One Person Company & Private Limited Company under The Companies Act, 2013
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One Person Company & Private Limited Company under The Companies Act, 2013 CA Rajkumar S Adukia, B.Com. (Hons.), FCA, ACS, ACMA, LL.B, Dip.IFR (UK), MBA, DLL& LW, DIPR, Dip in Criminolgy 9820061049/9323061049 Email id: [email protected] 1 [email protected]
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One Person Company & Private Limited Company under The Companies Act, 2013. CA Rajkumar S Adukia, B.Com . ( Hons .), FCA, ACS, ACMA, LL.B, Dip.IFR (UK), MBA, DLL& LW, DIPR, Dip in Criminolgy 9820061049/9323061049 Email id: [email protected]. About Companies……………. There are….. - PowerPoint PPT Presentation
Transcript of One Person Company & Private Limited Company under The Companies Act, 2013
One Person Company & Private Limited Company
under The Companies Act, 2013
CA Rajkumar S Adukia,
B.Com. (Hons.), FCA, ACS, ACMA, LL.B, Dip.IFR (UK), MBA, DLL& LW, DIPR, Dip in
Criminolgy
9820061049/9323061049
Email id: [email protected]
About Companies…………….
There are….. More than 13 lakh Companies in India More than 100 million companies in the
world 1st Company formed in 1342 1st Companies Act was Bubble Act, 1720 in
UK 1st Companies Act in India – The Joint
Stock Companies Act, 1850
The Legislations governing Companies….
India The Companies Act, 2013 – The 8th legislation for
Companies in India With 470 sections under 29 chapters with 7
schedules UK
The Companies Act 2006 - 1300 sections and 16 schedules
United States Collection of over 50 different systems of corporate law
– main being Delaware General Corporation Law (DGCL)
The Companies Act, 2013…looking back ‘Concept Paper on new Company Law’ was placed
on 04th August 2004 Companies Bill, 2008 was introduced on 23rd
October 2008 Farewell to the 57 years old Companies Act, 1956 The Companies Act of 2013 incorporated 162
recommendations made by the Standing Committee Companies Act, 2013 – passed by LS on 18th
December, 2012 and RS on 8th August, 2013 President’s Assent – 29th August 2013 Notified in the Gazette of India - 30th August, 2013
The Companies Act, 2013Notification of sections under Companies Act, 201312th September 2013 – 98 sections (effective 12th September 201327th February 2014 – 1 section (Sec135 – effective 1st April 2014)26th March 2014 – 183 sections (effective 1st April 2014)
The Companies Rules, 2014 Rules for 19 chapters including corporate social
responsibility rules – have been notified in phases Certain provisions under chapter XV, XVI, XVIII,
XIX, XX, part II chapter XXI, chapter XXVII, chapter XXVIII – yet to be notified
What’s new? First time introduced the concept of One Person
Company Inclusive definition of Financial Statement E-governance in all company processes Corporate Social Responsibility Mandatory Rotation of auditors for listed
companies and other prescribed classes of companies
Specific section pertaining to duties of directors Mode of appointment of Independent Directors
and their tenure
What’s new? Mandatory Auditing Standards Constitution of National Financial Reporting
Authority, an independent body to take action against the Auditors in case of professional mis-conduct section 132
Specific framework for Merger and Acquisitions of companies
Registered Valuers Mediation and Conciliation Panel Substantial part of the Companies Act, 2013
will be in the form of rules
TYPES OF COMPANY - On the basis of size:
Small company Other company
On the basis of number of members: One person company Private company Public company
On the basis of control: Holding company Subsidiary company Associate Company
TYPES OF COMPANY - On the basis of liability
Limited by Shares by Guarantee (with or without share capital)
Unlimited On the basis of manner of access to capital
Listed company Un-listed company
On the basis of nature of business Companies with charitable objects etc. (Section
8 of the Companies Act, 2013) Dormant Company (Section 455 of the
Companies Act, 2013) Government Companies (Chapter XXIII of the
Companies Act, 2013) Nidhi Companies (Chapter XXVI of the
Companies Act, 2013) On the basis of place of business
Company incorporated within a country Foreign company
Advantages of OPC Promotes entrepreneurship across the country. de-risks the business by transferring the promoter’s liability to
the company. very little paper work — the Articles of Association would be
simple and short If same person is doubling as director and shareholder there
would be no need for board or shareholders’ meetings. Quorum requirements, proxies, maintaining of various registers
of members, filing of multiple e-forms fade away, leaving the single operator free from the fetters of corporate governance, except that he has to maintain his books of accounts, prepare and file annual audited balance sheet and profit and loss accounts, without the Board’s report.
Advantages of OPC The memorandum of a One Person Company shall
indicate the name of the person who shall, in the event of the subscriber’s death, disability or otherwise, become the member of the company.
The memorandum of a company shall state the last letters and word “OPC Limited” in the case of a One Person limited company.
