New concepts

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One person company (OPC)
• Private company – with only 1 member
• Memorandum of OPC to include nomination of person who will
become member in case of subscriber’s death or incapacity
• Such nomination can be changed at any point of time
• The words “One Person Company” to be mentioned in brackets
below name of company
• There can be more than 1 director in case of OPC
• Financial statements to be filed within 180 days of end of FY
Concessions to OPCs
• Minimum 2 Board meetings in a calendar year (with gap of minimum
90 days between 2 meetings). However, in case of only 1 Director, no
Board meeting required – only resolutions to be recorded
• OPC need not prepare cash flow statement / need not hold AGM
• Auditor rotation not applicable
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One person company (OPC)…
Limitations
• Only natural person, being citizen of India & resident can incorporate
/ be a nominee in an OPC
• One person can not incorporate / be nominee in more than 5 OPC
• Minor can not be member / nominee / hold beneficial interest
• OPC can not be an investment company
• Where paid up capital of OPC exceeds Rs. 50 lakhs or average annual
turnover (last 3 years) exceeds Rs. 2 crores, it shall convert itself in to
a private / public company within 6 months

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Small company
• Small company – company, other than public company, whose
– Paid up share capital is ≤ Rs. 50 lakhs; or
– Turnover ≤ Rs. 2 crores
• Holding Co / subsidiary company, section 8 company, company
registered under a Special Act not to be treated as small companies
Concessions to Small companies
• Small company not required to prepare cash flow statement
• Small company to conduct at least 2 Board meetings in a calendar
year (with gap of 90 days between 2 meetings)
• Auditor rotation not applicable for small companies

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Dormant company
• Who can attain status of a dormant company? – Companies;
– Formed for a future project, or to hold and asset / intellectual
property and has no significant accounting transactions
– Not carrying out any significant business or operation, or has not
made any significant accounting transaction, or has not filed
financial statements / annual returns for 2 years
• Special resolution in AGM / confirmation from at least 3/4th
shareholders (by value) required to apply for being dormant company
• Certain additional conditions prescribed for company to be eligible to
make application to be dormant company

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Dormant company…
Concessions to dormant companies
• Dormant company not required to prepare cash flow statement
• Dormant company to conduct at least 2 Board meetings in a calendar
year (with gap of 90 days between 2 meetings)
• Rotation of auditors not applicable
Limitations
• ROC to initiate process of striking off name of company in case it
remains dormant for consecutive 5 years
• Return to be filed within 30 days of end of financial year of financial
position duly audited by CA

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Nidhi Company
• Nidhi company is a company registered under Companies Act and
notified as a Nidhi company by Central Government under Section
620-A of Companies Act. It is a non-banking finance company doing
the business of lending and borrowing with its members or
shareholders.
Producer Company
• A producer company is basically a body corporate registered as
Producer Company under Companies Act, 1956 and shall carry on or
relate to any of following activities classified broadly:-
• (a) production, harvesting, processing, procurement, grading,
pooling, handling, marketing, selling, export of *primary produce of
the Members or import of goods or services for their benefit :
• (b) rendering technical services, consultancy services, training,
education, research and development and all other activities for the
promotion of the interests of its Members;
• (c) generation, transmission and distribution of power, revitalization
• of land and water resources, their use, conservation and
communications relatable to primary produce;
• (d) promoting mutual assistance, welfare measures, financial
services, insurance of producers or their primary produce;
Holding/Subsidiary/Associate
Key definitions
• Financial statement – [sec 2 (40)] –
– Defined to include balance sheet,
– profit & loss account / income & expenditure account,
– cash flow statement,
– statement of changes in equity, if applicable,
– explanatory notes
• Financial statement for small / dormant company / OPC not to
include cash flow statement
• Financial year – [ sec 2 (41)] –
– Defined as period ending on 31st March every year;
– Where company is incorporated after 1st Jan in a year, financial
year will be till 31st March of the next year
– Companies given 2 years to align financial year to April – March

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Key definitions
– In case a company is a holding / subsidiary company of a
company incorporated outside India, and such company is
required to consolidate its accounts outside India, a different
financial year can be followed subject to approval by the Tribunal
• Subsidiary company [Sec 2 (87)] means a company in which the
holding company
– Controls composition (>50%) of the Board
– Exercises or controls more than 50% of total share capital either
by itself or together with one or more subsidiaries
• Total share capital = paid up equity capital + convertible preference
share capital

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Key definitions
• Scenarios determining whether a company is a subsidiary or not:
Total share capital of Z Ltd (Rs. Lakhs)
Equity share capital 100
Convertible Preference share capital 100
Total share capital 200

• Scenario 1 : A Ltd holds 60% of equity share capital & 50% of

convertible preference share capital, with balance held by B Ltd
• Scenario 2 : A Ltd holds 51% of equity share capital. B Ltd holds 49%
of equity capital and 100% of convertible preference capital

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