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25
May
17
One person company compliance in India

Compliance is a term or we can say a provision to maintain company’s annual filing, books of account and other statutory requirement. It is mandatory information needed to be informed to the central government. People need to spend some money on their Company so that their company runs uniformly without any legal barrier.

One Person Company is liable to certain Compliance which needs to be completed with a month from Date of Incorporation. Company should accept foregone reality that compliance will help entrepreneurs to do business with comfort and ease. The concept of OPC was evolved to eradicate the limitation of a sole proprietorship which was introduced in Companies act, 2013.It is one of the newest and one of the most popular form of Company. In OPC Person enjoys commencement of Business without any involvement of any other person.

In comparison with Private Limited Company OPC have lesser compliance formalities. Below are mandatory compliance requirement.

Corporate Stationary

After OPC registration it is recommended to purchase the following stationary for use with OPC compliance matters.

Name Board is the requirement of the company. Companies including an OPC are required to paint or affix the name of the company and address of its registered office outside every office or place in which it carries on business.

Company’s Rubber Stamp is a round rubber bearing name of the company and straight rubber stamp bearing the name of the company along with designation of the authorised signatory can be purchased from the local vendor. It is required for the execution of various legal documents like Board Resolutions, bank account opening forms, cheques, etc.

Letterhead is a printed heading which should be mentioned including name and registered office address of the OPC. It consists of all the forms of invoices, notices and other official documents of the company.

In case of OPC ‘‘One Person Company’’ must be mentioned in brackets below the name of the company, wherever its name is printed whether it has been affixed or engraved.

OPC PAN Application

Obtaining PAN card is the first step after incorporation of any corporate legal entity. PAN can be applied online after incorporation to receive the PAN allotment letter. The letter must then be signed by the OPC Director, sealed with company rubber stamp and couriered to the NSDL office. PAN Card will be issued in about 15 days after receipt of the hard copy PAN application from the applicant.

Opening OPC Bank Account

Proprietorship bank account opening is a bit tricky but opening bank account for a OPC is very simple. Additional tax registrations or documents are required to open a bank account for a OPC. According to the Reserve Bank of India’s KYC norms, the following are the documents required to open a current account in the name of a OPC:

  • Self-attested copies of OPC Certificate of incorporation
  • Memorandum of Association and Articles of Association 
  • Open Bank for Company
  • Copy of the telephone bill;
  • Copy of PAN allotment letter;
  • Identity proof of the Director

Documents submitted for opening of bank account must be self-attested with seal of the company. Hence, its important to obtain company seal and company letterhead after incorporation of the OPC.

Appointment of Auditor

Appointment of the Auditor of the Company is a requirement, it can be individual; practising Chartered accountant within 30 days of incorporation. In case of OPC as well, an Auditor must be appointed by the Director of the OPC for auditing of financial statements of the company.

OPC Annual General Meeting

All companies other than a OPC is required to hold a AGM(Annual General) each financial year with not more than fifteen months elapsing between the date of one annual general meeting of a company and that of the next. However, in case of a OPC where there is only one director on the Board of Directors, then it is sufficient for the resolution by one Director be passed and entered in the minutes-book. The signed and dated resolution by Director of a OPC is deemed to be the meeting of the Board of Directors for all the purposes under the Companies Act. Also, provisions relating to quorum for meetings of Board do not apply to a OPC where there is only one Director on its Board of Directors.

OPC Financial Statements

All companies are required to prepare and file with the ROC, the following financial statements:

  • Cash flow statement for the financial year
  • Balance sheet as at the end of the financial year;
  • Profit and loss account;
  • Statement of changes in equity, if applicable;
  • Explanatory note forming part of any document.

Compliance in OPC is needed for the rapid growth and it is necessary that it stays clear of unnecessary legal paraphernalia. Falling in line with the compliance system ensures that in certain cases it can all be sorted with a warning but when the issue is a graver one, the companies end up paying fines for not following the compliance.

Reasons why should OPC be compliant

Improved Public Relations- Marketing and advertising becomes easy after fulfilling all the legal obligations. Company become Job Creator encouraging more and more people becoming part of the Company. Good compliance management creates good reputation in the market.   

