LEGAL ENVIRONMENT

OF BUSINESS
ASSIGNMENT -1

Introduction
An entrepreneur is a person who initiates a business or manages and organizes a business with
considerable amount of risks. Entrepreneurship is one such impalpable factor which contributes
to the growth and development of a nation. The profound concept of One Person Company is a
step towards facilitating entrepreneurship.
Companies Act, 2013 is an act of Parliament of India which consolidates and amends the laws
relating to the companies. One person company is a new concept which has been introduced by
the Companies Act 2013. As per Section 2(62) of the Companies Act, 2013 a One Person
Company is a Private Company which has only one person as a member. This concept of OPC
was first recommended by the expert committee of Dr. JJ Irani in 2005, thereby enabling
entrepreneurs carrying the business in the form of Sole-Proprietorship to enter into a corporate
framework.

Formation
One person company is a legal entity which functions on the similar principles of a private
limited company but has only one member as its shareholder. OPC may be constituted on anyone
of the category which is a company limited by guarantee or a company limited by shares. One
major difference between the one person company and the sole proprietorship is that in OPC the
liability is confined to only the company assets where as in sole proprietorship the liability is
unlimited and in the case of business failure the personal assets are also under consideration.

Features of OPC
Only one shareholder:
Only a natural person who is a citizen of India and an Indian resident (stayed in India for a
period not less than 182 days) can incorporate a one person company.
Director:
OPC must have a minimum of one director. The shareholder can himself be the director.
However there is no restriction on the number of directors which should not exceed 15.

Nominee:
The person forming the OPC must nominate a member as his Nominee with his written consent
who, in the event of his death or incapability, shall come forward and take over the proceedings
of the one person company.
Process of Incorporation
The steps to be followed for an incorporating a one person company is as follows:

Initially, the shareholder has to obtain a Digital Identification Number (DNI) and a

Digital Signature Certificate.

Then, the shareholder has to select a company name and then apply to Ministry of

Corporate Office to check for the availability of the name (company).

After the selection of a nominee the consent of the nominee on the prescribed or required

forms must be taken.

The shareholder now has to file all the important forms with Memorandum of

Association and Articles of Association.

MOA & AOA and the other required documents are to be signed electronically with the

Registrar of Companies.
Payment of the fee required towards Ministry of Corporate Affairs has to be done.
After the scrutiny of the documents the shareholder receives a certificate of Incorporation
thus, enabling to start one person company.

According to the article One person company- The next big thing published in The Economic
Times it is found that 911 OPCs have registered with Corporate Affairs Ministry in seven
months from April 1st 2014(came into effect) to October 2014. OPC will give greater flexibility
to an individual or a professional to manage his business efficiently and at the same time enjoy
the benefits of a company. OPC will open the avenues for more favorable banking facilities,
particularly loans. Besides, this concept will also boost the flow of foreign funds in India.