One Person Company is newly added in the Companies Act 2013, earlier there was no concept of a one-person Company.
The main aim was to promote the individual having the resources to form a company by reducing the complications and challenges faced while incorporation of a legal entity. It can be said as it is a company which is owned by a single person.
Section 2(63) of Companies Act 2013 defines about the OPC as one-person company means a company which has only one person as member.
Only a natural person who is Indian citizen and Resident of India:
- Is eligible to incorporate a One Person Company.
- Shall be the Nominee for the Sole member of a One Person Company.
The term resident in India means a person who has stayed in India for a period of not less 182 days immediately preceding one calendar year
- Minor shall not become member or nominee of the One Person Company or can hold share with beneficial interest in such One Person Company.
- One Person Company are restricted to do business of Non-Banking Financial Investment activities including investment in securities of any other body corporate.
- It is Mandatory for a OPC to write OPC in bracket after the name of the Company.
- OPC can be incorporated as a Private Limited Company only.
- OPC cannot be incorporated or converted under Section 8 of the Act.
Privileges to incorporate OPC
- The privilege to incorporate OPC is that the owner has a limited liability, unlike in a sole Proprietorship where the owner has unlimited liability.
- OPC has a minimum requirement of One director only which can be extend up to maximum of 15 directors.
- The annual general meeting is not mandatory in OPC.
- The OPC is required to conduct a minimum two board meetings in a calendar year, and one meeting in each half of a calendar year.
- The sole proprietor business can easily be converted into OPC.
- Only Rs. One Lakh is required as minimum authorized share Capital to incorporate OPC
- No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
- Such Company cannot be incorporate or converted into a company under section 8 of the Act.
- Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any-body corporate.
Conversion of OPC into Public Company or Private Company
OPC can be converted into other form of company other than company under section 8 of the Act.
OPC enables a person to incorporate a company on its own conditions and prevents interference. Thus, this concept creates opportunities too.