Employee retention There are many compliance issues that deal with the benefit of the employees, some these even talk about protecting the employees. For a company that adheres to these guidelines, it becomes easy to retain the employees as the workforce of the company feels home in the company and strives to work for the betterment of the business and the product.
Thus, for a One Person Company, which anyway is bound by a lot of compliance guidelines, it is paramount to manage all that. As in the longer run it showers the company with all the benefits that may or may not be visible in the beginning.

  • Smooth operations

Certain rules help more than they harm. Rules related to discrimination and harassment help create a better working environment for employees which can lead to better productivity. Also better security – financial as well physical – help employees provide more to the company.

09
May
17
Women Director of the Company

India is a country of opportunities where all people have equal right. According to Indian Constitution people, All the citizen in India deserves equal right whether they are of any Caste, Religion or Gender. There are opportunities of some fields where women are less preferred. But now the scenario has been changed. Women are walking parallel with Men in every field whether it is Defence, Finance, Banking, Corporate or any other sector.   

Women are part of many board meetings of companies in and outside India. In India, there are certain provisions preferred/ privileged considering the fact of disadvantages in some ways. Companies are showing interest more and more on appointing professionals as women directors on the board, instead of inducting family members, including wives and daughters, as directors to meet a regulatory deadline that require listed firms to appoint at least one woman director on their boards. 

Importance and Role of Board of Directors

According to the Companies Act, 2013 there are certain provisions made for employing women directors on the Boards of the certain class of companies and it is a welcome move. Before we get more into it let’s pick a point of importance and role of the Board of directors. The Board of Directors is an important body. These are important persons elected by the shareholders and responsible for running the company.

Board of directors is collectively responsible for making policies for good governance. The Body should act in the best interests of the Company and Stakeholders. It mainly focuses on the accountability and responsibilities of directors by mandating certain disclosures such as evaluation of the performance of the board, CSR policy, whistleblower mechanism, risk policies etc in the Directors report.

Duties of Directors, Companies Act 2013

Companies Act, 2013 defines duties of directors and role of independent directors. It also cast a duty on the Board to device proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

There are certain provisions for appointment of woman director. Due to this there has been an increase in the maximum number of directors from existing limit of 12 to 15 and provided for an increase. According to the special resolution, it can be beyond 15 by a special resolution. Kept the power with Central Govt for prescribing minimum number of directors in case of certain companies or class of companies - prohibited insider trading - provided for stringent penalties for violation of duties and nondisclosure of interest in related party transactions

Why focus on Woman directors? 

According to the survey in North America, more than 700 reputed companies have the highest representation of women directors on board and have achieved better financial performance than those have less representation of women directors on Board. In the United States, women held about more than 16% of the board seats of companies. It is having a better percentage in European countries. These are listed companies which are a very dismal percentage. There has been thrust given by the New Act, 2013 is helping to improve the representation of women directors on the board.

According to the relevant Section is 149 of the Act, 2013. The provisions are mainly related to appointment of directors and matters such as the minimum and a maximum number of directors, type/class of directors to be appointed.

Rules have been displayed on the MCA website that indicates the following for appointment of women directors on the boards of companies:

  1. a) Every listed company shall appoint at least one woman director within one-year
  2. b) Every Public company that is having paid up capital of 100 crores or more or - a turnover of 300 crores or more have to compulsorily appoint within 3 years.

Point of view has made many things right. Companies have taken decisions and successfully built a good Business. In many situation Gender bias has affected many companies. According to the new Act a company should compulsory appoint at least one woman director and the company will have to search for good woman directors.

For more information about company registration visit Registrationwala.

20
Feb
17
Types of Companies under Ministry of Corporate Affairs

Ministry of Corporate affairs is an Indian ministry that is primarily concerned with Companies Act, 2013, Companies Act, 1956, Limited Liability partnership act 2008 and other  rules and regulations. The responsibility of this Ministry is regulation of Indian enterprises in Industrial and Services sector.

Companies can be registered in India

Private Limited Company-It is the type of company recommended for Business. The cost of registration of the private limited company is cheaper than other forms of a company. Private limited should have a minimum of 2 members and can have maximum 200 members. In this company liabilities are limited and it has some features of a partnership.

People mostly prefer this of the company for fundraising. The degree of operation and ownership can easily separate in this type of company. Business can be exited without any hassle. In this members are limited to only contribute towards a number of shares.      

One Person Company-It is the type of company which can be started by a Single member.OPC is the latest form of company in Companies Act, 2013. One person can become the director as well as the shareholder. Similar to the private limited company as the degree of operation and ownership are on the separate basis. 

