The One Person Company was introduced in India in the year 2013. The Draft Rules under the act known as the Companies Act 2013 has defined the incorporation process of the One Person Company. There are certain definite rules one should follow while incorporation of the One Person Company. These have been explained below-
Who has the right to incorporate the One Person Company?
According to the draft rules written in the Companies Act of 2013, only a natural person who is known to be an Indian citizen and the resident of India has the ultimate right to incorporate the One Person Company. He also has the right to be the sole member of this new business entity known as the One Person Company. A ‘resident of India’ is known to be a particular person who has lived in India for a time which is more than 182 days. It should be immediately during the previous financial year. It should be noted that a single person does not have the right to incorporate more than five One person Company.
Who is the Nominee of the One Person Company?
The original owner who is the person incorporating the One Person Company is responsible to nominate a particular person who has the ability to become the member of the One Person Company. He should be able to carry out his duty when the original owner has died or when he is incapable to carry out the contract. It is necessary to mention the name of the nominee in the memorandum of the one person Company. Also, it is necessary to get the consent of the nominated person of the one person company.
The automatic conversion of OPC into Private Limited or Limited Company
The Companies Act 2013 has stated that the limit to which the paid-up share can increase is fifty lakh. If it happens to exceed the limit of fifty lakh rupees or if something like the turnover somehow exceeds two crores rupees then this company will be automatically converted into the Private Limited or Limited Company. It is necessary for the conversion of the One Person Company to take place within a stipulated period of six months of which the paid-up share capital has somehow increased beyond fifty lakh rupees or that the average turnover exceeds two crore rupees.