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TMI BlogONE PERSON COMPANYX X X X Extracts X X X X X X X X Extracts X X X X ..... ONE PERSON COMPANY - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 14-9-2013 - - INTRODUCTION The Companies Act, 2013 got the assent of the President and the provisions of the Act will come into effect as when notified by the Central Government. In this Act a new concept of One Person Company is introduced which is being discussed in this article with reference to the draft Rules put forth by the Ministry of Corporate Affairs seeking the comments of the stakeholders. DEFINITION Section 2(62) of the Companies Act, 2013 ( Act for short) defines the term One person company . It is a company which has only one person as a member. WHO IS ELIGIBLE? Rule 2.1(1) provides that only a natural person wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o is an Indian citizen and resident in India shall be eligible to incorporate One Person Company. Likewise only a natural person who is an India citizen and resident in India shall be a nominee for the sole member of a One Person Company. The term resident in India means a person who has stayed in India for a period of not less than 180 days during the immediately preceding financial year. The above said eligible person shall be eligible to incorporate up to five One Person Company according to Rule 2.1(2). Rule 2.1(3) provides that where a natural person, being member in One Person Company in accordance with this rule becomes a member in another One Person Company by virtue of his being a nominee in that One Person Company, he/she sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all meet the eligibility criteria specified in rule 2.1(2) within a period of one hundred and eighty days. FORMATION Section 3(1) of the Act provides that a company may be formed for the lawful purpose by one person, where the company is to be formed is to be One Person Company that is to say, a Private Company by subscribing his name to a memorandum and complying with the requirements of this Act in respect of registration. MEMORANDUM The memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber s death or his incapacity to contract become the member of the company and the written consent of such person shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles. Such other person may withdraw his consent in such manner as may be prescribed. CHANGE IN NAME The member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed. It shall be the duty of the member of One Person Company to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as may be prescribed, and the company shall intimate the Registrar any such change within such time and in such manner as may be prescribed. Any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch change in the name of the person shall not be deemed to be an alteration of the memorandum. NOMINATION Rule 2.2 provides that the subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining his/her prior written consent, who shall, in the event of the subscriber s death or his incapacity to contract, become the member of that One Person Company. The name of the person nominated shall be mentioned in the memorandum of One Person Company and the nomination in Form No. 2.1 along with consent of such nominee obtained in Form No. 2.2 and fee as provided in Annexure B shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles. The person nomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nated by the subscriber or member of One Person Company may, withdraw his consent by giving a notice in writing to such sole member and to the One Person company. The sole member shall nominate another person as nominee within 15 days on the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent of such other person so nominated in Form No. 2.2. The company shall within thirty days of receipt of the notice of withdrawal of consent file with the Registrar, a notice of such withdrawal of consent and the intimation of the name of another person nominated by the sole member in Form No.2.3 along with fee as provided in Annexure B and the written consent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such another person so nominated in Form No.2.2. The subscriber or member of a One Person Company may, by intimating in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the prior consent of such another person in Form No. 2.2. The company shall, on the receipt of such intimation, file with the Registrar, a notice of such change in Form No. 2.4 along with fee as provided in Annexure B and with the written consent of the new nominee in Form No. 2.2 within 30 days of receipt of intimation of the change. Where the sole member of One Person Company ceases to be the member in the even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his death or his incapacity to contract and his nominee becomes the member of such One Person Company, such new member shall nominate within fifteen days of becoming the member a person who shall in the event of his death or his incapacity to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form No. 2.5 along with the fee as provided in Annexure B within 30 days of the change in membership and with the prior written consent of the person so nominated in Form No. 2.2. One Person Company to convert itself into a public company or a private company in certain cases Rule 2.4. provides that where the paid up share capital of a One Person Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company. Such One Person Company shall be required to convert itself, within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees or the close of the financial year during which its balance sheet total exceeds one crore rupees, as the case may be, into either a private company with minimum of two members and two directors or a public company with minimum of seven members and three directors in accordance with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 18 of the Act . It shall alter its memorandum and articles by passing an ordinary or special resolution in accordance with sub-section (3) of section 122 of the Act to give effect to the conversion and to make necessary changes incidental thereto. Within thirty days of the becoming applicable, the One Person Company shall give a notice to the Registrar in Form No. 2.6 informing that it has ceased to be a One Person Company and that it is now required to convert itself into a private company or a public company by virtue of its paid up share capital or average annual turnover, having exceeded the threshold limit laid. The relevant period", for this purpose, means the period of immediately preceding three consecutive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial years. PENALTY Rule 2.3 provides that if One Person Company or any officer of the OPC contravenes the provisions of these rules, OPC or any officer of the OPC shall be punishable with fine which may extend to five thousand rupees and with a further fine which may extend to five hundred rupees for every day after the first during which such contravention continues. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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