OPC OPC UNDER COMPANIES UNDER COMPANIES

ACT, 2013ACT, 2013

By By

CA. P.RAJACA. P.RAJA,,

Partner Partner

P R N & Associates, ChennaiP R N & Associates, Chennai

E-mail : getcaraja@gmail.comE-mail : getcaraja@gmail.com

Origin of the concept in IndiaOrigin of the concept in India

The concept of OPC was mooted, in the report of The concept of OPC was mooted, in the report of Dr. J.J.IraniDr. J.J.Irani Committee.Committee.

Suggestion of the committee -Suggestion of the committee -With increasing use of With increasing use of information technology and computersinformation technology and computers, emergence , emergence of the service sector, it is time that the of the service sector, it is time that the entrepreneurial capabilities of the people are given entrepreneurial capabilities of the people are given an outlet for participation in economic activity. Such an outlet for participation in economic activity. Such economic activity may take place through the economic activity may take place through the creation of an economic person in the form of a creation of an economic person in the form of a companycompany. .

Contd…Contd… Yet it would not be reasonable to expect that every entrepreneur Yet it would not be reasonable to expect that every entrepreneur

who is capable of developing his ideas and participating in the who is capable of developing his ideas and participating in the

market place should do it through an association of persons. We market place should do it through an association of persons. We

feel that it is pfeel that it is possible for individuals to operate in the economic ossible for individuals to operate in the economic

domaindomain and and contribute effectivelycontribute effectively. To facilitate this, the . To facilitate this, the

Committee recommends that the law should recognize the Committee recommends that the law should recognize the

formation of a single person economic entity in the form of ‘One formation of a single person economic entity in the form of ‘One

Person Company’. Person Company’.

Such an entity may be provided with a simpler regime through Such an entity may be provided with a simpler regime through

exemptions so that the single entrepreneur is not compelled to exemptions so that the single entrepreneur is not compelled to

fritter away his time, energy and resources on procedural matters.fritter away his time, energy and resources on procedural matters.

What is one person What is one person company?company?

Section 2(62) of the CA, 2013Section 2(62) of the CA, 2013 Company formed by a single personCompany formed by a single person One-person company in the legal system One-person company in the legal system

is a move that would encourage is a move that would encourage corporatization of business and corporatization of business and entrepreneurshipentrepreneurship

OPC is a one shareholder corporate entity.OPC is a one shareholder corporate entity. Legal and financial liability is limited to Legal and financial liability is limited to

the company only.the company only.

Type Of OPC Type Of OPC

As per section 3(1) and (2) of the CA, 2013, As per section 3(1) and (2) of the CA, 2013, OPCOPC can only be can only be incorporatedincorporated as as privateprivate limited company, such as ;limited company, such as ;

i.i. A company limited by shares; orA company limited by shares; or

ii.ii. A company limited by guarantee; orA company limited by guarantee; or

iii.iii. An unlimited companyAn unlimited company

Features of OPCFeatures of OPC

It can be incorporated by one person as private limited.It can be incorporated by one person as private limited.

Name of the company should be end with (OPC). Eg., ABC Name of the company should be end with (OPC). Eg., ABC India Private Ltd(OPC).India Private Ltd(OPC).

Only One Director.Only One Director.

Minimum capital – Rs 1 lakh and Maximum Rs 50 lakhsMinimum capital – Rs 1 lakh and Maximum Rs 50 lakhs

Lock-in-PeriodLock-in-Period - Two Years from Incorporation - Two Years from Incorporation

Benefits of OPCBenefits of OPC

Limited LiabilityLimited Liability

Legal Status and Social recognition Legal Status and Social recognition

Complete control with single personComplete control with single person

Easy to get loan from banksEasy to get loan from banks

Ample time limit to file annul returns – 180 days from the Ample time limit to file annul returns – 180 days from the

closure of financial yearclosure of financial year

Minimum compliance with Companies ActMinimum compliance with Companies Act

Who can Incorporate a OPC ?Who can Incorporate a OPC ?

As per Rule 3(1) of the Companies(Incorporation) Rules, As per Rule 3(1) of the Companies(Incorporation) Rules,

2014, Only a 2014, Only a natural personnatural person who is an Indian citizen and who is an Indian citizen and

resident in India shall be eligible.resident in India shall be eligible.

As per the explanation given to Rule 3(1) - “Resident in As per the explanation given to Rule 3(1) - “Resident in

India” means a person who has stayed in India for a period of India” means a person who has stayed in India for a period of

not less than 182 daysnot less than 182 days during immediately preceding one during immediately preceding one

Calendar yearCalendar year. .

Who can not become Who can not become member/nominee of OPCmember/nominee of OPC

Minor (as per Rule 3(4) of the CR(INC), 2014. Minor (as per Rule 3(4) of the CR(INC), 2014.

Foreign CitizenForeign Citizen

Non ResidentNon Resident

A person incapacitated to contractA person incapacitated to contract

Persons other than a Natural Person (i.e.,) Living Persons other than a Natural Person (i.e.,) Living

human beinghuman being

Can OPC engage in all business ?Can OPC engage in all business ?

