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One Person Company
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One Person Company
A one-person company is an Indian private limited company which has only one founder/promoter. The founder should be a natural person who is a country resident. There is also a threshold of paid-up capital (₹ 50 lakh) and average turnover (₹ 2 crores in 3 immediately preceding financial years) for a one-person
INCORPORATION OF ONE PERSON COMPANY
Rule 3 of the Companies (Incorporation) Rules 2014 say, only a natural person who is an Indian citizen and resident in India: –
- shall be eligible to incorporate a One Person Company;
- shall be a nominee for the sole member of a One Person Company.
“Resident in India” means 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.
A person can incorporate only one “One Person Company”, at any point of time and the said person shall not be a nominee of more than a One Person Company. The subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.
PROCEDURE TO REGISTER /INCORPORATE ONE PERSON COMPANY
STEP 1-Name approval
The name of the person nominated shall be mentioned in the memorandum of One Person Company and such nomination in Form INC-32 (SPICe), Single Application for Incorporation of Company, along with consent of such nominee obtained in Form INC – 3 and fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles. Form INC-32 is for incorporation of one Person Company. Rule 3 of Companies (Incorporation) Rules, 2014 – One Person Company
- Only a natural person who is an Indian citizen and resident in India-
- shall be eligible to incorporate a One Person Company;
- shall be a nominee for the sole member of a One Person Company.
Explanation-For the purposes of this rule,
- The term “resident in India” means 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.
- A natural person shall not be a member of more than a One Person Company at any point of time and the said person shall not be a nominee of more than a One Person Company.
- Where a natural person, being a member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days.
- No minor shall become a member or nominee of the One Person Company or can hold shares with beneficial interest.
- 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 unless two years have expired from the date of incorporation of One Person Company, except 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.
STEP 2: TO OBTAIN NECESSARY DOCUMENTS
The essential documents are –
- Identity Proof: Copy of the Permanent Account Number (PAN) of all the Directors and Promoters (Mandatory);
- Proof of Address: Copy of a valid Passport/Driving License/Aadhar Card/Telephone or Electricity Bill, not older than 2 months;
- a recent passport size photograph of the Directors/Promoters;
- In case if the office premises are taken on rent then A Rent Agreement or Leave & License Agreement is mandatory;
- The Utility Bills of the registered office
- . The Consent to act as the Director in the Form DIR-2
- The details of Directors’ Directorship in any other Companies/LLPs, if any.
STEP 3: PREPARINGDSC (DIGITAL SIGNATURE) AND DIN (DIRECTOR IDENTIFICATION NUMBER) Preparing DSC and DIN
Obtaining Digital Signature Certificate (DSC) and Directors Identification Number (DIN) for all the directors and promoters of the company. An application should be filed in RUN FORM to the Registrar of Company (Central Registration Centre – CRC of Ministry of Corporate Affairs). For name approval maximum 2 names may be provided by the applicant. The approved name has the validity of 20 days. The name must include the words such as foundation, association, forum, council, chambers, etc. as in accordance with the Company (Incorporation) Rules, 2014.
STEP 4: DRAFTING OF MOA AND AOA
Draft the Memorandum of Association and Articles of Association of the proposed company in required E-form
STEP 5 FILLING ALL OTHER NECESSARY FORMS WITH ROC (Registrar of companies)
Forms like Form No. INC – 7, Form No. INC – 22, Form No. DIR – 12 along with the appropriate documents are to be filed with ROC.
STEP 6 GETTING CERTIFICATE OF INCORPORATION OF THE COMPANY
If the Concerned ROC is satisfied with the incorporation forms, A Certificate of Incorporation is issued by the Registrar of Companies with a unique Company Identification Number (CIN), after the ROC is satisfied with the filed forms and documents.
The Central Government can direct the company to convert its status to Private or Public Company and change its name by adding the suffix ‘Limited’ or ‘Private Limited’ and there upon the Registrar shall register the company accordingly. The Central Government may direct such a company to be wound up or amalgamated with another company that is registered under this section. But such orders can only be given after the company has been given a reasonable chance to be heard. And then a copy of the order is given to the Registrar.
In case a company violates the term laid down in Section 8, Sub-section (11) of Section 8 of the Companies Act states the company shall be punishable, subject to the fraudulent actions of the company –
- with fine not less than 10 Lakh rupees and which can be extended up to 1 Crore rupees,
- Every directors and officer of the company in default shall be punishable with imprisonment for a term which can be of three years with fine which shall not be less than 25,000 rupees but which can extend to 25 Lakh rupees,
