Covid 19 Pandemic has created challenges in terms of the commerce and investment sector. In order to redress the problem government has taken the initiative to facilitate investment and commerce by
bringing an amendment to the Companies Act 1994 in a form of one-person Companies (OPC) within its arsenal. This article will evaluate what is ‘person company’ is, how it can be registered, the capital required for it, liabilities, and all other legal aspects of it.
The definition of One Person Company (OPC)
- 1 The definition of One Person Company (OPC)
- 2 Can a foreigner form OPC?
- 3 Contents of Memorandum
As per the newly added section 11A(c), the amendment defines the One Person Company (OPC) as a company that has one natural person as its shareholder. At the end of these companies, the words ‘one person company or OPC’ must be inserted.
Registration of the one-person company
accordingly, newly inserted section 392B, for any lawful object natural person may incorporate an OPC by signing his/her name in the memorandum. The section further explains that one person may only incorporate one OPC.
Documents required for registration of one person company
Both the sole shareholder and the nominee require the following documents for one-person company registration:
a. National ID card
b. Passport Size picture
c. TIN certificate
d. Mobile number
e. Email address
Can a foreigner form OPC?
There is no apparent bar for a foreigner in forming an OPC, The prescribed method for registration requires the NID of the shareholder, which a foreigner does not possess, and thus a foreigner may not be able to form an OPC.
Contents of Memorandum
The memorandum shall contain the name of the nominee who shall be deemed to be the shareholder of the company upon the death and incapacity of the shareholder. The nominee shall be entitled to the same rights and liabilities as the old shareholder who appointed him/her. If a nominee wants himself/herself to be removed his/her name from the list, he/she simply withdraws his/her consent to be listed. Upon the death of the nominee or incapacity, he/she may be replaced by the shareholder himself/herself. The nominee can appoint another person as the nominee upon his/her death.
Required capital for forming OPC
392C states that for a one-person company the minimum paid-up capital is 25 lakhs taka and the maximum paid-up capital is 5 crore taka. The annual turnover must be between 1 crore and 50 crore taka in the previous financial year.
The sole shareholder must convert the company into a private limited company or public limited company if the paid-up capital or turnover increases subject to fulfilling conditions. According to section 392, A memorandum and article of the association are also required.
Director of One Person Company
The sole natural shareholder will be the director. The director may appoint the manager, secretary, and other employees as necessary. At least one meeting in a financial year shall be conducted by the director of OPC.
Amendment in the memorandum
the Registrar must be notified as per the specified procedure for bringing any change in the memorandum. For any change in the memorandum, it has to be changed through the high court. In terms of change in the article of association, it can be done through RJSC i.e. the registered office of the register.
Balance sheet and financial records along with other necessary documents must be submitted to the register within 180 days of the end of the financial year by the OPC. Each balance sheet shall include the profit and loss or income and expenditure and be signed by the Director who is the sole shareholder of the one-person company.
As per section 392H, All shares of the OPC can be transferred to any other individuals with natural beings subject to the provision of the section. One-Person Company Formation & Registration Procedure in Bangladesh
(i) A letter containing that the Board of Directors of the Company approved the share transfer;
(ii) A document containing a number of shares to be transferred of the Company;
(iii) Form 117 (signed);
(iv) Board Resolution by the company approving the transfer of the shares; and
(v) Share Transfer Certificate.
Liabilities of OPC
One of the striking benefits of OPC is that OPC may allow for limited liability through the creation of a separate legal entity. The liabilities of the company are not shoved on the face of the shareholder. In the case of an unforeseen event, the assets of the business owner will not be at risk. In contrast, where the ups and downs of the business are apparent, the personal assets of the proprietorship firm are at risk. The losses or debts incurred by the OPC, which resulted merely in the due course of the business will not affect the personal property of the entrepreneur. If this was the situation in a sole proprietorship firm, the owner would have to take responsibility to settle the debts and liabilities. In contrast, where limited liability comes into play for the OPC, it can limit the shareholder’s liability proportional to the unpaid subscription money.
Obligations of the OPC
The contractual obligations of the OPC cannot hold the member obligated, even if the member holds all the shares of the company,
bearing in mind that the company is a separate legal entity.
The introduction of OPC has had a positive development in the Companies Act 1994. This will facilitate business and commerce with more safeguards for a sole investor. Counsels Law Partners (CLP) is a full-service law firm that has been dealing with all types of Foreign Investment related issues through its competent and experienced lawyers. Therefore, if you need any assistance or consultation, visit us at our office or feel free to contact us at +8801700920980 (WhatsApp) or via Email- firstname.lastname@example.org .