SMALL COMPANY
SMALL COMPANY [SEC. 2(85)1: means a company, other than a public company
a) paid-up share capital of which does not exceed Rs. 4 crores or such higher amount as may be
prescribed (not more than Rs. 40 crores); and
b) Turnover of which as per profit and loss account for the immediatelv precedinq financial vear
does not exceed Rs.2 Crore or such higher amount as may be prescribed (not more than Rs.100
Crores
Exceptions: A Company shall not be a small Company, if
• It is a public Company or
• It is a holding Company of any Company: or
• It is a subsidiary Company of any Company
• It is a Company Registered u/s 8
• It is a Company or a body corporate governed by special Act.
Exemptions or benefits available: Following exemptions are available to small company:
a) Financial statement does not include Cash flow statement
b) Need not to prepare report on AGM
ONE PERSON COMPANY
What is meant by One Person Company (OPC). Who can become the member of OPC?
1. Definition (SEC. 2(62)): One person company means a company which has onlv one person as
a member.
2. Provisions applicable to OPC:
a) One Person Company shall have minimum one director. It means OPC may have more than
one director.
b) It is a kind of private companv
c) Capital and Turnover Conditions: The paid-up share capital of OPC shall not exceed Rs.50 Lakhs
and Turnover shall not exceed Rs.2 Crores. In other words, OPC is always a small companv.'
1 Example: A Pvt. Ltd. is wholly owned subsidiary of AB Ltd. A Pvt. Ltd. wanted to avail exemptions as provided to Private Companies. In this case
since A Pvt. Ltd. is subsidiary of AB Ltd., which is a Public Company, therefore A Pvt. Ltd. will be deemed to be a Public Company and will not
be allowed to avail exemptions provided to a Private Company.
Rule 7A. Penalty"- If a One Person Company (OPC) or any officer of such company contravenes any of the provisions of rules related to the
formation and nomination by the subscriber/member of One Person Company, the OPC or any officer of such company shall be punishable with
fine which may extend to 5000 rupees and with a further fine which may extend to 500 rupees for every day after the first offence during which
such contravention continues
d) OPC can be formed either as:
• Company limited by shares; or
• Company limited by guarantee; or
• Unlimited company.
3. Eligibility to become a member of OPC: The Member -
• Must be a natural person, i.e. individual. [Legal Entities, Artificial Juridical persons are excluded].
• Must be an Indian citizen.
• Must be a resident in India.
[Note: “Resident in India” means a person who has stayed in India for a period of not less than
182 days during the immediately preceding one calendar year].
4. RESTRICTIONS WITH RESPECT TO OPC:
i. Restrictions on member:
• A natural person shall not be eligible to incorporate more than one OPC
• A minor shall not become member of the OPC or cannot hold share with beneficial interest.
ii. Restrictions on OPC:
• It cannot be incorporated and converted into a section 8 company.
• It cannot carry out Non-Banking Financial Management activities. (NBFC)
• It cannot make investment in securities of any B Cor orates.
• It cannot be converted into any kind of company, i.e. private or public) within period of 2
years from the date of incorporation of OPC.
Exception: OPC can be converted voluntarily on increase of, paid up share capital beyond
Rs. 50 lakhs, or turnover beyond Rs. 2 Crores.
5. Privileges or benefits to OPC:
a) Financial statement does not include Cash Flow Statement
b) Need not hold AGM
c) Need not prepare report on AGM
d) Financial statements and Board’s report can be signed by one director
e) Concept of managerial remuneration under section 19 1 is not applicable.
Who can become the Nominee of One Person Company?
1. Nominee: The nominee -
a) Must be a natural person, i.e. individual. [Legal Entities, Artificial Juridical persons are excluded].
b) Must be an Indian citizen.
c) Must be a resident in India3.
[Note: “Resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding
one calendar year].
2. Restrictions on Nominee:
a) A natural person shall not be eligible to become nominee for more than one OPC.
b) A minor shall not become nominee of the OPC.
3. MOA: Name of nominee shall be mentioned in the MOA of the OPC.
4. Consent: Before mentioning the name of such person in MOA, as nominee, the
subscriber ofOPC shall obtain the consent of such person.
5. The consent obtained from Nominee shall be filed with ROC.
6. Withdrawal of Consent by Nominee:
a) Nominee may withdraw his consent by giving a notice to the — (i) Sole Member and
(ii) OPC.
b) In such case, the sole member shall nominate another person within 15
days of receipt ofnotice of withdrawal.
c) Within 30 davs of receipt of notice of withdrawal, OPC shall file with ROC —
i) Notice of withdrawal of consent and
ii) Intimation of another nominee, along with written consent of new nominee.
7. Change in name of Nominee:
a) Change in nominee may arise due to-
i) withdrawal of Nominee’s consent, or
ii) Change in name of Nominee by sole member.
b) Any such change in the name of the person shall not be deemed to be an alteration
of the MOA.
8. On nominee becoming member:
a) If sole member of OPC ceases to be the member in the event of death or
incapacity tocontract then the nominee becomes the member of such OPC.
b) Within 15 days of becoming member the new member shall nominate a person
who shall inthe event of his death or his incapacity to contract become the member
of OPC.
c) Within 30 days of becoming member, OPC shall file with ROC an intimation of
cessation and nomination, along with written consent of new nominee.
