PRESENTATION

ONE PERSON COMPANY

SUBMITTED TO-
ASSISTANT PROFESSOR EISHA VASHISHTHA
Submitted by-
•Kratika Mandil
•Indira Shedge
•Mangal Talape
 One person company
•The concept of OPC was mooted, in the report of Dr. J.J. Irani
Committee.
•With the implementation of the Companies Act 2013, u/s 2(62)
OPC is defined as “a company which has only one person as
member.”
•Section 3(1)(c) also classifies OPC as a private company for all
legal purposes with 1 member or shareholder.
•One Person Company is a hybrid of Sole-Proprietor and
Company form of business, and has been provided with relaxed
requirements under the Companies Act, 2013.
• Some of the largest companies worldwide such as eBay and Amazon began
being a one person start-up with one tech-savvy founder.
• Jeff Bezos, founder and CEO of Amazon.com was a computer engineer who
decided to leave Wall Street to start an online bookstore out of his garage.
Amazon is now the largest online retailer in the world.
• In India, The Digitex Fabrics Opc Private Limited is listed in the class
of pvt ltd company and classified as Non Govt Company. This company is
registered with an Authorized Share Capital of Rs. 31 LAC and its paid up
capital is 30 LAC.
 Inter-Country Comparison
• The concept of OPC has grown in India over the last few years, and can be
called relatively new as far as legislations go. However, this concept has
already pre existed in several other countries such as China, France, United
States, United Kingdom, Singapore.
• The first country to introduce this concept was the UK, due to the celebrated
case of Salomon & Salomon Co. Ltd. in 1925.
• Each country has the same motivating factor for introducing the concept into
their laws - to encourage and give impetus to businesses, entrepreneurship and
hence boost their nation’s economic development.
 OTHER COUNTRIES INDIA

