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One person company
1. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
ONE PERSON COMPANY
A LOOK AT THE RELEVANT LEGAL
PROVISIONS UNDER THE
COMPANIES ACT, 2013
2. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Introduction
• The Sections relating to One Person
Company were notified on the 26th
March 2013 and the rules with regard to
the same have also been notified.
3. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Meaning of One Person Company
• As per Section 2 (62) of the Companies Act, 2013 (hereinafter
“the Act”), a One Person Company is a Private Company
which has only one person as a member. It is to be noted that
all the provisions relating to Private Companies would apply to
a One Person Company, unless otherwise specifically excluded.
The words ‘‘One Person Company’’ must be mentioned in
brackets below the name of such company, wherever its name
is printed, affixed or engraved. [Second proviso to Section
12(3)]
4. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Eligibilityto Incorporate
a
One PersonCompany
• Only a natural person who is an Indian
Citizen and resident Indian (person who has
stayed in India for a period of not less than
one hundred and eighty two (182) days
during the immediately preceding one
calendar year) can incorporate a One Person
Company by subscribing his name to the
memorandum.
5. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Application for
Incorporation
• Application for incorporation of a One Person
Company shall be made to the registrar within
whose jurisdiction the registered office of the
company is proposed to be situated, in Form
No.INC.2 along with the fee as provided in
the Companies (Registration offices and fees)
Rules, 2014 for registration of a company
6. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Appointment of a Nominee
• The subscriber to the memorandum shall appoint a nominee
and such nominee shall be a natural person, Indian citizen and
a resident Indian and the name of such nominee should be
included in the memorandum and such nomination in Form
No INC.2 along with the consent of such nominee obtained in
Form No INC.3 and fee as provided in the Companies
(Registration offices and fees) Rules, 2014 shall be filed with
the Registrar at the time of incorporation of the company
along with its memorandum and articles.
7. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• In the event of the subscriber’s death or his incapacity to contract, the
nominee mentioned in the memorandum would become the member of the
company and such new member shall nominate within fifteen days of
becoming member, a person who shall in the event of his death or his
incapacity to contract become the member of such company, and the company
shall file with the Registrar an intimation of such cessation and nomination in
Form No INC.4 along with the fee as provided in the Companies
(Registration offices and fees) Rules, 2014 within thirty days of the change in
membership and with the prior written consent of the person so nominated in
Form No.INC.3. Proviso to clause (c) of sub section (1) of Section 3 of the
Act states that a change in name of the member of a One Person Company
shall not be deemed to be an alteration of the memorandum.
8. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Restrictions withregardto
One Person Company
• No person can incorporate more than one One Person
Company (this is a significant departure from the draft
rules which allowed a person to incorporate up to five
One Person Companies) or become nominee in more
than one such company [sub rule (2)].
• Where a member of a One Person Company becomes a
member in another such Company by virtue of his
being a nominee in that One Person Company, such
person shall meet the eligibility criteria specified in
sub rule (2) within a period of one hundred and eighty
days
9. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• A minor cannot become a member or a nominee of a One Person
Company or hold share with beneficial interest.
• 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 any body
corporates.
• One Person company cannot convert voluntarily into any kind of
company unless two years have expired from the date of its
incorporation, except threshold limit (paid up share capital) is
increased beyond fifty lakh rupees or its average annual turnover
during the relevant period exceeds two crore rupees.
10. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Provisions withregardto
Directors andMeetings of Board
• One Person Company should have a minimum of one (1)
director. [Section 149 (1) (a)].
• One Person Company shall hold at least one meeting of the
Board of Directors in each half of a calendar year and the
gap between the two meetings shall not be less than ninety
days [Section 173 (5)].
• One Person Company having only one director is not
required to comply with either Section 173 (meetings of
board) or 174 (Quorum for meetings of Board). [Proviso to
sub - section (5) of section 173].
11. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• In case of a One Person Company—(i) the resolution
required to be passed at the general meetings of the
company shall be deemed to have been passed if the
resolution is agreed upon by the sole member and
communicated to the company and entered in the
minutes book maintained under section 118; (ii) such
minutes book shall be signed and dated by the
member; (iii) the resolution shall become effective
from the date of signing such minutes by the sole
member.
12. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• In case of a One Person Company— (i) where the
company is having only one director, all the
businesses to be transacted at the meeting of the
Board shall be entered into minutes book maintained
under section 118; (ii) such minutes book shall be
signed and dated by the director; (iii) the resolution
shall become effective from the date of signing such
minutes by the director.
13. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Financial Statement and
Board’s Report [Section 134 & 137]
• The financial statement of a One Person Company shall be signed
by only one director for submission to the auditor for his report
thereon.
• The report of the Board of Directors to be attached to the financial
statement means a report containing explanations or comments by
the Board on every qualification, reservation or adverse remark or
disclaimer made by the auditor in his report.
• A One Person Company shall file a copy of the financial
statements duly adopted by its member, along with all the
documents which are required to be attached to such financial
statements, within one hundred eighty days from the closure of the
financial year. [Section 137].
14. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Contractby One Person
Company [Section 193]
• Where a One Person Company limited by shares or guarantee enters
into a contract with the sole member of the company who also
happens to be the director of the company, shall ensure that the
terms of the contract or offer are contained in the memorandum or
are recorded in the minutes of the first meeting of the Board of
Directors of the company held next after entering into contract,
unless the contract is in writing. This requirement, however, will not
apply to contracts entered into by the company in the ordinary
course of its business
• A one person company is required to inform the registrar about
every such contract within a period of 15 days of the date of
approval by the Board of Directors.
15. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Various Exemptions available
to a One Person Company
• One Person Company is exempted from holding Annual
General meeting.[Section 96(1)]
• One Person Company is not required to prepare a cash
flow statement as a part of financial statement.[Section
2(40)]
• In case a One Person Company does not have a company
secretary, the annual return can be signed by the director
of the company. [Proviso to Section 92(1)]
• Section 122 of the Act states that the provisions of the
following sections shall not apply to a One Person
Company-
16. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• Section 98: Power of Tribunal to call meetings of members, etc.
• Section 100: Calling of extraordinary general meeting
• Section 101: Notice of meeting
• Section 102: Statement to be annexed to notice
• Section 103: Quorum for meetings
• Section 104: Chairman of meetings
• Section 105: Proxies
• Section 106: Restriction on voting rights
• Section 107: Voting by show of hands
• Section 108: Voting through electronic means
• Section 109: Demand for poll
• Section 110: Postal ballot
• Section 111: Circulation of members’ resolution.
17. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
MandatoryConversion of One Person Company
intoPrivateCompanyor Public Company
in certaincases
A One Person Company shall convert itself into a private
company when either
• its paid up capital exceeds Rupees Fifty Lakhs or
• its average turnover during the immediately preceding three
years exceeds Rupees Two Crores.
A One Person Company breaching either of the above thresholds
shall within a period of 60 days from such breach give a notice
to the Registrar in Form No.INC.5.
18. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Conversionof PrivateCompany
intoOne PersonCompany
• A Private Company other than a Section 8
company (Not for Profit Company) having
paid up share capital of fifty lakhs rupees
or less or average annual turnover during
the relevant period is two crore rupees or
less may convert itself into one person
company by passing a special resolution in
the general meeting.
19. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Observation andconclusion:
• While the benefits of Incorporating a One Person Company
(hereinafter “OPC”) seem obvious in that they offer the
advantage of limited liability, there are too many restrictions in
nature of limiting the number of OPC a person can incorporate
to one and the restriction on voluntary conversion into any
kind of company before the expiry of two years.
• The provisions relating to mandatory conversion of an OPC
into a private or public company for exceeding the threshold
mentioned in Rule 6 of Companies (Incorporation) Rules,
2014 seems particularly harsh.
20. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
#1533, Trichy Road,
Coimbatore, India – 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• An OPC as a business structure doesn’t seem efficient from
tax perspective as an OPC would be treated as a company
and be subject to a higher rate of tax compared to a Sole
Proprietorship. Since an OPC is a company, there would be
an incidence of tax (dividend distribution tax) while
distribution of dividend.
• It would be premature to comment on the success or failure
of this new business model just yet, as it is yet to be put to
test. It remains to be seen if OPC would become popular
business model for entrepreneurs wanting to go it alone.