OPC gives wings in the hand of Sole proprietor to form the company under with full control. It is done without any interference of the third person. This type is easy for an entrepreneur to directly target the market. Fundraising from banks and the financial institution is easy. People who are Indians and resident in India can form OPC.     

Public Limited Company-This is a publicly held company. A large amount of capital investment can easily be obtained. These types companies are considered to be a more transparent business model as compared to other business structures. Investors get the choice of transferring their ownership in the company without any hassle by just selling the shares.

Section 8 Company-These companies are basically formed to encourage arts science, sports, education, research, social welfare, religion, charity, etc. These kinds businesses do not play any vital role in profit. Company Intends to prohibit the payment of any dividend to its members. These companies are the non-profit making company.

Section 8 company was incorporated mainly for welfare purposes. Previously, it was defined as Section-25 Company. Due to commencement of Companies act, 2013 it was called as Section-8 Company

Nidhi Company- Nidhi Company comes from the Hindi word ‘Nidhi’ means fund. These are the  NonBanking financial corporation. These are also known as mutual benefit funds. Nidhi company is known in the corporate scenario is member benefits company. Companies are formed for the welfare of the members and to increase saving habits.  

Other types of Companies

There are some more types companies which can be registered in India.

  • Companies that have unlimited liability
  • Producer Company
  • Joint Venture Company
02
Feb
17
Why should entrepreneurs prefer one person company?

One person Company is a new venture for Start-ups .OPC can be formed by a single person. This concept which was proposed under the Companies act 2013.Person gets privilege to form a company by making a combination of sole proprietor and entrepreneur. OPC is a hybrid structure of the combination of many benefits of limited liabilities.

OPC is a new concept which will take around few years for expansion between its audience. By the time this will be common between the public then it will have a rapid explore. OPC is an opportunity for those who want to take their business on an international level.

In OPC investors have to deal with only one member which do not create any disturbance amongst idea of Business. The concept of OPC is a success in many of the countries Outside India where people have given their business a drastic growth.  

Advantages of OPC

  • Only 1 person can be director or shareholder.
  • Easy to manage continuity and incorporate.
  • Easy to transfer to another person.
  • No professional qualification required to become a director.
  • Confidential sense is provided towards customer and suppliers.
  • Lesser compliance cost.
  • Separation of juristic person and legal entity
  • The company is kept uninterrupted until it is dissolved.
  • Access to credit, bank loan, market, etc.

Steps to form OPC

  • Obtain Digital Signature Certificate.
  • Obtain Director Identification Number.
  • Select the name and make an application to the ministry of corporate affairs office name availability.
  • Sign and file various documents including MOA-Memorandum of association & AOA- Articles of Association with the Registrar of Companies electronically.
  • Pay the Requisite fee and Stamp duty to Ministry of Corporate Affairs.
  • Collect Receipt of Certificate of Registration/Incorporation from ROC.

Disadvantages of One Person Company

  • Setting up an OPC is not an easy task.
  • More Formalities are required as in the comparison of other forms Private Company.
  • Investment in the shares and securities of the corporate which is not a good part for OPC.
  • OPC cannot be converted into the public company or a private company once it has been incorporated.
  • Higher tax rate which causes disinterest to form OPC.

One person company encourages small scale businessman to form company and expand it on a larger scale .OPC has given many entrepreneurs a chance to form their company and built their business with their own name being the director of the company. Business growth is the agenda of every company.OPC keeps the audience confident about the brand. 

20
Jan
17
What is One Person Company in India?

A business entity run by a sole owner with the benefit of limited liability, offering protection to its shareholders is a One Person Company. Only one Director is required to form a One Person Company.

With supporting documents such as DIN, DSC, etc., an OPC can be registered within two weeks.

Features of One Person Company

  • Director

As the name suggests, a minimum of one Director and one member is required to form a One Person Company. Hence, the sole shareholder can be the Director itself. A maximum number of 15 Directors are possible for a One Person Company.

  • One Shareholder

A person of Indian origin and an Indian citizen can form a One Person Company.

  • Nominee for the Shareholder

A shareholder may appoint another person as a shareholder in case of death or incapacity of the original shareholder. The nominee shall give its consent to be appointed as the sole shareholder.

  • Taxation

As the government has not strictly specified, the tax rates for any Private Limited Company are applicable to a One Person Company.

