Intermediate · Paper 5 – Business Laws & Ethics · Companies Act, 2013 · 2:38
English
Transcript
Can just one person own a whole company? Yes! Meet the One Person Company.
Selvi weaves silk sarees in Kanchipuram, all by herself. She wants bank loans and limited liability, but she has no business partner.
Selvi: Can I form a company all alone?
Yes! Section 2, clause 62 says a One Person Company is a company which has only one person as a member. It is a kind of private company, first introduced by the Companies Act, 2013, as recommended by the J J Irani Committee.
It may be limited by shares, or limited by guarantee.
But what if Selvi dies, or becomes incapable of contracting? So the memorandum must name a nominee, with the nominee's prior written consent in Form I N C 3. On the member's death or incapacity, the nominee becomes the member.
Kumar: Selvi, I give my written consent. I will be your nominee.
If the nominee withdraws consent, the member must nominate another person within fifteen days, and the company files Form I N C 4 with the Registrar within thirty days.
Who can form an O P C? As per the study notes, only a natural person who is an Indian citizen and resident in India, that is, who stayed in India for at least 182 days in the previous financial year.
Note the 2021 amendment: the stay is now 120 days, and Indian citizens living abroad can also form an O P C.
Now the conditions. A person can form only one O P C, and be a nominee in only one O P C. No minor can be a member or nominee. An O P C cannot become a Section 8 company, and cannot carry out non banking financial investment activities.
Exam tip! Write the definition with Section 2, clause 62. And remember the nominee forms: consent in I N C 3, and the change filed in I N C 4.
Let's recap. One member, a kind of private company. A nominee with written consent. Only a natural person who is an Indian citizen. One O P C per person, and no minors.
Now try the test in the MPA app. In the next video, we will learn the benefits and conversion of a One Person Company.