One Person Company

One Person Company(OPC), is been newly introduced in recently enacted Companies Act 2013, the concept may be new to India, but it has been followed by other parts of the world like European countries where it is more prevalent.

Meaning:

Sec 2(62) of Companies Act 2013 defines “One Man Company” as a company which has only one person as a member.
A one man company is treated as Private company only. OPC consists of one person who himself is promoter, director, member which are all rolled into one.
Section 12(3) states that the word “One Man Company” shall be mentioned in brackets below name of such company, where ever the name is printed or affixed.

Features:

1. Only One Shareholder: Only a person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company.
2. Nominee for the Shareholder: The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Only a Indian citizen and resident in India shall be a nominee for the sole member of a One Person Company 
3. Director: Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. Company may have a maximum number of 15 directors.

Steps to Incorporate One Person Company (OPC):

1. Obtain Digital Signature Certificate [DSC] for the proposed Director(s). 
2. Obtain Director Identification Number [DIN] for the proposed director(s). 
3. Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name. 
4. Draft Memorandum of Association and Articles of Association [MOA & AOA]. 
5. Sign and file various documents including MOA & AOA with the Registrar of Companies electronically. 
6. Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty. 
7. Scrutiny of documents at Registrar of Companies [ROC]. 
8. Receipt of Certificate of Registration/Incorporation from ROC.

Terms and Restrictions of OPC:

1. A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company. 
2. Minor cannot shall become member or nominee of the One Person Company or can hold share with beneficial interest. 
3. An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit]. 
4. An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate. 
5. An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except if the Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.