  • Compliance

One Person Company has the leverage of not complying with many requirements that are applicable to a Private Limited Company.

Terms and Restrictions of One Person Company

  • A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
  • Only a person who is not a minor is eligible to be a nominee of the One Person Company
  • One Person Company cannot be incorporated or converted into a limited company
  • A One Person Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
  • Such a company cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, unless the capital is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores

Advantages of One Person Company

  • One Person is a separate legal entity from its members
  • Liability of member is limited
  • One Person Company being a Private Limited Company is best suited for new entrepreneurs
  • As in the case of any other Company, mandatory requirement of an auditor is not applicable
  • The necessity to hold a number of Board Meetings and General Meetings does not apply to One Person Company

Process to Incorporate One Person Company

  • Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed Director(s) in case it is not already available
  • Check for Company name availability by filing form INC-1
  • Obtain consent of nominee for the sole shareholder
  • Draft Memorandum of Association and Articles of Association
  • Once the name of the Company is approved, sign and file various documents electronically including MOA and AOA along with form INC-2, which is required for the incorporation of the Company, with the Registrar of Companies
    • Form INC-2 must be filed within 60 days of filing form INC-1
  • Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty
  • The Registrar of Companies scrutinizes and validates the documents
  • Receipt of Certificate of Registration/Incorporation from the Registrar
23
Nov
16
10 Reasons why start-ups should choose One Person Company (OPC) as their form of business

With innovation and IT boom in the country more and more people are taking up entrepreneurship and starting their own business. However, one of the most important questions for a new entrepreneur is to find out which sort of company he should float in the contemporary scenario. Going by the recent trend and business environment, the best advice one can give a nascent entrepreneur is to opt for OPC (One Person Company). There are various benefits of OPC. Some of them are listed below. Have a read:

A separate entity for law

One of the major benefits of opting for an OPC is that according to law a separate legal entity is created. And it means that the company will be legally equipped to do almost everything a person is allowed to do in a legal set-up.

Smooth funding

Getting funding is relatively easier for an OPC. It can manage funding from financial institutions, angel investors etc. Thus an OPC, gradually over the course of time, can even turn itself into a Pvt ltd company.

Limited liability

Every start-up dreams of being as little risk prone as possible. Hence it is always on a lookout for limited liability. OPC promotes its owner to go an extra mile without having to care for the liabilities it may incur in case of failure. In case of OPC, even if the company falters, liability will only affect the capital of the company and not disturb the personal assets of the owner.

Minimum regulations, maximum results

Since in OPC is under the control of one person, there are various regulations which are eased for it. Thus a new entrepreneur can always be more focused on his business rather than losing his sleep over never-ending list of regulations and laws for starting a new business in a growing economy like India.

Perks of a Small Scale Industries (SSI)

The government is always willing to promote small scale industries and has often gone extra yards to see that the everyday furnishing small scale industries grow at a decent pace. After all, SSIs form the backbone of an agrarian economy like India. An OPC falls under the category of a SSI thus it can avail all those benefits which are there for SSI units. Some of those perks include loans at lower interest rates, funds without any security from banks up to a certain limit, benefits under FTP (Foreign Trade Policy). Once a company gets these earlier benefits it goes a long way in providing it the much sought early boost.

The Sole owner

Being the sole owner of the company gives you full control over the business. While it also puts your leadership and entrepreneurship skills at test, it ensures that the decision making is quicker. Also in OPC whatever the results are you are going to be responsible for it. It makes sure that the credit for the company’s growth goes to the sole owner.

Free from the hassle of credit limit

When an OPC files for loan, the credit limit of the owner does not affect that. To put things in simpler words, even if the credit limit of the owner is not that great, his OPC will be able to generate good funds.

Favourable Income Tax Laws

Once the company is registered as an OPC, any money being spent on the salary of the director will be allowed as tax deduction. There are certain other benefits available too which are subject to income tax act.

Interest on late payment

Since almost all the start-ups fall in the category of SSI, they receive protection under Small and Medium Enterprises Development act 2006. If a buyer of the service fails to pay for it under a certain period as specified by the seller, the seller is free to charge interest on his product.

No trust deficit

If there’s a business which runs in the name of company, naturally people have more faith in it.

Also before we wind up, here is another note: Any existing business can convert it as OPC and thus avail all the aforementioned benefits.

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