The One Person Companies are also not required to hold any Annual General Meeting under the new Companies Act 2013. This facility is not extended towards any other type of companies
OPC v/s SOLE PROPRIETORSHIPOPC v/s SOLE PROPRIETORSHIP Separate legal entity Limited Liability Debt- not the sole
responsibility of the owner
Finance- credit record of the company
Legal requirements- will need to register itself as such
Separate tax
Owner & entity is same personality
Unlimited Liability Debt - sole responsibility
of the owner Finance- credit history of
the owner Legal requirements- will
not have to draw up paper declaring its status
Tax paid by the owner
One Person Company(OPC)- Companies Act, 2013 one person as a member promoter, director and member – All in One a single shareholder corporate entity Sec.2(62) of the Companies Act, 2013 OPC new in India but a fairly successful form
of business in US, UK & several other countries including Pakistan
OPC first recommended by the expert committee of Dr. JJ Irani in 2005
OPC- other countries U.K.
1. U.K.Companies Act, 2006 & the Companies (Single Member) Private Companies Regulations 1992
Singapore Company Amendment Act of 2004 and other regulations
United Arab Emirates One Person Company recognized
1. Only Articles of Association United States
1. In US, several states permit the formation and operation of a single-member Limited Liability Company (LLC).
OPC- other countries China
1. introduced it in October 2005) in which the promoting individual is both the director and the shareholder.
2. In China, one person is allowed to apply for opening a limited company with a minimum capital of 1, 00,000 Yuan. The amended law of China prescribes that the owner should pay the investment capital at one time and bars him from opening a second company of the same kind.
Pakistan
1. The amended company law of Pakistan permits one person to form a single-member company by filing with registrar, at the time of incorporation, a nomination in the prescribed form indicating at least two individuals to act as nominee director and alternate nominee director.
Salient features of OPC Only one member/shareholder at a time Min 1 and Max 15 of directors Appointment of nominee Compulsory Paid-up capital not to exceedRs.50 lakhs rule 6(1) Average annual turnover not to exceed Rs.2 crore Words ‘‘One Person Company’’ to be mentioned in
brackets below the name of such company Eg rajkumar adukia consultants pvt ltd(opc) Exempted from holding general meetings and
Board meetings, if the company has only one director
Registrar of Companies to be informed about every contract entered into
Companies Act 2013 - OPC Registered as a Pvt Ltd Min paid-up share capital of Rs. 1 Lakh Right to transfer shares restricted Natural person who is an Indian citizen &
resident in India Not eligible to incorporate more than one OPC
or become nominee in more than one OPC No minor Nominate and indicate the name of the person
in the memorandum
Companies Act 2013 - OPC Nomination in Form No INC.2 Consent of nominee in Form No INC.3 Sole member can be the first director Mandatory rotation & maximum term of
AUDITORS not applicable to OPC No meetings of Board and quorum required if
there is only one director
Companies Act 2013 -OPC terms of the contract or offer contained in the
memorandum / recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract
inform the Registrar - every contract other than in ordinary course of business within 15 days of the date of approval by the Board of Directors
annual return in Form No. MGT.7 extract of the annual return in Form No.
MGT.9 to form part of the Board’s report22 [email protected]
Exemptions - One Person Company
General Meetings, Extra Ordinary General Meeting and Notice for convening General Meeting
Not required to hold two board meetings - in case of only one director
Quorum for meetings, voting procedures etc. Provisions of Sec.98 and Secs.100 to 111
Restrictions on OPC Cannot be incorporated or converted into a
company under s.8 of the Companies Act, 2013
Cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates
Cannot convert voluntarily into any kind of company unless two years is expired from the date of incorporation
Mandatory Conversion of OPC into Public or Private Company Rule 6 of the Companies (Incorporation) Rules,
2014 Paid up share capital exceeds 50 lakh rupees
or its average annual turnover exceeds 2 crore rupees
Convert itself, within six months
Conversion of private company into OPC Rule 7of the Companies (Incorporation) Rules,
2014 By passing a special resolution in the general
meeting Not applicable to s.8 company Should obtain No objection in writing from
members and creditors File an application in Form No.INC.6 for its
conversion
Private Limited Company Minimum – 2 members Maximum – 200 members Liability of members limited Not allowed to invite public to subscribe to its
shares and debentures
Incorporation Application for incorporation in Form no. INC.7 Memorandum of a company - forms specified
in Tables A, B or C in Schedule I of the Act Application for the reservation of a name in
Form No. INC.1 Rule 8 of the Companies (Incorporation) Rules,
2014 deals with undesirable names Articles of a company - forms specified in
Tables, F, G and H in Schedule I
Private Placement of Securities S.42 & Rule 14 under Companies (Prospectus
and Allotment of Securities) Rules 2014 Does not cover Qualified Institutional Buyers and
Employees for the limit of 200 people Value of the Offer per person not to be less than
Rs.20,000 of ‘face value’ of securities Valuation report by a Registered Valuer Allotment within 60 days or refund from 75th day Return of allotment of securities to Registrar
