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CompaniesAct.in: Graduated One Person Company- a mixed bag
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The Companies Act, 2013 defines ‘One Person Company’ or OPC as a company formed for any lawful purpose with only one person as its member. One person company is a private company with one person subscribing to the Memorandum and complying with the requirements of the legislation in respect of registration. The Act provides that the words ‘One Person Company’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

The Memorandum of OPC is required to indicate the name of another person, with his prior written consent, who shall, in the event of the subscriber‘s death or his incapacity to contract, become the member of the company. The written consent of such person, who is a nominee of the member, shall also be filed with the Registrar at the time of incorporation along with the Memorandum and Articles. The nominee may withdraw his consent in a manner that as may be prescribed, the new Act also provides the member, the freedom to change the nominee at any time by giving notice in a manner as may be prescribed.  The member of OPC is required to inform the company of change, if any, in the details nominee by indicating it in the Memorandum or otherwise within the time and in such manner as may be prescribed. The company is required to inform the Registrar of any such change. The member who is an individual shall be deemed to be the first director of the company until a director is duly appointed by the member.

  • The concept of One Person Company is new in the Indian law and was quite sought after by the industry.
  • It provides entrepreneurs an opportunity to set up a company without adding family as members of the company just to fulfill the requirement of minimum two members.
  • It provides an opportunity to proprietorships, particularly in the SME sector, to organize themselves as a private limited company and thus limit their liability to the share capital invested in the company.
  • Structured as an OPC instead of a proprietorship, the entrepreneur can have better access to banking finance.
  • There is no provision in the new Act for converting an existing private limited company registered under the Companies Act 1956 or any previous company law into a one person company.
  • Physical presence of directors and member of the OPC is not compulsory for meetings of the board or members. The flexibility to participate through virtual presence will help increase operational efficiencies.
  • Conversion of SME into OPC will help the government capture quality data about the sector and form policies accordingly.
  • Since foreign companies prefer to do business with registered entities such as private or public limited company, the introduction of OPC will help increase international trade with India.

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