The Companies Act, 2013 outlines the rules surrounding a One Person Company (OPC) in India. The introduction of an OPC allows sole entrepreneurs to register a company with one person as a director and shareholder. However, the rules also mandate the sole member to propose a person as his nominee. Today, we will talk about the One Person Company nominee in complete detail.
According to Section 3(1) of the Companies Act, 2013, a single person can form a One Person Company for any lawful purpose. Only a citizen and resident of India can form an OPC. Foreigners and NRIs are not permitted. Further, a resident of India is a person who has stayed for a period not less than 182 days within the immediately preceding calendar year.
One Person Company Nominee
While an OPC is similar to a private limited company in many ways, one major difference is that the sole member of the OPC needs to specify the name of a nominee during registration. This was done to ensure that the company survives even if the sole member becomes incapable of entering into a contract. This is in the case of death or permanent disability (mental or physical) of the sole member.
Who can become a One Person Company nominee?
All eligibility criteria for the owner of the OPC apply to the nominee. Therefore, the nominee eligibility criteria are:
- Citizen of India
- Resident of India
- More than 18 years old
- Must be a natural person and not another company or firm.
The process of nominating a person as a One Person Company nominee.
When you register an OPC, you are required to propose the name of a nominee who would take care of your business if you become incapable to enter into legal contracts. Apart from submitting the PAN Card, identity and address proof of the nominee, you also need to submit his/her consent via Form INC-3.
Rule 4 (2), (3), (4), (5), and (6) of the Company (incorporation) Rules, 2014, states the follows:
Consent of the One Person Company Nominee
(2): You need to mention the name of the nominee in the Memorandum of Association. Further, you need to submit the nomination in Form SPICE+and the consent of the nominee in form INC-3. Further, you need to submit this along with the prescribed fees at the time of incorporating the OPC.
When a nominee withdraws the consent
(3): The nominee can withdraw the consent at any time. He/she must give notice to the sole member of the OPC for the same. On receipt of the notice, the sole member must appoint a nominee within 15 days. On appointing a new nominee, the sole member must inform the company along with the consent of the new nominee via form INC-3.
(4) The company needs to file a notice of the withdrawal of consent and intimation of another person as the One Person Company nominee via form INC-4 within thirty days of receipt of the notice of withdrawal of consent.
Changing the nominee
(5) The sole member can change the name of the person as the nominee for any reason. He must submit a written intimation to the company. The reasons can include the death or incapacity of the nominee to enter legal contracts among other reasons. On receipt of such intimation from the sole owner, the company must file a notice with the Registrar via form INC-4.
Death of the sole member of the OPC
(6) If the sole member of the OPC dies or becomes incapacitated to enter into any legal contract, then the One Person Company nominee becomes the sole member of the OPC. In such cases, the new member needs to nominate another person as the nominee within 15 days. The company needs to file a notice with the Registrar via form INC-4 within thirty days of the change in membership.
Summing Up
In an OPC with a single shareholder, a nominee is essential to ensure continuity of business. The One Person Company nominee takes over the responsibilities of the sole member if he becomes incapable of entering into any legal contract. We hope that this article offered all the information that you were seeking regarding a nominee in an OPC. Please go through the sections mentioned above for more clarity. Good Luck!!
