“One Person Company” is a new concept introduced by the Companies Act 2013. As the name suggests, a one person company is formed with only one person as its member. Since such companies have only one member, these companies enjoy certain privileges or exemptions as compared to other companies.
a. A One Person Company can be incorporated as a private limited company only.
b. It can have only one member at any point of time.
c. t may have only one director.
d. The words “One Person Company” must be mentioned in brackets below the name of the company.
e. Exemption is available from holding Board Meetings (in case of only one director) and General Meetings.
Special Provisions and Exemptions available to a One Person Company:
Incorporation and related matters
a. A One Person company is incorporated as a private limited company with only one person as its member.
b. The memorandum of One Person Company 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.
c. Prior written consent from the other person should be obtained and the consent should be filed with Registrar of Companies at the time of incorporation along with the memorandum and Articles. Format of consent is yet to be prescribed.
d. Person is entitled to withdraw his consent in the manner to be prescribed.
e. Member of One Person Company may at any time change the name of such other person by indicating it in the memorandum or by giving notice in such manner as may be prescribed. Such change should be intimated to the company by the member and the company in turn will intimate to the Registrar. The time and manner of intimation by member to company and by company to Registrar is yet to be prescribed.
f. Any such change in the name of the person shall not be deemed to be an alteration of the memorandum.
g. The words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.
The annual return of a One Person Company shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
a. The provisions of Section 98 and Sections 100 to 111 (both inclusive), more specifically given below, shall not apply to a One Person Company.
b. Provisions regarding calling of an Extra-Ordinary General Meeting by the Board or Tribunal do not apply to a One Person Company.
c. All provisions regarding annual general meetings like notice period, contents of notice, explanatory statement, quorum requirements, proxies, voting etc. do not apply to a One Person Company.
Board of Directors and Board Meetings
a. A One Person Company needs to have minimum 1 director and maximum fifteen directors, which can also be increased by passing a special resolution as in case of any other company.
b. If the Articles of Association do not contain the name of the first director, member of the one person company will be deemed to be the first director till the time director(s) is duly appointed by following provisions of law.
d. Atleast one Board Meeting must be held in each half of the calender year and the gap between the two meetings should not be less than ninety days.
a. The financial statements of a one person company can be signed by one director alone.
b. Board’s report to be annexed to financial statements may only contain explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
c. Cash Flow Statement is not a mandatory part of financial statements for a One Person Company. [Section 2(40)]
d. Financial statements of a one person company needs to be filed with the Registrar, after they are duly adopted by the member, within 180 days of closure of financial year along with all necessary documents.
Contract by a One Person Company
In case a One Person Company enters into any contract, not in the ordinary course of business, with its sole member who is also a director, then such contract must:
– either be in writing, or
– entered in the Memorandum, or
– recorded in the minutes of the meeting held for the first time after entering of the contract
Particulars of the said contract must be filed by the company with the Registrar within 15 days of the approval of the contract by the Board.