• India, expressly mention a minimum

• Countries like the U.K. and the U.S.A.
requirement of capital for their OPCs.
require the capital of their OPCs to “meet
the expected strains of a venture of its • India requires that only a natural person
nature and size”. may incorporate an OPC.
• Capacity of people to start an OPC, most • India OPC can have maximum 15 directors.
countries do not put a restriction on
legal/natural persons from starting or
incorporating an OPC.
• In UK there no limit as to the maximum
number of directors
 Eligibility criteria
Only a Natural Person who is born in India and is a Resident Of India or
otherwise shall be eligible to-
•Be a member of One Person Company,
•a nominee for the sole member of a One Person Company.
The person cannot acquire more than 1 OPC and cannot become the nominee
to more than one OPC.
The term “resident in India” means a person who has stayed in India for a
period of not less 120 days immediately preceding one calendar year ( after the
Companies (Incorporation) Second Amendment Rules, 2021 came in effect).
 Features
• Single-member: OPCs can have only one member or shareholder, unlike other
private companies.
• Nominee: A unique feature of OPCs that separates it from other kinds of
companies is that the sole member of the company has to mention a nominee
while registering the company.
• Minimum one director: OPCs need to have minimum one person (the
member) as director. They can have a maximum of 15 directors.
• No minimum paid-up share capital: Companies Act, 2013 has not prescribed
any amount as minimum paid-up capital for OPCs.
• Separate legal entity: It is run by individuals yet OPCs are a separate legal
entity similar to that of any registered corporate.
 Features
• Limited liability: In OPC the shareholder liability is limited to his shareholding
which means any loss or debt in business does not affect the personal pocket of
the owner hence no personal liability against the company which accounts for
greater credibility.
• Freedom - Since the company consists of a sole individual, there is no need to
hold meetings repeatedly, and the sole director may not be required to be
answerable to any one else on day to day matters.
• Easy formation: In comparison to other private companies the formation of
OPC is comparatively easy as there are lesser documentation and lesser form
formalities.
• Shares transferability: In OPC shares can be transferred only after making
changes in MOA while in a private company shares can be transferred easily.
 Formation of One Person Company
• An OPC can be formed by a single person by signing the Memorandum of
Association and meeting the other requirements set out in the Companies Act of
2013.
• In the case that the original member dies or becomes incapable of entering any
contract, the MoA shall additionally reveal all the details of a nominee who will
become the sole member of the company.
• In addition to the registration application, the MoA and the nominee's consent to
his nomination must be given to the Registrar of Companies.
• That nominee has the right to withdraw his name at any moment by making the
necessary application to the Registrar. The member can also withdraw his
nomination at any time.
 Membership in One Person Co.
• Only natural persons who are citizens or residents of India are eligible to
create an OPC in India.
• The same directive applies to OPC nominees as well.
• Furthermore, at any given moment, a natural person cannot be a member or
nominee of more than one OPC.
• An OPC can only be joined by a natural person, which does not apply to
companies.
• Minors are forbidden from being members or nominees of OPCs.
 Why should OPC be chosen?
• It is a Separate Legal Entity:  OPC protects the liability because the asset of
the director and that of the company are considered different. Hence, the
director’s personal assets are not used to pay the debts of the company.
• The registration of the company with the Ministry of Corporate Affairs gives it
more credibility and reliability with the stakeholders. Due to this, it helps the
business in its expansion.
• It enjoys perpetual succession: The company shall continue to operate even if
the director has resigned or there is a change in the company.
 Conversion of OPC into a Public Company or a Private Company
For converting an OPC into Private Limited Company, the provisions laid down in Section 18 of the
Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, in particular, Rule
6 should be discharged by newly formed Private Company. There are two modes of conversion:
• Voluntary Conversion
Under Voluntary Conversion, the criteria that the OPC is not allowed to convert itself into a private
limited company until the expiry of two years from the date of incorporation as an OPC.
• Mandatory Conversion
Under mandatory conversion, if the OPC crosses the threshold limits as mentioned-
(a) paid up share capital that exceeds Rs. 50 lakhs and
(b) the yearly turnover of immediately previous three consecutive financial years is more than 2
Crores rupees, but subsequently via the Companies (Incorporation) Second Amendment Rules,
2021 effect from 1st April 2021, there is no compulsory conversion of an OPC to a private
company if the paid up share capital of an OPC exceeds Rs. 50 lakhs or its average turnover
during the relevant period Rs. 2 crores.
 Process of Conversion of OPC 
• Intimation to ROC
The concerned Registrar of Companies (ROC) should first be communicated through the
prescribed method that the OPC is now required for converting itself into a private limited
company.
• Passing the Board Resolutions
The OPC should hold a general meeting for passing the resolution of appointment of
directors and members for meeting the requirements of the private limited company. For
converting an OPC to a private limited company, there should be at least 2 members and 2
directors.
• Furthermore, a board resolution should be passed for approving the alteration of
the Memorandum of Association (MOA) and Articles of Association (AOA) of the
OPC.
 Privileges in One Person Company
• Annual general meetings are not required for OPCs.
• Cash flow statements need not be included in their financial statements.
• The yearly returns could be signed by the directors as well; a company
u company secretary is not required.
• OPCs are exempt from provisions relating to independent directors.
• In comparison to other companies, directors can earn high remuneration.
 Disadvantages of One Person Company

•Members: Only a natural person who shall be eligible to incorporate a One Person
Company and shall be a nominee of a One Person Company.
•High Tax Rate-In the case of One Person Company, you are directly charged 30%
income tax. The high tax rate is a big disadvantage of one Person Company.
•Consistency Cost- Compliance cost of partnership firm or proprietary is very low
compared to One Person Company.
•One Person Management- A shareholder is one, and that person makes all the
decisions. On the off chance that he is insightful, it is excellent; however, in some
cases, cross-check is required for business development. The company’s success
and growth are all dependent on one person’s decision-making ability.
THANK-YOU