ONE PERSON COMPANY

ONE PERSON COMPANY (OPC) – Companies Bill, 2012:

To promote Corporatization and to ensure entrepreneurial flexibility Companies Bill, 2012 has introduced the concept of One Person Company/One Man Company in India. As per definition given in Clause 2(62) of the Companies Bill, 2012 “One Person Company” means a company which has only one person as a member.

Main features of one person Company as per Companies Bill, 2012 are as follows:

1.       Registration: One Person Company can be registered as a private company.

2.       Name: Wherever the name mentioned or prefixed or painted below the name of such Company in brackets “One Person Company” shall be mentioned.

3.       Restriction on number of members: There will be only one member provided that one another person shall be named by this member in the memorandum with the written consent of such other person, who shall in the event of death of the member or his incapacity to contract shall become the member of the Company. Name of such other person can be changed afterwards in the prescribed manner.

4.       Guarantee for capital contribution: In the subscribers sheet the member will make the declaration to take all the share capital as mentioned therein.

5.       Signing of Annual Return: The annual return shall be signed by the Company Secretary and where there is no company secretary by the director of the Company.

6.       Annual general meeting: Once in a year, within 6 months of end of financial year and within 9 month of end of financial year in case of first annual general meeting.

7.       Board of Directors: There shall be at least one director on the Board and maximum of fifteen directors. In the absence of name of first directors in the articles of the Company the individual member will deemed to be the first director of the Company until any other person appointed as the director by the member of the Company.

8.       Meeting of Board of Director(s): The Company shall hold its first Board meeting within 30 days of its incorporation and there after shall hold at least one board meeting in each half of a calendar year and the gap between two such board meetings is not less than 90 days.

9.       Directors Report attached to financial statement: It shall contain explanation on the adverse remarks and qualification, if any, given in the auditors’ report.

10.   Filing of annual accounts/ financial statements: Financial statements of each financial year completed in all respect along with the prescribed documents shall be filed within 180 days of closure of financial year.

11.   Contracts: Where a contract entered between the Company and the sole member of the Company who is also the director of the Company, the Company shall, unless the contract is in writing and in ordinary course of business, ensure that the terms of contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the Company held next after entering into Contract.

ONE PERSON COMPANY VS SOLE PROPRIETORSHIP:

One Person Company has many similarities with sole proprietorship but still it is different from it in many ways.  The major differences are unlike sole proprietorship it will be a separate legal entity from that of its member and limited liability of promoters.

ADVANTAGES OF ONE PERSON COMPANY:

One Person Company has almost all the benefits of a private limited company such as of limited liability, separate legal entity, minimum legal compliances, independent decision making and continuity of existence.

CRITICISM OF ONE PERSON COMPANY:

One Person Company has been criticized mainly on the ground of tax evasion as such companies can be formed with the purpose of evasion of tax. Some other grounds of criticism are limited marginal ability of a single person to take all the responsibilities of management and suspected fraud which can be done when all the affairs handled and controlled by only one man.