Incorporating a Business
One Person Company
One Person Company is a new concept in India which has been introduced by the companies act 2013. In the old Companies act 1956 a minimum of two directors and shareholders were required to form a private limited company. However in case of a one person company, only 1 person is required who can be a shareholder as well as the director? Hence the name is One Person Company.
We at My Office Accountant help you incorpate a One Person Company successfully. When you want to register a One Person Company you need to consider the following:
One Director: The Company shall have only one director, but at the same time there is no bar on more number of directors. However, as per the Act, the total number of directors shall not be more than 15. You also need to remember that as per the Companies Act, if nothing explicitly is mentioned in the incorporation document, it would be assumed that the sole shareholder shall also be the sole director in the one person company and which shall be practically the case in most One Person Companies incorporated.
Nominee: On the death of the sole member, the nominee shall be the person recognized by the company as having title to all the shares of member. He is entitled to same dividends and other rights and liabilities to which the sole member of the company was entitled or liable.
Taxation: Since nothing has been specified as such by the finance ministry, it is assumed that the rates of taxation applicable for a private limited company shall apply to a One Person Company. Net Profits, which are calculated by deducting all allowable expenses from the turnover of sales, shall be taxable at the rate of 30% + education cess.
Freedom From Compliance: By incorporating a One Person Company, you also get the freedom from complying with many requirements as normally applicable to other private limited companies. Certain Sections like Section 96, 98 and Sections 100 to 111 are not applicable to One Person Company.