Incorporating features of One Person Company across the world - PowerPoint PPT Presentation

View by Category
About This Presentation
Title:

Incorporating features of One Person Company across the world

Description:

In this blog, we have discussed about the incorporating features of one person companies and their advantages in world-wide. – PowerPoint PPT presentation

Number of Views:2
Slides: 18
Provided by: dharanik169
Category: Other

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Incorporating features of One Person Company across the world


1
Incorporating features of One Person Company
across the world
  • In this blog, we have discussed about the
    incorporating features of one person
    companies and their advantages in world-wide

2
Incorporating features of One Person Company
across the world
  • One person companies are not provided under the
    companies Act, 1956. It was introduced by the
    Companies Act, 2013. One Person Company, the name
    itself suggest that it should contain only one
    member. Moreover, an OPC is a vehicle that seeks
    remedies to solve problems faced by companies
    such as Sole proprietorship. It has the unlimited
    liability and able to balance the extensive
    requirements of incorporating and running
    business. Therefore, one person companies will be
    best choice of business for the person who wish
    to start a business venture with the structural
    and organizational advantages.

3
  • Moreover, an one person company is a vehicle that
    seeks remedies to solve problems faced by
    companies such as Sole proprietorship. It has the
    unlimited liability and able to balance the
    extensive requirements of incorporating and
    running business. Therefore, one person companies
    will be best choice of business for the person
    who wish to start a business venture with the
    structural and organizational advantages.

4
Incorporating an OPC
  • Several countries have already recognized the
    ability of individuals incorporating a company
    before the enactment of the new Companies Act in
    2013. Furthermore, members of a companies are
    nothing but subscribers to its memorandum of
    association (MOA), or its shareholders.
    Therefore, OPC is a company that has only one
    shareholder as its member. Such companies are
    generally created when there is only one founder
    or promoter for the business. Entrepreneurs whose
    businesses lies in early stages can start OPCs
    instead of sole proprietorship business because
    they provide several advantages.

5
Incorporating History of OPC
  • The concept of one person company was first
    recommended by the experts committee of Dr. JJ
    Irani in 2005. Chiefly, the committee decided to
    classify the companies based on size, members and
    the control. In reference to the OPC, it is said
    that it is the time that entrepreneurial
    capabilities of the people are given an outlet
    for the participation in the economical
    activates.

6
  • Moreover, it is also recommended that a simpler
    rule through exemptions be made applicable
    to OPCs in order that an entrepreneur is not
    required to expend excessive time and resources
    on procedure that could otherwise be applied to
    its business activities.
  • Consequently, major counterparts of Indian OPCs
    are found in Europe, United States and Australia
    have resulted in strengthening the economies of
    the countries. Similarly, OPC will give
    businessmen all the benefits that a private
    business will give. OPCs provides the opportunity
    to people to take advantage of the unique
    characteristics of a company while remaining
    independent.

7
Reason for the formation
  • Under the old companies act, there was a
    requirement of at least two people to form a
    private limited companies. Hence, this is
    considered to be the major difficulty for those
    business people who wish to start the business
    alone. The only option will be going for a
    private limited companies or public limited
    companies with seven members.
  • Specifically, The reason why a private limited
    company necessarily have at least two people is
    to differentiate it from a sole
    proprietorship, which any individual could start
    on his own consensus.Incorporating features may
    vary from one company to other,

8
Idea of an OPC
  • To over this problem, the companies are
    incorporating by individuals on appointing
    directors. They were given only one share, which
    is mandatory to become the member of the
    companies. The rest of the shares are retained by
    the owner of the company. In other words, the
    idea of one person company was introduced for the
    first time in the year 2009, but unfortunately,
    the idea could not cope up itself into something
    concrete. Then again in 2012, efforts were made
    to implement the idea, and it became a reality
    with the introduction of the Companies Act, 2013.

9
Features of a One Person Company
10
  • Some of the general features of a one-person
    company
  • Private company
  • Section 3(1)(c) of the Companies Act says that a
    single person can form a company for any lawful
    purpose. It further describes OPCs as private
    companies.
  • Single member
  • Moreover, One person companies should have only
    one member or shareholder, unlike other private
    companies.
  • Nominee
  • A unique feature of OPCs that separates it from
    other kinds of companies is that the sole member
    of the company has to mention a nominee while
    registering the company.

