Good news for entrepreneurs, now you can form One Person Company (OPC) in India. Till now to register a Private Limited company two directors were mandatory by the law. But from now on anyone who wants to start a venture alone can register it as a One Person Company. One Person Company needs only one person as the shareholder as well as the Director. The OPC is new concept introduced in India by the Companies Act 2013. This is indeed good news for budding entrepreneurs to start their own venture without looking for another director or shareholder.
Section 2(62) of the Companies Act, 2013 defines One Person Company as a company which only has one person as a member. The single person holds the 100% share of the company. But there is no restriction in having more than one director; however the number of directors should not exceed 15.
But according to the Company Incorporation Rules, only a natural person who is a resident and citizen of India is eligible to form a One Person Company. No foreign resident or any legal entities like companies can form as OPC. As per rule 3(4), a minor cannot hold any share of the OPC. It also specifies that, no person shall be eligible for a nominee in more than one OPC.
The person forming the OPC must have to nominate a Nominee. The nominee has to give his written consent which is required to be filled with the ROC at the incorporation time of the OPC. The appointed nominee will become the member and director of the One Person Company, in the event of death or inability to contract of the sole member of the company.
The nominee will take over all the shares and responsibilities of the company after he/she becomes the director and have to appoint another nominee as the director. However the nominee has the right to withdraw their consent at any time.
How to form an One Person Company:
The procedure to form an OPC is same as forming a Private Limited company. The OPC companies shall have OPC suffix added to it as Pvt. Ltd., in case of a Private Limited company. First the company name should be checked at the registrar of companies for the availability of the name of the company.
Next is to assign DIN to the directors and applying for the digital signature. Then you need to draft the memorandum of association and articles of association, which specifies the objectives of the company.
As the company will be owned by a single person, he must nominate someone to take charge of it in case of his death or disability.