As per Rule 3(6) of the Companies(Incorporation) Rule, As per Rule 3(6) of the Companies(Incorporation) Rule,

2014;2014;

Such companies CAN NOT engage in Such companies CAN NOT engage in NBFCNBFC activities activities

including including investmentinvestment in securities of any body corporate.in securities of any body corporate.

OPC can not be incorporated or converted into OPC can not be incorporated or converted into Section 8Section 8

company.company.

Process for the Incorporation of Process for the Incorporation of OPCOPC

Step 1 :Step 1 :

Obtain DSC for the proposed Director Obtain DSC for the proposed Director

Step 2 :Step 2 :

Obtain DIN for the proposed DirectorObtain DIN for the proposed Director

Step 3 :Step 3 :

Select suitable company name- Maximum 6 names Select suitable company name- Maximum 6 names

Contd..Contd..Step 4 :Step 4 :

File Form INC 1 – Name AvailabilityFile Form INC 1 – Name Availability

Step 5 :Step 5 :

File Form INC 2 with in 60 days from the date of INC 1 filed – File Form INC 2 with in 60 days from the date of INC 1 filed –

Registration of the company along with the following Registration of the company along with the following

documentsdocuments

MOA & AOAMOA & AOA

ID, Address proof and photo’s of the DirectorID, Address proof and photo’s of the Director

Contd..Contd.. Written consent of the Nominee - Form INC 3.Written consent of the Nominee - Form INC 3.

Declaration by professional – Form INC 8Declaration by professional – Form INC 8

Affidavit of the subscriber and First Director – Form INC 9Affidavit of the subscriber and First Director – Form INC 9

Specimen signature – Form INC 10Specimen signature – Form INC 10

Correspondence address if its different from registered Correspondence address if its different from registered

address – Form INC 22 with in 30 days from the date of address – Form INC 22 with in 30 days from the date of

incorporation.incorporation.

Lapse status of OPCLapse status of OPC

As per Rule6(1) of the CR(INC) ,2014As per Rule6(1) of the CR(INC) ,2014

If paid up share capital is increased If paid up share capital is increased beyond FIFTYbeyond FIFTY lakhs. lakhs.

{OR}{OR}

It’s average annual turnover during the relevant period It’s average annual turnover during the relevant period exceedexceed

TWO crore TWO crore rupees.rupees.

Note : “Relevant Period" means the period of immediately Note : “Relevant Period" means the period of immediately

preceding preceding three consecutivethree consecutive financial yearsfinancial years

Withdrawal or death of nominee Withdrawal or death of nominee or member of OPCor member of OPC

As per Rule 4(3) and (4) of CA(INC), 2014 -Can withdraw his As per Rule 4(3) and (4) of CA(INC), 2014 -Can withdraw his

consent by giving notice in writing to the sole member and OPC.consent by giving notice in writing to the sole member and OPC.

Sole member should nominate another person Sole member should nominate another person within 15 days within 15 days of the of the

above and intimate to the company along with his consent in Form above and intimate to the company along with his consent in Form

No : INC 3No : INC 3

The company shall The company shall within 30 days within 30 days of receipt of withdrawal of consent of receipt of withdrawal of consent

file with the registrar Form No. INC 4 along with INC 3 of new file with the registrar Form No. INC 4 along with INC 3 of new

nomineenominee..

Conversion of OPC into PVT LtdConversion of OPC into PVT Ltd Voluntary Conversion : (i.e.,) after completion of Voluntary Conversion : (i.e.,) after completion of two years two years

from the date of incorporation - File Form No. INC 6 from the date of incorporation - File Form No. INC 6 within 30 within 30

days days ..

Mandatory Conversion : Threshold limit specified exceeded – Mandatory Conversion : Threshold limit specified exceeded –

Intimate in Form No. INC 5 to the ROC within 60 days –Rule Intimate in Form No. INC 5 to the ROC within 60 days –Rule

6(4)6(4)ANDAND

File Form No. INC 6 within File Form No. INC 6 within Six Month Six Month for conversion into for conversion into

private limitedprivate limited

Conversion of Private Ltd into OPCConversion of Private Ltd into OPC

Check share capital and Average annual turnover of the Check share capital and Average annual turnover of the

relevant period.relevant period.

Obtain “No Objection” in writing from members and Obtain “No Objection” in writing from members and

creditorscreditors

Special resolution to be passed in GM.Special resolution to be passed in GM.

File copy of special resolution in Form No. File copy of special resolution in Form No. MGT 14 within 30 MGT 14 within 30

daysdays of passing special resolution.of passing special resolution.

Conversion Of Private Ltd into Conversion Of Private Ltd into OPCOPC

As per Rule 7(1) and (2)As per Rule 7(1) and (2) The company shall file an application in The company shall file an application in Form No. INC 6Form No. INC 6 for for

its conversion.its conversion.

