Understanding One Person Company in India
According to the Companies Act before its 2013 update, one person couldn't set up a company. However, the revised act introduced the idea of a One Person Company, which allows a single natural person to form a company.
A company can now be founded with just one director and one member, who may also be the same person, in line with Section 2 (62) of the Companies Act 2013. Similar to private limited companies, One Person Company (OPC) in India must end their names with "(OPC) private limited."
To learn about the considerations to make while incorporating an OPC and OPC compliance requirements under company law, keep reading.
An OPC combines the advantages of both a sole proprietorship and a company. The following are a few advantages of an OPC:
● It has a separate legal entity, similar to a private or public limited company.
● Shareholder and director liability is limited.
● A shareholder may also serve as a director.
● The company may be succeeded by the shareholder's nominee in the situation of his or her death.
● Fewer company law compliance requirements compared to requirements for private or public limited companies.
One Person Company (OPCs) must comply with a few regulations and factors while incorporating. The following are some essential considerations while incorporating an OPC:
● The nominee, who will take over as a member in the event of the subscriber's death or disability, will be named in the OPC Memorandum.
● The candidate must provide prior written consent in the required form, which must be submitted with the memorandum of association and articles of association to the ROC at the time of incorporation.
● Such a nominee has the option to revoke his agreement to serve as the OPC's nominee.
● The OPC member may replace the nominee at any time by notifying the firm and obtaining the new nominee's consent. This information must then be submitted to the ROC in the appropriate form.
● The only eligible person to incorporate OPC is a natural person who is an Indian citizen, whether or not that person resides in India. Or shall be a candidate for the only OPC member.
● A natural person is only permitted to belong to one OPC at a time and may not serve as more than one OPC nominee.
● No minor may join or run for office in the OPC. NBFC activities cannot be performed by an OPC.
● It is possible to convert an OPC into a private or public company, but not into a Section 8 company under the 2013 Companies Act.
A One Person Company (OPC) in India must adhere to the following rules and requirements following company law:
● At least one board meeting should be held in each half of the year, with at least 90 days separating the two meetings. Though, an OPC is not necessary to hold an AGM.
● It is also necessary to comply with the legal requirements for financial statement audits, maintaining accurate books of accounts, and filing ITRs. Therefore, an OPC is not required to prepare a cash flow statement.
● Annual submission to the ROC of Forms AOC-4 and MGT 7-A.
OPCs can provide superior operational control and are simple to set up, operate, and maintain. OPCs are the easiest way for small businesses to establish themselves because of how simple they are to register and how inexpensive they are to run. They also offer them a professional appearance.
As a professional services company, Prakash K Prakash, Chartered Accountants give knowledgeable direction and assistance for setting up and running One Person Company (OPC) in India. Our team of skilled specialists aids clients in complying with legal obligations, including drafting and filing documents, keeping registers, and ensuring regulatory compliance.
To learn more about our OPC services and how we can assist you in setting up and managing your OPC in India, get in touch with us."
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