One Person Company: Soul of proprietorship in corporate body

ONE PERSON COMPANY: A PRACTICE TO MERGE SOUL OF PROPRIETORSHIP IN THE BODY OF A COMPANY.

“The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.”Henry Ford

Not old in some countries but new in India, One person company is a form of business, introduced by Companies act, 2013, enabling sole proprietors to enter into corporate world.

It is like forming a company with the soul of proprietorship and privileges of a private limited company but with fewer requirements. 

One person company has only one shareholder/member that give him to run the business of the company solely on his decision, i.e., one Person Company gives MONOPOLY IN MANAGEMENT. Although, a maximum number of 15 directors can be appointed in one person company but it’s a benefit as more Directors can run management smoothly, and is not any legal obligation.

SOME FEATURES OF ONE PERSON COMPANY:

a. One person company (OPC) can only be incorporated as a Private limited company.

b. OPC can have only one person as its shareholder/member.

c. The minimum paid up share capital is Rs. 1,00,000.

d. OPC does not requires to hold Annual General Meeting.

e. If the Articles of Association do not contain the name of the first director, member of the One Person Company will be deemed to be the first director till the time director(s) is duly appointed.

f. The subscriber to the memorandum of association of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.

g. Only one director is sufficient to sign the Financial Statements/Directors’ Report.

h. A person shall not be eligible to incorporate more than OPC or become nominee in more than one such company.

i. A minor cannot become a member or nominee of the OPC or can hold share with beneficial interest.

j. OPC can be incorporated for charitable purpose.

PROCESS OF INCORPORATION OF ONE PERSON COMPANY:

a. First obtain Digital Signature Certificate for the proposed Director(s).

b. Then obtain Director Identification Number [DIN] for the proposed director(s).

c. Then select suitable Company Name(six names, in number of priority), and make an application to the Ministry of Corporate Office for availability of name.(in FORM INC-1)

d. After that draft Memorandum of Association and Articles of Association [MOA & AOA]. 

e. Sign and file various documents including MOA & AOA with the Registrar of Companies electronically. (via various E-FORMS) 

f. Pay Requisite fee to Ministry of Corporate Affairs and also Stamp Duty. 

g. Then Registrar of Companies(ROC) will scrutinize the documents.

h. Then ROC will issue Certificate of Registration/Incorporation.

One person company is better form of business than sole proprietorship as it enjoys privileges of a private limited company, but it also attracts legal obligations more than a sole proprietorship.

By Mayank vashishta

vashishtamayank@gmail.com