This was a long-standing demand to have less compliance for one person and small companies. Rule 8A introduced with effect from 31st July 2018 by the Companies (Accounts) Amendment Rules 2018. Let us discuss.
Tag Archives: One Person Company
On 5th June 2015, Ministry of Corporate Affairs posted here a draft notification to be published in Official Gazette announcing some exemption to Private Companies.
As there is no effective date is announced in the Notification, this notification shall come into effect on the date of its publication in the Official Gazette.
[UPDATE 20th June 2015: MCA uploaded copy of Official Gazette dated 5th June 2015, in which this Notification is published. Meaning that; These exemption came into force from that date]
The Notification is issued in exercise of power conferred by Clauses (a) and (b) of Sub – section (1) of 462 read with sub –section (2) of said section of the Companies Act, 2013. A copy of this notification has been laid in draft before both Houses of Parliament as required by sub-section (2) of section 462 of the Companies Act, 2013.
Paragraph 2 of the Notification cast a condition on the Private Companies:
What is in name? Everyone had said it sometimes in life. Here, I am discussing what is in display of name.
Every professional practicing Corporate Law, selecting a name is rather a complex issue. When promoters select name for proposed company or a company try to change its name, there is complex rules. Rule 8 of the Companies (Incorporation) Rules, 2014 list undesirable names. Thereafter, a promoters or company, as the case may be, have to reserve selected name before further steps. All these are not within scope of this post.
Noun Object Private Limited (OPC)
Recently, when Registrar of Companies issued a Certificate of Incorporation for a One Person Company. A question was raised whether name as appeared on Certificate is correct and proper or not? How company will present this name to public, as it appear on certificate or in some other manner.
Form INC-29 deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN. This Form is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the Form is processed and found complete, company would registered and CIN would be allocated. Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for allotment of DIN while incorporating a company.
Select the type of proposed company under drop-down provided. Producer Company should be selected only in case company complies with the provisions of Part IXA of the Companies Act, 1956. Incorporation of a charitable company under section 8 and company defined under chapter XXI of the Companies Act, 2013 are not facilitated under this integrated incorporation form.
At the time of writing this blog post, I have no information of publication of the Company (Incorporation) Rules, 2015 which seems to come into effect with effect from 1st May 2015 as Official MCA21 portal has issued all forms prescribed under these forms.
I have no words of advice on enforceability of these rules until copy of publication in official gazette. These Rules come into effect only after publication in official gazette. [Rule 1(1) of the Companies (Incorporation) Amendment Rules 2015]
In original Rule 5 discussed earlier here, penalty in relation to contravention of these rules by One Person Company or its officer was prescribed. Rule 5 of these rules is being deleted.
But penalty is still there. New Rule 7A is introduced for the purpose. I highlight effect in deletion of rule 5 and introduction of rule 7A here:
Section 134 of the Companies Act 2013 enumerates provisions related to with Financial Statements and Boards’ Reports. Rule 8 to Rule 12 of the Companies (Accounts) Rules 2014 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also deals with Boards’ Report.
Penalty for Contravention of Section 134:
If a company contravenes the provisions of section 134, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. [Section 134(8)]
Section 18 of the Companies Act 2013 discussed earlier here talk about conversion of companies. In Rule 7 of the Companies (Incorporation) Rules 2014 list out formalities for conversion of a private company into a one person company.
A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting. [Rule 7(1)]