One Person Company



The
concept of the Person Company is the outcome of the revolutionary changes in
the Corporate Laws as made by the Indian Parliament for modernizing the
business procedures of the corporate entities. Previously, the term “company”
was synonymous with the “association of individuals or persons”. This new concept of
One Person Company has changed the stated literal meaning of a company.



The
Law and the Concept:



Before
the enactment of the Companies Act 2013, there was no provision regarding the
formation of a company without having the prescribed number of members. The
minimum number of members required for forming a private limited company under
Companies Act 1956 was 2. However, under the new act, that is, the Companies
Act 2013, a company can be formed by a single member and such a company shall
be called as the One Person Company.



This
clearly shows that an OPC has only one shareholder or member. However, the
basic features of a company do not become extinct here. Keeping these
features, the assets and liabilities of an OPC is treated separately from the
assets and liabilities of its sole member. In other words, the OPC and its
member are different and this makes an OPC different from a sole proprietorship
business.



 



Features
of One Person Company



One
Person Company has some distinct features, which are discussed below.



1. One person: The
most striking feature of a One Person Company is that it has only one director
(S. 149 of the Companies Act 2013), who is the only shareholder of it.



2. Amount of minimum paid-up
capital: The Companies Act 2013 specifies the minimum paid-up
capital for OPCs. An OPC shall have at least Rs. 1 lakh as paid-up capital.



3. Financial Statements: An
OPC requires to publish the Statement of Profit and Loss and Balance Sheet. Unlike
other companies, it does not need to publish the Cash Flow Statement. The sated
financial statements are required to be filed with the Registrar of Companies (RoC)
within 180 days from the date of closing of the financial year.



4. Writing the name of the company:
A
One Person Company needs to mention its name in brackets below the name of the
company.



5. Non-applicable clauses: The
following clauses are not applicable to an OPC:




  • Clause 98: Power of Tribunal to
    call meetings of members,

  • Clause 100: Calling of extraordinary
    general meeting,

  • Clause 101: Notice of Meeting,

  • Clause 102: Statement to be annexed
    to notice,

  • Clause 103: Quorum for meetings,

  • Clause 104: Chairman of meetings,

  • Clause 105: Proxies,

  • Clause 106: Restriction on voting
    rights,

  • Clause 107: Voting by show of
    hands,

  • Clause 108: Voting through
    Electronic means,

  • Clause 109: Demand for poll,

  • Clause 110: Postal Ballot,

  • Clause 111: Circulation of members’
    resolution



 



Why to prefer One Person Company
over a sole-proprietorship business?



 1.
Single entity: In the case of One Person Company, the sole member and the
company are treated as separate entity.



2. Taxation: In
the case of sole proprietary business, the entire profit of a business is
treated as the income of the sole owner. However, the earnings of One Person
Company is not treated as the income of the sole director or member. The
concept of One Person Company was introduced through the Companies Act 2013,
and in the Income Tax Act, there is no special treatment regarding the income
of the One Person Company. Here, in this case, the profit of One Person Company
is treated as the profit of a company and treated according to the rule of
taxation of a private limited company. 



3. Succession: On
the occasion of the death of the sole director of an One Person Company, a designated
nominee can run the company. On the other hand, a sole proprietary firm gets dissolved
with the death of its sole owner.     



Steps involved in forming One
Person Company








Bibliography

1. Mca.gov.in