Directors of the company should provide Directors of the company should provide ;; Declaration by way of affidavit conforming that Declaration by way of affidavit conforming that

the members and creditors has given no the members and creditors has given no objection. objection. List of members and creditorsList of members and creditors Latest Audited balance sheet and Profit & Loss Latest Audited balance sheet and Profit & Loss

Account.Account. the copy of no objection letter of secured the copy of no objection letter of secured

creditorscreditors

Penalty Penalty

As per Rule 6(5) of the Companies (Incorporation) Rules, As per Rule 6(5) of the Companies (Incorporation) Rules,

2014: If OPC or any officer of OPC contravenes the 2014: If OPC or any officer of OPC contravenes the

provisions of the Companies(Incorporation) Rule 2014, provisions of the Companies(Incorporation) Rule 2014,

then such OPC or any officer of the OPC shall be then such OPC or any officer of the OPC shall be

punishable fine which may extend to punishable fine which may extend to Rs. 10,000/- Rs. 10,000/- and and

with further may extend to Rs. 1,000/- for every day after with further may extend to Rs. 1,000/- for every day after

first day during which such contravention continues.first day during which such contravention continues.

Chapter VII ( Management & Chapter VII ( Management & Admin) - ExemptionAdmin) - Exemption

As per the provision of section 122 of the CA,2013As per the provision of section 122 of the CA,2013

Cash Flow StatementCash Flow Statement

Section 96 – Holding AGMSection 96 – Holding AGM

Section 98 – Power of Tribunal to call meetingSection 98 – Power of Tribunal to call meeting

Section 100 – Calling EGMSection 100 – Calling EGM

Section 101 – Notice to meetingSection 101 – Notice to meeting

Section 102 – Statement to be annexed to the meeting.Section 102 – Statement to be annexed to the meeting.

Section 103 – Quorum of meetingSection 103 – Quorum of meeting

Chapter VII ( Management & Chapter VII ( Management & Admin) - ExemptionAdmin) - Exemption

Section 104 – Chairman of the meetingSection 104 – Chairman of the meeting

Section 105 – ProxiesSection 105 – Proxies

Section 106 – Restriction on voting rightsSection 106 – Restriction on voting rights

Section 107- Voting by handsSection 107- Voting by hands

Section 108 – Voting Through ElectronicallySection 108 – Voting Through Electronically

Section 109 – Demand for pollSection 109 – Demand for poll

Section 110 – Postal ballotSection 110 – Postal ballot

Section 111 – Circulation of members resolutionSection 111 – Circulation of members resolution

Company vis-à-vis ONE Company vis-à-vis ONE PERSON COMPANYPERSON COMPANY

Common Seal

Perpetual Succession

Separate legal entity

Separate property

Limited liability

Management and Control

OPC Vs SOLE OPC Vs SOLE PROPRIETORSHIPPROPRIETORSHIPOPCOPC

Separate legal entitySeparate legal entity

Limited LiabilityLimited LiabilityDebt- not the sole responsibility Debt- not the sole responsibility of the ownerof the ownerFinance- credit record of the Finance- credit record of the company company Legal requirements- will need Legal requirements- will need to register itself as such to register itself as such

Separate taxSeparate tax

Sole proprietorshipSole proprietorshipOwner & entity is same Owner & entity is same personalitypersonality

Unlimited LiabilityUnlimited LiabilityDebt - sole responsibility of the Debt - sole responsibility of the ownerownerFinance- credit history of the Finance- credit history of the owner owner Legal requirements- will not have Legal requirements- will not have to draw up paper declaring its statusto draw up paper declaring its status

Tax paid by the ownerTax paid by the owner

Practical QuestionsPractical Questions

Is OPC required to file Annul Returns ?Is OPC required to file Annul Returns ?

Is mandatory to nominate a person ?Is mandatory to nominate a person ?

Should MOA carry nominee details?Should MOA carry nominee details?

Is it mandatory to maintain minutes book?Is it mandatory to maintain minutes book?

Practical QuestionsPractical Questions

Is OPC suitable for medium & Large business?Is OPC suitable for medium & Large business?

Whether a person form more than 1 one OPC? Whether a person form more than 1 one OPC?

– Rule 3(2)– Rule 3(2)

Whether a minor become member of OPC?Whether a minor become member of OPC?

Whether an OPC can carryout NBFC activities?Whether an OPC can carryout NBFC activities?

Practical QuestionsPractical Questions What If a member of an OPC becomes a member In What If a member of an OPC becomes a member In

another OPC by virtue of being a nominee in that other another OPC by virtue of being a nominee in that other

OPC ?OPC ?

Can have more than one director in OPC ? Can have more than one director in OPC ?

Can a person form OPC who is already Director in a Can a person form OPC who is already Director in a

existing Private Ltd ?existing Private Ltd ?

Practical QuestionsPractical Questions

Whether only an individual or even a legal entity Whether only an individual or even a legal entity

can form a one-person company?can form a one-person company?

Who can be a nominee of OPC ?Who can be a nominee of OPC ?

Is OPC exempted to hold Board Meeting ?Is OPC exempted to hold Board Meeting ?

Is OPC required to obtain commencement of Is OPC required to obtain commencement of

business?business?

QUESTIONS ???QUESTIONS ???

THANK YOUTHANK YOU

By CA. P. RAJA

Partner P R N & Associates,

ChennaiE-mail :

getcaraja@gmail.comCell: 98402 03100