One Person Company: Nominee Consent Form [Form INC-3]

Introduction:

One Person Company in India to help entrepreneurs who can start a business on their own by allowing them to form a one person economic entity. One of the most significant benefits of a One Person Company (OPC) is that it can only have one member, whereas a Private Limited Company or a Limited Liability Partnership requires a minimum of two members to form and maintain (LLP). A One Person Company, like a Corporation, is a legal entity separate from its promoter that provides limited liability protection to its solitary shareholder while maintaining business continuity and being simple to create. [1]By signing his or her name to the memorandum of association, or becoming a shareholder, one person can start a business for any authorized purpose. In India, these kinds of businesses are known as One Person Companies. An OPC is a type of business that allows a single individual to manage a corporate entity with limited liability protection; however, it does have some limits.

The member must nominate one person as his or her nominee for incorporating the company under this form of company, and that candidate must grant his or her consent under form INC-3 to become that person’s nominee.[2]

The following are the most noticeable and amazing characteristics of one-person companies:

• There is only one director needed for these.
• Benefits of Liability Limitation
• Like corporate bodies, they have legal recognition and long-term viability.
• Annual and regulatory compliance costs are lower.
• Exemption from strict adherence to the regulations governing general meetings and auditor rotation
• In addition, there are several tax breaks.[3]

Who is eligible to be a nominee for an OPC?

Only a natural person who is an Indian citizen and a resident of India may be a nominee for the only member of an OPC, according to Rule 3(1) of the Companies (Incorporation) Rules 2014.[4]

Section 3: Formation of a Company

The nitty-gritty of company creation is principally laid out and discussed in Section 3 of the Companies Act, 2013, part of Chapter II. A company under this section can be formed for only one lawful purpose and can be one of three types: (1) a limited-by-shares company, (2) a limited-by-guarantee company, or (3) an unlimited company (having no limit to the liabilities of its members). A corporation limited by guarantee is defined by section 2(21) of the act of 2013 as one in which the members’ liability is restricted to the amount they agree to contribute to the company’s assets if it is wound up. A company limited by shares is defined under section 2(22) of the act of 2013 as one in which the members’ liability is restricted to the amount unpaid if any of the shares are held by them. This section is the backbone of the Companies Act, and it establishes the initial requirements for forming a company, which is the first step toward incorporation. As a result, this analysis will provide a detailed description and application of this section.

Nominee for a One-Person Company

In a one-person firm, a nominee is a person chosen by the lone promoter to take his or her place in the event of the sole promoter’s death or incapacitation. A one-person company’s nominee must be an Indian citizen and a resident of India above the age of 18. To be nominated as a nominee, the nominee must present a copy of his or her PAN card, as well as a recent address proof and proof of residence. Address proof can be shown through documents such as a driver’s license, passport, aadhaar card, voter id, and ration card. [5]

Consent Form for Nominees

A nominee consent form, also known as Form INC-3, must be filed with the MCA when forming a one-person corporation. The nominee agrees or declares the following by completing Form INC-3:

• In the event of the subscriber’s/death member’s or inability to contract, he/she consents to become a member of the company.
• He or she is an Indian citizen who lives in the country.
• He/She has not been convicted of any crime relating to the promotion, formation, or management of any company or LLP in the last five years, and has not been found guilty of any fraud, misfeasance, or breach of duty to any company under this Act or any earlier company legislation or LLP Act.
• He is not a nominee in any other One Person Corporation.
• He or she would meet the requirements for a nominee of a one-person company.
• He/she is aware that the person nominating me has the right to withdraw my nomination at any time without his/her agreement.[6]

Filling Consent Form for Nominees

The nominee consent form can be filed by following the steps below:

Step 1: Download the INC-3 form. The most recent version of Form INC-3 is available on the MCA website.

Step 2: Fill out the INC-3 PDF form. Using Adobe Acrobat, fill out the information requested on Form INC-3 electronically.

Step 3: Attach the Required Documents. The following documents must be attached to Form INC-3:

• Copy of PAN Card
• Proof of Address and Residence
• Using Adobe Acrobat, affix self-attested copies of the papers to the form.

Step 4: Print the INC-3 that has been completed. Print the INC-3 form after you’ve filled in all of the information and attached all of the appropriate documents. There would only be three pages in all. physically sign Form INC-3.

Step 5: Upload to MCA Portal During the incorporation process, upload Form INC-3 along with other incorporation paperwork to the MCA portal.

The steps to becoming a Nominated Nominee [7]

1. A One Person Company member must first receive written permission from the person they plan to nominate as a nominee.
2. The name of the person nominated must be specified in the One Person Company’s memorandum.
3. The nomination must be filed with the registrar in Form INC 2, along with the nominee’s written approval in Form INC 3 and the fee specified in the Companies (Registration offices and fees) Rules, 2014, at the time the One Person Company is incorporated, along with its memorandum and articles.
   “I, (Name of the nominee) hereby give my consent to become the member of (Name of the One Person Company), in the event of death of (Name of the sole member of the One Person Company) subscriber/member of the company or his incapacity to contract.”
4. A Director Identification Number is not required on this form, however, a Permanent Account Number is required.
5. Surprisingly, this form requests an Identify Proof as well as a copy of your PAN Card. A copy of the resident proof must also be included.
6. This is not an electronic form. This is essential in order to fill out the form electronically and print it once all of the mandatory fields have been completed. The Nominee must sign a printed copy of Form INC–3 before submitting it. E-Form INC-2 should be attached to the form.

