The Companies Bill, 2011 brought in the concept of ‘One Person Company’ to India. Basically its an legal entity which works same as a company, but has only one person as a member. The concept mixes the benefits of both proprietorship and company form of business, which means that it is a company operated by single person but the liability is limited to the company and not the person. In short we can say the concept of One Person Company is a boon for Entrepreneurs.
Recently the Companies Bill, 2011 has been passed in parliament and enacted it to the Companies Act, 2013 which provides for the concept of an One Person Company. The concept is already prevalent in many countries such as Singapore, China, USA and other European countries.
How to form a One-Person-Company?
Although the exact rules are yet to come, the following rules have been proposed so far that the person forming the Company has to give the following information:
- The name of the One Person Company.
- The nature of activities of the One Person Company.
- A nominee to take the place of the single member(in case of death, disability, bankruptcy etc.) This provision is to ensure perpetuity and continuity to the life of the Company.
- Minimum share capital will be same as in the case of private limited company i.e. Rs. 1,00,000
- One small rule is that like every private limited company has the suffix Pvt. Ltd., every One Person Company should have the suffix OPC in brackets.
Three types of One Person Company can be formed.
- Company limited by shares.
- Company limited by guarantee.
- Unlimited company.
Relaxations given to One Person Company.
- One person Company must have minimum one director and a maximum of 15 directors.
- There is no separate provision for appointment of first director, an individual being member shall be deemed to be first director.
- One Person Company have been given the option to dispense with the requirement of holding an AGM.
- Provisions relating to minimum board meeting and minimum quorum shall not apply to One person Company having single director. In case of more than one director, it shall conduct at least one board meeting in each half year and time gap between two meetings should be minimum 90 days.
- Financial Statements needs to be signed by the director and Annual returns by the Company Secretary, else by the director.
- One person Company have been relaxed from preparing Cash Flow Statements.
- One person Company are required to file Financial Statements and Annual Returns to ROC within 180 days from closure of financial year.
The concept of One Person Company is good for Entrepreneurs with new ideas and venture trying to explore the corporate world without burden of the co-founder.