One Person Company (OPC): The government of India had come with many new concepts, new facilitate to support startups and to boost entrepreneurship. Government of India had come with many new concepts, new facilities to support startups and to boost entrepreneurship
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One Person Company (OPC) – An overview
As a part of this, a new form of business entity One Person Company (OPC) has been introduced by the Companies Act, 2013. This concept of OPC was first recommended by the expert committee of Dr. JJ Irani in 2005. OPC provides an opportunity to those who look forward to starting their own startups with a structure of organized business with continuous access to financial, legal, market resources.
As defined by companies act 2013, ‘One Person Company means a company which has only one member’
Eligibility for OPC :
As stated by the act following are the persons eligible for establishing an OPC
(1) A naturally born Indian & resident of India
(2) Those who are born outside india and residing in India are ineligible.
(3) Even though the person is a naturally born Indian and residing in India he/she is not eligible for this if he/she has already opened 1 One person company.
Features of OPC :
This is the basic concept of a One Person Company. A natural person who is a resident of india and also a citizen of india can form a one person company. He / she who forms OPC owns 100% stake in the company. The act has also said that a person can be a shareholder in only one one person company at any given time.
(2) One Director :
Opc Must have at least of One Director, the Sole Shareholder can himself be the Sole Director.As per the Act, the total number of directors shall not be more than 15.
(3) Nomination :
The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. The requirements of being a resident Indian and citizen of India also apply to the nominee. If the person so nominated is already a member of another One Person Company, at the same time, by virtue of rules has to decide within 6 months which one person company he has to continue. On becoming member, such nominee shall nominate any other person as his nominee.
(4) Compliance of law :
For the purpose of easy compliance act has facilitated the following :
(a) No requirement to hold annual or extraordinary general meetings
(b)No requirement of preparing cash Flow in the annual financial statements.
(c) No requirements of signing by a company Secretary on the annual return. It can be signed by the Director himself.
(5) Taxation matters :
According to Income Tax Act 1961, One person company is under the bracket of 30% on total income with an additional surcharge of 5% if the income exceeds 1 crore with an addition to 3% of education cess.
Some more points to be known :
(1) Non banking financial services :
An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
(2) Eligibility of a minor :
Minor cannot become a member or nominee of the One Person Company or can hold share with beneficial interest.
(3) Subsequent conversion :
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 compulsorily file required forms with the ROC for conversion in to a Private or Public Company. This has to be done within 6 months from the actual date of crossing the threshold limit stated above.