How to form a One Person Company? – Step by Step process. 

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According to the companies act, 1956, a Public Limited Company must require at least 7 members, and where in a Private Limited Company requires at least 2 members. But now the One Person Company is allowed to form under the provision of the Companies Act 2013, Sec 2(62). 

Introduction :

Here in the name itself we can come over the meaning of One Person Company which clearly means a Company which has only one person to run. The main thing to remember is that according to Section 3 it classifies that OPC (ONE PERSON COMPANY)  will come under Private Company. Here the provisions which are applicable for Private Company are also applicable for OPC. Though the One Person is like sole proprietor his liabilities to the debtors company will be limited. 

Essentials of forming OPC 

Coming to the essentials of forming OPC , one should know that according to the Company Rule 3 of 2014, the member who forms OPC Must be an Ordinary Person & Resident of India. And the individual must not be a minor. 

Here the question arises: who are Ordinary persons?  Ordinary person involves the people who don’t belong to any kind of organization, like traders, and having partnership with any kind of corporate entity. The person residing in India can only be eligible to form OPC,  where the foreigners or non – Resident Indians cannot form OPC in India. A OPC should involve one promoter and one director here the promoter and the director can also be the same person. No individual is eligible to incorporate more than one OPC. It is according to Rule 3(2) of the companies Rules, 2014. 

The mandatory thing is to select a NOMINEE of a single member company. He must give his consent in writing, if in the case the only member’s death of incapacity of contract occurs, the Nominee will step into the only company and name will also be mentioned in the epistle of Association. No person can be able to Nominee in more than one OPC, as per Rule 3(2) of Companies Rule,2014. 

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Here are the steps to form One Person Company.

Step 1 :

At first the person should apply for DIN i.e. Directors Identification Number and Obtain Digital.

Step 2 : 

Secondly the proposed company name should be selected. The promoter is the one who applies the name of the company to ROC, the company is to be incorporated in E Form INC 1 of Rs 1000/- through online payment net banking or card. The promoter should sign the form digitally  on MCA 21 Portal. In INCI, the promoter should indicate the Capital Of Company, Objectives of formation of the company is the state where it wishes to incorporate the OPC. The promoter will get 60 days off time to register the name of the company if the promoter takes more than 60 days off time the name will not be available.

Step 3 : 

The nominees consent is to be obtained in the form INC- 3. Next, the Drafting of Memorandum of Association and Article of Associations should be done. The Drafting of Memorandum of Association of Article is a step to check availability of names made by the register. The main objects should match with the objects written in e- Form INC – 1 

These are the two documents are the charter and internal rules and regulations of the company. The AOA should be followed by the table F, G. H, I & J as authorized in schedule – I to be signed by subscribers. The AOA gives the names of the first Director and mandatory. There are 5 clauses mainly in schedule – I by following table named as  A, B, C, D & E the MOA should follow this 

  • Name clause
  • Registered Office Clause
  • Object Clause
  • Liabilities Clause
  • Capital Clause

In handwriting Subscribers, they have to consider the following for subscribers clause

  • Name
  • Fathers name
  • Occupation
  • Resident Address
  • Share subscribe
  • Affix I’ve Passport Size Photograph
  • Signed in the given column

Nominee Clause

“I hereby witnessed that subscribers signed in my presence on Date,  at____________________ further I have verified their identity details for their identification satisfy myself on their identical particular is filed in “. 

Below this the witness must Name,  Address, Description, Signature. The subscriber will contribute the amount by way of cash or cheque when shares are allotted and the company gets incorporated followed by share certificates.

It is required to take a Declaration from the company’s secretary / cost accountant,  giving declaration that, the requirements of Companies Act, 2013 and the rules made to registration of company and matter have been complied with. 

Then,  the subscribers should take an affidavit from the First Director of the Company. In the non – judicial stamp it is given that : 

  1. It has not been convicted of any offense in connection with the promotion, formation or management of any company during the preceding five years.
  2. It has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years.
  3. All the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of the knowledge

The next step is stamping which should be digitally signed on various documents, with the latest photographs and the candidates signatures.

The last step of Pre – Incorporation is done after submission of the filled-in e – form as given above, ROC will process the form by checking all the attachments after all the Checking of registration was done the ROC will issue a certificate of Incorporation after payment of requisite fees. 

Step 4  :

Obtaining Certificate of Incorporation is the last step. It may note that One Person Company need not hold any Annual General Meeting i.e. AGM each year. Within 180 days the OPC should file one of the copies of Financial Statements with the Register of Companies. 

The concept of OPC was a good initiative from the Government. But there are some limitations in functioning. An OPC can be limited Upto 15 Directors. Moreover OPC cannot attract investment and has to continue in low cases. 

OPC is taxed at Corporate Income Tax Rate, it is the biggest disadvantage of OPC. At present @ 30 % wherein a Proprietorship Firm is taxed at personal income tax slab which is @ 10 % initially. Hence the OPC has not able to create much steer in the Business Community. 


Disclaimer: These guides/articles are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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