Ram wants to incorporate a company in which he will be the only member. According to provisions of the Companies Act, 2013, what type of company can be incorporated? What are the salient features of this type of company?
OR
Core Legal Challenge
Define OPC (One Person Company) and state the rules regarding its membership. Can it be converted into a non-profit company under Section 8 or a private company?
Section 2(62) of the Companies Act, 2013 defines one person company (OPC) as a company which has only one person as a member.
According to section 3(1)(c) of the Companies Act, 2013, OPC is a private limited company with the minimum paid up share capital as may be prescribed and having one member.
➢ The memorandum of OPC shall indicate the name of the other person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of the company.
➢ Such Company cannot be incorporated or converted into a company under section 8 of the Act. Though it may be converted to private or public companies in certain cases.
➢ If One Person Company or any officer of such company contravenes the provisions, they shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.
Further, OPC cannot be incorporated or converted into a company under section 8 of the Act. Though it may be converted to private or public companies in certain cases.
Ram wants to incorporate a company in which he will be the only member. Hence, he can incorporate an One person Company.
OPC (One Person Company) – salient features
➢ Only one person as member.
➢ Minimum paid up capital – no limit prescribed.
➢ The other person whose name is given in the memorandum shall give his prior written consent in prescribed form and the same shall be filed with Registrar of companies at the time of incorporation.
➢ Such other person may be given the right to withdraw his consent.
➢ The member of OPC may at any time change the name of such other person by giving notice to the company and the company shall intimate the same to the Registrar.
➢ Any such change in the name of the person shall not be deemed to be an alteration of the memorandum.
➢ Only a natural person who is an Indian citizen whether resident in India or otherwise-
shall be eligible to incorporate an OPC;
shall be a nominee for the sole member of an OPC.
➢ No person shall be eligible to incorporate more than one OPC or become nominee in more than one such company.
➢ No minor shall become member or nominee of the OPC or can hold share with beneficial interest.
➢ Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body-corporate.
Here the member can be the sole member-cum-director.
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