Share capital, Dividend, Accounts Share capital and debentures - Chapter IV of Act
& Companies (Share Capital and Debentures) Rules, 2014 new procedure for increasing the share capital
Declaration and payment of dividend - Chapter VIII of the Act & Companies (Declaration and Payment of Dividend) Rules, 2014 only out of profit of the company for the financial
year or out of undistributed profit of any previous financial year or out of both
Accounts - Chapter IX & Companies (Accounts) Rules, 2014 accrual basis and according to the double entry
system of accounting
Directors Directors - Chapter XI & Companies
(Appointment and Qualification of Directors) Rules, 2014
Appointment of Managing Director now applicable to private limited companies also
Maximum number of directors – 15 At least one director who has stayed in India
for a total period of not less than 182 days in the previous calendar year
Duties of directors - S.166 No loans to directors
Related party transactions Sec.188 of the Companies Act 2013 & Companies
(Meetings of Board and its Powers) Rules, 2014. Prior approval of the company by a special
resolution company having paid-up share capital of Rs. 10 crore or
more sale, purchase or supply of goods or materials
exceeding 25% of annual turnover selling, buying property of any kind exceeding 10% of
net worth leasing of property of any kind exceeding 10% of net
worth or exceeding 10% of turnover Availing/ rendering of any services exceeding 10% of
net worth
Audit and auditors Appointment of auditors only for a period of 5
years mandatory appointment and rotation of auditors listed companies unlisted public companies having paid up share
capital of Rs.10 crore or more private limited companies having paid up share
capital of rupees 20 crore or more Companies below threshold limit but public
borrowings from financial institutions, banks or public deposits of rupees 50 crores or more
Does not apply to one person companies and small companies34 [email protected]
Audit and auditors Individual Auditor - completed his term of 5
consecutive years - not eligible for reappointment - for Subsequent 5 yrs
Audit firm - completed its two terms of 10 consecutive years - not eligible for reappointment for Subsequent 5 yrs
Appointment of auditors subject to ratification in every annual general meeting till the 6th such meeting by an ordinary resolution
Incoming auditor or audit firm not eligible if such auditor/audit firm associated with outgoing auditor/audit firm under the same network of audit firms
Audit and auditors Appointment of internal auditor or a firm of
internal auditors every private company having turnover of two
hundred crore rupees or more during the preceding financial year
or outstanding loans or borrowings from banks or
public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year
Meetings 21 clear days notice to the shareholders notice can be given by electronic mode also first AGM within 9 months from the close of the
financial year other cases within 6 months from the close of
the financial year postal ballot is applicable to private limited
companies also for certain transactions OPC and other companies having members upto 50
– exempted quorum, notice, proxies etc applicable for pvt
ltd cos also37 [email protected]
Annual Returns To be certified by a Company Secretary in
practice in Form No. MGT.8 a company having paid-up share capital of ten
crore rupees or more or turnover of fifty crore rupees or more
Extract of annual return to form part of the Board’s report
Corporate Social Responsibility S.135 Schedule VII Companies (Corporate Social Responsibility
Policy) Rules, 2014 Applicable to Every company having
net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more or net profit of Rs. 5 crore or more
National Company Law Tribunal Chapter XXVII Rules not yet notified Principal Bench to be at New Delhi President and such number of Judicial and
Technical members as may be notified
National Company Law Appellate Tribunal Appeal to be filed within a period of 45 days
from the date on which a copy of the order of the Tribunal is made available
Chairperson and such number of Judicial and Technical Members, not exceeding eleven
Appeal to the Supreme Court within sixty days from the date of receipt of the order of the Appellate Tribunal
Mediation and Conciliation Panel also proposed to be created
About the Author CA. Rajkumar S Adukia is an eminent business
consultant, academician, writer, and speaker. He is the senior partner of Adukia & Associates.
In addition to being a Chartered Accountant, Company Secretary, Cost Accountant, MBA, Dip IFR (UK), Mr.Adukia also holds a Degree in Law and Diploma in Labor Laws and IPR.
Mr. Adukia, a rank holder from Bombay University completed the Chartered Accountancy examination with 1st Rank in Inter CA & 6th Rank in Final CA, and 3rd Rank in Final Cost Accountancy Course in 1983.
In his three decades of practice as a Chartered Accountant on he left no stone unturned, be it academic expertise or professional development.
About the Author
He has been coordinating with various Professional Institutions, Associations, Universities, University Grants Commission and other Educational Institutions.
Authored several books on a vast range of topics including Internal Audit, Bank Audit, SEZ, CARO, PMLA, Anti-dumping, Income Tax Search, Survey and Seizure, IFRS, LLP, Labour Laws, Real estate, ERM, Inbound and Outbound Investments, Green Audit etc.
The author can be reached at [email protected] Mob – 09820061049 / 0932306104943 [email protected]
