One Person Company Registration

Many Indian Entrepreneurs are waiting patiently for the beginning of One Person Company Registration or Incorporation in India. Companies Act 2013 shows that a One Person Company would provide a host of features similar to a Private Limited Company while requiring minimal compliances. Therefore, it is no wonder that there is tremendous interest among Indian Entrepreneurs to start a One Person Company in India. In this article, we look at some of the benefits of a One Person Company in India and the process for incorporation of a One Person Company in India.

One Person Company

The concept of One Person Company in India was introduced by Dr Jamshed J. Irani in his Report on Company Law dated 31st May, 2oo5. As per the report, Dr Irani recommended that with the increasing use of information technology and emergence of a strong service sector in India, it was time for the Government to empower entrepreneurs who on their own are capable of developing ideas and participating in the marketplace. He suggested that entrepreneurs who on their own are capable of starting a venture should not be made to do it through an association of persons, and should be able to create a single person economic entity in the form of ‘One Person Company’. Further, it was also suggested that such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not compelled to fritter away his time, energy and resources on procedural matters.

This led to the introduction of "One Person Company" in the Companies Bill 2013, which got its assent in the Lok Sabha on 18 December 2012 and in the Rajya Sabha on 8 August 2013. After obtaining the assent of the President of India on 29 August 2013, it has become the Companies Act, 2013.

Benefits of One Person Company

Till the introduction of One Person Company in India, the Limited Liability and Continuous Existence feature were only available to an association of persons such as a Private Limited Company or Limited Liability Partnership or a Limited Company. With the introduction of One Person Company, the limited liability and continuous existence feature are now also available for One Person Company, which is an entity with just one member. As One Person Company has just one member, it is necessary as per the law for the single member of the Company to designate another person in the Memorandum of Association, who on the event of subscriber's death or incapacity will make the person contract. This mechanism provides an adequate safeguard to ensure the continued existence of the entity even in case of incapacitation of the single-member.

All companies in India requires to hold an annual general meeting each year, in addition to any other meetings and not more than fifteen months should elapse between the dates of subsequent annual general meetings. One Person Company is exempt from holding an annual general meeting or extraordinary general meetings. The resolution signed by the single Director and entered into the minute's book is sufficient, in lieu of a General / Extraordinary General Meeting.

Every company in India requires to prepare and file financial statements that include a balance sheet, profit and loss account, cash flow statement, statement of changes in equity and explanatory notes. In the case of One Person Company, a cash flow statement is not required.