11
  • NO PERPETUAL SUCCESSION
  • Since there is only one member in an OPC, his
    death will result in the nominee choosing or
    rejecting to become its sole member. This does
    not happen in other companies as they follow the
    concept of perpetual succession.
  • MINIMUM ONE DIRECTOR
  • In essence, OPCs need to have minimum one person
    (the member) as director. They can have a maximum
    of 15 directors.
  • NO MINIMUM PAID-UP SHARE CAPITAL
  • Companies Act, 2013 has not prescribed any amount
    as minimum paid-up capital for OPCs.
  • SPECIAL PRIVILEGES
  • OPCs enjoys privileges and exemptions under the
    Companies Act compared to other companies.

12
Who can form a one person company?
  • In addition, Only a natural person who is an
    Indian citizen and resident in India, i.e., a
    person who has stayed in India for a period of
    not less than one hundred and eighty two days
    during the immediately preceding one calendar
    year can incorporate a One Person Company and a
    nominee for the sole member of a One Person
    Company.

13
AS PER ONE PERSON COMPANY (RULE 3 OF COMPANIES
(INCORPORATION) RULES, 2014)
  • A person cannot incorporate more than one OPC or
    be the nominee of more than One Person Company
  • A minor shall not become member or nominee of
    the One Person Company or can hold share with
    beneficial interest.
  • Therefore, Company cannot be incorporated or
    converted into a company under section 8 of the
    Act.
  • Consequently, Company cannot carry out
    Non-Banking Financial Investment activities
    including investment in securities of anybody
    corporate.
  • No such company can convert voluntarily into any
    kind of company unless two years have expired
    from the date of incorporation of One Person
    Company, except when threshold limit (paid up
    share capital) is increased beyond fifty lakh
    rupees or its average annual turnover during the
    relevant period exceeds two crore rupees.

14
Privileges of One Person Companies
  • OPC enjoys the following privileges under the
    Companies Act
  • They do not have to hold annual general meetings.
  • Their financial statements need not include cash
    flow statements.
  • Annual returns are not signed by the company
    secretary, only directors can do so.
  • Provisions relating to independent directors do
    not apply to them.
  • Their articles can provide for additional grounds
    for vacation of a directors office.
  • Several provisions relating to meetings and
    quorum do not apply to them.
  • They can pay more remuneration to directors than
    compared to other companies.

15
Membership in One Person Companies
  • Only natural persons who are Indian citizens and
    residents are eligible to incorporating a one
    person company in India. The same condition
    applies to nominees of OPCs. Further, such a
    natural person cannot be a member or nominee of
    more than one OPC at any point of time.
  • Chiefly, it is important to note that only
    natural persons can become members of OPCs. This
    does not happen in the case of companies wherein
    companies themselves can own shares and be
    members. Further, the law prohibits minors from
    being members or nominees of OPCs.

16
Conversion of OPCs into other Companies
  • Under the rules regulation the incorporating
    features of one person companies, the OPC cannot
    be converted into Section 8 companies, because
    the section 8 companies have the charitable
    objectives. Furthermore, OPCs can be converted
    into all other kinds of companies until the
    expiry date of 2 years for the date of company
    incorporation.
  • An OPC will be terminated, if its paid-up share
    capital of the company exceeds 50 lakh or either
    the average annual turnover of the company
    exceeds 2 crores. In such a case, the OPC will be
    convert into a private or public limited company.
    The company can obtain no objection certificate,
    and the resolution should be filed with the
    registrar of companies within 30 days in Form no.
    MGT14.

17
One Person Company as a Global Perspective
  • Although OPC is a recent concept in India, it has
    been widespread in the United Kingdom for many
    years by Lord Herschel in the renowned case of
    Saloman v. Saloman Co. Ltd where he
    acknowledged the idea of a one-person company as
    lawful. Further, under Section 7 of the UK
    Companies Act, 2006, a one-person public and
    a private company can be formed by complying with
    the registration and Memorandum of Association
    requirements, as laid down in the UK Act.
  • Similarly, in the United States, almost all
    states issues license for single member limited
    liability companies with different state-specific
    laws. Amongst Asian countries, Pakistan,
    Singapore and China adopted OPC in their legal
    systems in 2003, 2004 and 2005 respectively.
About PowerShow.com