One Person Company

1. One Person Company (Section 2(62) of the Companies Act, 2013)

2. One Person Company • Simpler legal and governance regime for operation and maintenance • Waives a number of compliance requirements. • ‘Lives on’ even after the death/disability of the sole member • OPC registered with one member • Appointment of another person as a nominee member in the event of the subscriber’s death or his incapacity • Only natural person who is an Indian citizen and resident in India is eligible to incorporate OPC.

3. Types of OPC • a company limited by shares; or • a company limited by guarantee; or • an unlimited company.

4. Appointment of directors • Articles of a company may provide for the appointment of the first directors • If articles are silent then the subscriber to the memorandum who is an individual shall be deemed to be the first director of the company • May have a single director • Maximum-15 directors more than 15 after passing Special Resolution • Director must have stayed in India for a total period of not less than 182 days in the previous calendar year

5. Meetings of Board • At least one meeting of the Board of Directors to conducted in each half of a calendar year • Gap between the two meetings should not be less than ninety days • Exemption – if company has only one director.

6. Contract by One Person Company • One Person Company limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company, the terms of contract or offer are in writing or contained in a memorandum or recorded in the minutes of the Board meeting held next after entering into the contact. • Inform the Registrar about every contract entered into by the company within a period of fifteen days of the date of approval by the Board of Directors. • Contracts in ordinary course of business not required to comply with the above.

7. Financial Statement • The financial statement, signed by one director, for submission to the auditor for his report thereon. • Board of Directors Report means a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report. • Filed with ROC within 180 days from the closure of the financial year • Financial statement, may not include the cash flow statement

8. Exemption • Section 96. Option to dispense with the requirement of holding an AGM • Section 98. Power of Tribunal to call meetings of members • Section 100. Calling of extraordinary general meeting. • Section 101. Notice of meeting. • Section 102. Statement to be annexed to notice. • Section 103. Quorum for meetings. • Section 104. Chairman of meetings • Section 105.Proxies • Section 106. Restriction on voting rights • Section 107. Voting by show of hands • Section 108. Voting through electronic means • Section 109. Demand for poll • Section 110.Postal ballot • Section 111. Circulation of members’ resolution

9. Restrictions • Such Company cannot be incorporated or converted into a company under section 8 of the Act. • Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporates. • No such company can convert voluntarily into any kind of company until expiry of 2 years from the date of incorporation, except in cases where capital or turnover threshold limits are reached. • No minor shall become member or nominee of the One Person Company or hold share with beneficial interest.

10. Conversion of OPC • Where the paid up share capital exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees • OPC to convert itself, within 6 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, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act

11. Conversion of private company into One Person Company • A private company other than a company registered under section 8 of the Act may convert itself into OPC by passing a special resolution in the general meeting. • AND after obtaining a NOC from all its members and creditors.

12. Other features of OPC • OPC to lose its status if paid up capital exceeds Rs. 50 lakhs or average annual turnover is more than Rs. 2 crores in 3 immediately preceding consecutive years. • Mandatory rotation of auditor after expiry of maximum term is not applicable.  • The annual return of a One Person Company shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

13. SMALL cOMPANY

14. Small Company The concept of “Small Company” has been introduced for the first time by the Companies Act, 2013. The Act identifies some companies as small companies based on their capital and turnover for the purpose of providing certain relief/exemptions to these companies. Most of the exemptions provided to a small company are same as that provided to a One Person Company.

15. Small Company - Section 2 (85) A  company, other than a public company,—  paid-up share capital of which does not exceed Rs. 50 lakh or such higher amount as may be prescribed which shall not be more than Rs. 5 crore; or turnover of which as per its last P&L A/c does not exceed Rs. 2crore or such higher amount as may be prescribed which shall not be more than Rs. 20 crore Provided that nothing in this clause shall apply to— (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act;

16. Salient Features Only a private company can be classified as a small company. Holding company, subsidiary company, charitable company and company governed by any Special Act cannot be classified as a small company. For a small company, either the paid up capital should not exceed Rs. 50 lakhs or the turnover as per latest statement of profit & loss should not exceed Rs. 5  crores. The status of a company as “Small Company” may change from year to year. Thus the benefits which are available during a particular year may stand withdrawn in the next year and become available again in the subsequent year.

17. Special Provisions and Exemptions • Privileges/exemptions available to a small company are same as OPC. • The annual return of a Small Company can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company. • A small company may hold only two board meetings in a year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.

18. Special Provisions and Exemptions A small company need not include Cash Flow Statement as a part of its financial statements. Provision regarding mandatory rotation of auditor not applicable to a small company. Holding and subsidiary companies are specifically excluded from the concept of small company. In other words, a holding or a subsidiary company can never enjoy the privileges of a small company even though they may fulfill the capital or turnover requirement of a small company.

19. “Foreign Company” {Section 2(42)}{Chapter XXII, Section 379 -393}

20. Foreign Company any company or body corporate incorporated outside India which— has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner.

21. Electronic ModeCompanies (Registration of Foreign Companies) Rules, 2014 “Electronic mode” means carrying out electronically based, whether main server is installed in India or not, including, but not limited to – (i) B2B and B2C transactions, data interchange and other digital supply transactions; (ii) offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India; (iii) financial settlements, web based marketing, advisory and transactional services, database services and products, supply chain management; (iv) online services such as telemarketing, telecommuting, telemedicine, education and information research; and (v) all related data communication services, whether conducted by e-mail, mobile devices, social media, cloud computing, document management, voice or data transmission or otherwise;

22. Application of Act to Foreign Company Where not less than fifty per cent of the paid-up share capital, of a foreign company is held by Indian citizen or corporate whether singly or in the aggregate, such company shall comply with the provisions of the Act as may be prescribed with regard to the business carried on by it in India as if it were a company incorporated in India.”

23. Documents to be delivered to Registrar Within 30 days of the establishment of its place of business in India, deliver to the Registrar for registration— a certified copy of the charter, statutes or memorandum and articles, of the company in the English language OR a certified translation thereof in the English language; the full address of the registered or principal office of the company; a list of the directors and secretary of the company containing such particulars as may be prescribed; the name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process particulars of opening and closing of a place of business in India on earlier occasion (s); declaration that none of the directors of the company or the authorized representative in India has ever been convicted or debarred from formation of companies and management in India or abroad

24. Accounts of Foreign Company In every calendar year make out a balance sheet and profit and loss account Documents relating to copies of latest consolidated financial statements of the parent foreign company Statement of related party transactions Statement of transfer of funds (including dividends if any) A copy of a list of all places of business established by the company in India as at the date

25. Annual Return Every foreign company shall prepare and file, within a period of sixty days from the last day of its financial year, to the Registrar annual return along with such fee and containing the particulars as they stood on the close of the financial year.

26. Display of Name Name of Company and Country of incorporation - Outside every office in English and also in the local language All business letters, billheads and letter paper, and all notices, and other official publications of the company;

27. Other Compliances Provisions of debentures Provisions of annual return Provisions of registration of charges Provisions relating to books of account and their inspection Provisions of Inspection, Inquiry and Investigation specified under Chapter XIV

28. Penalty Fine not less than Rs. 1 lakh but which may extend to Rs. 3 lakh Continuing offence, with an additional fine which may extend to Rs. 50,000 for every day after the first during which the contravention continues Every officer of the foreign company who is in default shall be punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 5 lakh, or with both.

29. Penalty Any failure shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof Company shall not be entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceeding in respect of any such contract, dealing or transaction, until the company has complied with the provisions of this Act applicable to it.

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