Change in Nominee Circumstances[8]

1. The nominee has the option to withdraw his consent.
2. Change of Nominee by a One-Person Company’s Sole Member.
3. Sole Member’s Death or Incapacity

The nominee has the option to withdraw his consent

As is customary, The Companies (Incorporation) Rules, 2014, sub-rule 4 of Rule 4

1. The One Person Company’s nominee can withdraw their consent by notifying the member and the One Person Company in writing.
2. In this case, the only member must designate another person as a nominee within 15 days of receiving the withdrawal letter. The name of the person nominated under subrule (1) shall be mentioned in the memorandum of a One Person Company, and such nomination in Form No INC.2 along with the nominee’s consent obtained in Form No INC.3 and the fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar along with the company’s memorandum and arrears at the time of incorporation.
3. The sole member must notify the One Person Company in writing of such nomination, as well as the written consent of any other person so nominated in Form INC 3. A person nominated by a subscriber or member of a One Person Company may withdraw his consent by notifying the only member and the One Person Company in writing: Provided, however, that after fifteen days of receiving the notification of withdrawal, the sole member shall designate another person as nominee and deliver a written notice of such nomination to the Company, accompanied with the written approval of such other person so nominated in Form No.INC.3.
4. Within 30 days of receiving the notice of withdrawal of consent, the One Person Company must file with the registrar a copy of the notice and the intimation of the name of another person nominated by the member in Form INC 4, along with the fee prescribed by the Companies (Registration offices and fees) Rules, 2014, and the written consent of the new nominee to be nominated in Form INC 3. The company must file a notice of withdrawal of consent and the intimation of the name of another person nominated by the sole member in Form No INC.4 with the Registrar within thirty days of receiving the notice of withdrawal of consent under subrule (3), along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the written consent of such another person with the Registrar.
5. A subscriber or member of a One Person Company may change the name of the person nominated by him at any time, for any reason, including death or incapacity to the contract of the nominee, by informing the company in writing, and nominate another person after obtaining the prior consent of such another person in Form No INC.3: Provided, however, that within three days of receiving such intimation, the company shall file with the Registrar a notice of such change in Form No INC.4 along with the fee prescribed in the Companies (Registration offices and fees) Rules, 2014, and with the written consent of the new nominee in Form No INC.3.
6. When the sole member of a One Person Company dies or becomes incapacitated to contract, and his nominee becomes a member of the One Person Company, the new member must nominate, within fifteen days of becoming a member, a person who will become a member of the company in the event of his death or incapacity to contract, and the company must file with the Regime.

Change of Nominee by a One-Person Company’s Sole Member

As is customary, The Companies (Incorporation) Rules, 2014, have a sub-rule 5 of Rule 4.

1. A One Person Company member can alter the nominee at any time by writing to the One Person Company.
2. In Form INC 3, the sole member must get the new nominee’s prior consent.
3. Within 30 days of receiving such intimation, the One Person Company shall file with the registrar a notice of such change in Form INC 4 along with the fee as stipulated in the Companies (Registration offices and fees) Rules, 2014 and with the signed consent of the new nominee in Form INC 3.

Sole Member’s Death or Incapacity

1. In the event that the only member dies or becomes unable to contract, the nominee shall become the OPC’s lone member.
2. Within 15 days of becoming a member, the new member must nominate a new nominee.
3. Within 30 days of the change in membership and with the prior written consent of the person so nominated in Form INC 3, the One Person Company shall file with the registrar an intimation of such cessation and nomination in Form INC 4 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the fee as provided in the Companies (Registration offices and fees) Rules, 2014.

Conclusion

OPC will provide an individual or professional more flexibility in managing his firm while also enjoying the benefits of a corporation. Once the Bill is enacted into law, company law experts predict an increase in one-person company registrations. Many international corporations will benefit from the OPC idea, as they will no longer be required to appoint a minimum of two nominees when forming a wholly-owned subsidiary. [9]The OPC will provide more advantageous banking facilities, primarily loans, to such business owners. Furthermore, the proposal will increase the flow of foreign investment into India by eliminating the need for a nominee shareholder.

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References:

[1] The Companies Act, 2016

[2] https://www.taracorporate.com/one-person-company-registration

[3] https://www-globaljurix-com.cdn.ampproject.org/v/www.globaljurix.com/amp/one-person-company/opc-registration.php?amp_js_v=a6&amp_gsa=1&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16273879781666&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=http%3A%2F%2Fwww.globaljurix.com%2Fone-person-company%2Fopc-registration.php

[4] https://taxguru-in.cdn.ampproject.org/v/s/taxguru.in/company-law/process-change-nominee-person-company.html?amp_js_v=a6&amp_gsa=1&amp&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16273538266255&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Ftaxguru.in%2Fcompany-law%2Fprocess-change-nominee-person-company.html

[5] Dheeraj Verma, One person company, Legal Services India http://www.legalservicesindia.com/article/2407/One-person-company.html.

[6] https://www.indiafilings.com/learn/nominee-consent-form-one-person-company/

[7] Vatsala Singh, One Person Company- A Concept For New Age Business Ownership, Singh and Associates

[8] https://taxguru-in.cdn.ampproject.org/v/s/taxguru.in/company-law/process-change-nominee-person-company.html?amp_js_v=a6&amp_gsa=1&amp&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16273538266255&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Ftaxguru.in%2Fcompany-law%2Fprocess-change-nominee-person-company.html

[9] https://yourfinancebook.com/consent-of-nominee-for-one-person-company-opc/