One person company or OPC is not a new concept. It’s widely used all over the world including in countries like Pakistan, china, Singapore and US. In India OPC concept has been introduced with the new Companies act 2013.
Section 2(62) of Companies Act 2013, has defined one person company. As per this section, One Person Company means a company which has only one person as a member.
An OPC is created or set up as a private limited company. But certain requirements of private limited company are not applicable to One Person Company. For instance, a One Person Company is required to write “OPC” with its name.
In this article we will be discussing who are allowed to set up a one person company or OPC in India.
If you want to know the procedure for incorporating OPC then following articles might help you.
As per rule 3 of Companies (incorporation) rules, 2014, only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate a one person company in India.
Residential status is based on the presence of the individual in India. An individual will be considered as resident in India if he or she has stayed in India for a period of not less than 182 days during the immediately previous one calendar year.
As per the rule, no person shall be eligible to incorporate more than a one person company or become nominee in more than one such company. This means, one person can set up only one OPC and can also become nominee in another OPC.
If a person who is already a member of one OPC became member in another such company by virtue of his being a nominee in the one person company then such person shall meet the eligibility criteria within a period of 180 days.
Even the person who is going to be appointed as nominee of the OPC during incorporation or after that is required to be a natural person who is an Indian citizen and resident in India.
As per companies act 2013, the memorandum of association should state name of another person who in the event of death of the subscriber shall become the member of the company. This provision is introduced to make sure that company must go on even after the death of the member or shareholder.
One Person Company concept will also help foreign companies to set up business in India. At present, foreign companies are required to appoint minimum two nominees to form a wholly subsidiary company in India.