according to the Companies (Registration Authorities and Fees) Rules, 2014, and the written approval of the other person mentioned in Form No. INC-3.
A member or a subscriber of an OPC may, by notice in writing to the firm, at any time for any cause, alter the name of the individual designated by him, including in case of demise or incapacity of the nominee, and appoint another person after receiving the prior consent of such other individual in Form No. INC-3.
After getting this notice, the firm must notify the Registrar of the alteration by depositing Form No. INC-4 to the Companies (Registration Authorities and Fees) Rules, 2014, together with the proper fee. If the new nominee offers written consent, Form No. INC 3 must be filed within thirty days of the notice of change being obtained.
Death of the Director in an OPC
In the unfortunate instance that the sole member of an OPC dies or becomes incapable of entering into a contract, the nominee instantly becomes a member of the company. Within 15 days of becoming a member, the latest member must suggest a person to serve as their nominee. The OPC is then required to submit an indication of the cessation of the previous member and the nomination of the new member to the Registrar, utilising Form INC-4. The written approval of the newly listed individual should be included in Form INC-3.
Wrapping Up
An OPC’s structure and operations depend hugely on the availability of nominees. The nominee reassures stakeholders and ensures the business operates smoothly and runs efficiently. It is vital for business owners contemplating registering for an OPC to cautiously select a candidate who fulfils the requirements and possesses the traits required to perform the duties included in the position. By designating a nominee, the OPC can boost its stability, standing, and long-term prospects.
