one person company concept

The new Company Bill, which proposes to do away with redundant
provisions of the existing Companies Act, 1956, envisages a new
entity in the form of one person company (OPC), while empowering the
Government to provide a simpler compliance regime for small
companies. "The Bill will provide a substantive legal framework
while leaving the procedural issues to the rules to be notified
subsequently, " said the Minister for Corporate Affairs, Mr Prem
Chand Gupta."The Bill, which would be introduced in the forthcoming
session of the Parliament, seeks to provide for single comprehensive
legal framework from incorporation to liquidation and winding
up. "Articulation of shareholders democracy with protection of the
rights of minority stakeholders, responsible self regulation with
disclosures and accountability has been the objective behind this
simplified company law," he added. It also envisages that Government
approval for appointment of directors and the quantum of their
remuneration is not required. Even related party transactions are
not to be regulated. The proposed new law also simplifies the
provisions relating to mergers and acquisitions. New voting rights
The Bill also provides for shares with differential voting rights to
be done away with and valuation on non-cash consideration for
allotment of shares through independent valuers. The new law
facilitates joint ventures and relaxes restrictions on limiting the
number of partners in entities such as partnership firms and banking
companies to a maximum 100 with no ceiling on professional firms
that are regulated by special Acts such as Chartered Accountants,
Company Secretaries, Cost Accountants, and Advocates Act.It provides
for statutory recognition to audit, remuneration and stakeholders
grievances committees of the board. Besides, it also recognises the
Chief Executive Officer, the Chief Financial Officer and the Company
Secretary as the key managerial personnel. The Bill recognises
insider trading by company directors/KMPs, as an offence with
criminal liability. A more effective regime for inspections and
investigations of companies while laying down the maximum and
minimum quantum of penalty for each offence with suitable deterrence
for repeat of offences has been proposed, Mr Gupta said. The
proposed Bill also facilitates use of electronic modes by companies
for their international process such as keeping books of accounts,
allowing voting by shareholders through electronic mode, and
conducting board meetings through video conferencing. –