FORMATION OF ONE PERSON COMPANY
One Person Company is set to organize the unorganized sector of proprietorship firms. OPC will have incredible prospect and it will be embraced as a booming business model. For small to mid level entrepreneurs, OPC is the scope for them to grow and to get recognition globally even for their single person entity. Comparatively in OPC there will be less paper work. OPC allows a single person to run a company with limited liability, in case of a sole proprietorship, even though it is run and owned by one individual there is no distinction between the owner and the business as in the case of OPC and the liability is unlimited.
In an OPC there is a nominee designated by the member. The nominee shall in the event of death of the member become a member of the one person company and will be responsible for the running of the company. But in the case of sole proprietorship, in the event of death of the sole proprietor the business goes to the legal hire or if there is a WILL then it can happen through execution of WILL.
A One Person Company has to file necessary returns with the Ministry of Corporate affairs and would also need to get its accounts audited.
One person can form a company without any additional shareholder, and if the member is willing to add shareholders, all he needs to do some procedural compliances to convert OPC in to a regular private limited company and file it before MCA.
Foreign Investors will show more attraction towards OPC as they will be dealing with one member to establish a corporate relationship and not with a score of shareholders/directors where there are more chances for disparity in Ideas, concepts etc, Any foreign company who wishes to establish in India a Joint venture will have to just negotiate the deal with the member of an OPC, and the venture will be expected to start sooner with more effective results.
Major exemptions available to one person company are :
An OPC has several privileges and exemptions which are not otherwise available to a private company some of the important exemptions are:
- The annual returns in the case of One Person Company shall be signed by the company secretary or where there is no company secretary, then by the director of the company.
- Provisions relating to General Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are not applicable to One Person Company. It shall be sufficient if the resolution is communicated by the member of the company to the MCA and entered in the minute book of the OPC.
- OPC needs to have minimum of one director and a maximum of 15 directors which can also be increased by passing a special resolution as in case of any other company.
- For the purposes of holding board meetings, in case of a OPC which has only One director, it shall be sufficient compliance if all resolutions required to be passed by such a company at a board meeting are entered in a minute book – signed and dated by the Director and such date shall be deemed to have the date of the board meeting.
- The OPC shall file with the MCA a copy of financial statements duly adopted by its member along with all the documents which are required to be attached to such financial statement, within 180 days from the closure of the financial year along with cash flow statements.
- The financial statement shall be signed by only one director and the annual return shall be signed by the company secretary and the director, and in case if there is no company secretary then only by the director.