Shahriar Islam Shovon :
One Person Company or OPC is a business entity having a unique idea where a single person easily can run business with limited liability. Finance Minister of Bangladesh AHM Mostafa Kamal said that the Government is planning to comprise a new provision into Law titled, ‘One Person Company’ into the Companies Act, 1994 (The Daily Star, 9th Sept 2020). Our neighbour country India already inserted this rule into their legal system and it seems successful. In India, the Companies Act, 2013 Section- 149(1) (a) states that, OPC as a company which has only one shareholder as its member. Bangladesh has the highest unemployment rate among the neighbouring countries of South Asia (International Labour Organizations, 23rd January, 2020). On the other hand, India provides a way for framing OPC to operate with little capital. The government of Bangladesh made a move to amend the Companies Act, 1994 with include a provision which may run by a single person mainly to seek attraction local and foreign investments. According to the Company Act 1994, Company is an artificial person and have separate legal entity and OPC will demonstrate such entities of Limited companies. In the case of Salomon v. A Salomon and Co Ltd [1897] AC 22, represents the orthodox view of separate legal entity under English law. Though Salomon was the owner of the company and Salomon was the maximum share holder of Salomon & Co Ltd but both were separate from each other and the company was treated as an artificial legal person. In this regard, Solomon had justifiable right to seek compensation from his own company and the principle ‘Corporate Vail’ established. For forming OPC, owner is bound to follow the same procedure, the registered documents must have a nominee after the death of owner, the responsibility is vested on the nominee. According to Indian Companies Act, 2013, one-person company may at any time can change the name of such other person who is nominated as a nominee, by giving notice (Section- 4(1) (f)). For framing OPC some legal issues should be followed. According to Companies (incorporation) Rules 2014 in India, no foreigner has any right to frame OPC but easy to do for natural people (Rules 3.1) and one such person cannot form more than one OPC (Rule 3.2). According to Companies Act, 2013 of India Section 173(5) One Person Company will assemble meeting for once in six months. There are a number of indicators which said the possibility of OPC in Bangladesh namely:
1. OPC Company has separate legal existence.
2. The liability of the director /shareholder is limited
3. Easy to get a loan from banks
4. It is too susceptible to make a fast decision and execute the plan
5. Easy to manage
6. Tax flexibility and savings benefit
7. OPC should be registered for operating the business and it is too easy to get a loan facility for OPC
8. The value of OPC is huge and money can be borrowed from lenders in OPC.
It is too easy for allocation, OPC can raise funds through venture capital or financial institutions and easy to raise funds thus graduating itself to a private limited company. But for Bangladesh, there are some challenges also. They are following namely:
1. The share capital is restricted.
2. Numbers of the members are restricted, which is just one
3. A minor cannot be a member of OPC or nominee.
4. The concept of perpetual succession is not workable in OPC
5. Minimum paid-up is not in one person company
6. According to Companies (incorporation) Rules, 2014 of India under Rule 3.1, only a natural person who is a citizen of India shall be eligible to incorporate one person company but this provision discourages foreign and multinational companies.
7. By following some legal rules and statutes OPC is required to be registered. In this regard, compliance cost is so much high.
Introduction of OPC in India was promising initiative by Indian Govt. OPC company in India involved in agriculture, hunting and forestry and many more. Overpopulation is an unexpected condition. We the people of Bangladesh and the number of our population is 164,875,800 (Worldometer, 10th August, 2020). Hence, entrepreneurship is badly needed for the Bangladeshi people and for this one person company (OPC) is the reasonable way to start a company. In India, OPC is one of the significant milestones of the Companies Act,2013, introduced to encourage self-employment with a vital backbone of India’s legal system. So why not Bangladesh? The liability is limited and OPC has more opportunities.
In this regard, people can enjoy all the privileges accessible to private limited company like, separate legal entity, limited liability, credit, bank loans and legal protection for the business. Basically, OPC requires one member who subscribes to the memorandum, holds shares of the company and one nominee, who comes to be the member of the company in case of death or any kind of incapability of the original person. For pursuing vision to become a sole entrepreneur in Bangladesh, the government of Bangladesh should unlock the door for everyone. OPC is providing the sole owner or young businessman all advantages of a private limited company.
One Person Company or OPC is a business entity having a unique idea where a single person easily can run business with limited liability. Finance Minister of Bangladesh AHM Mostafa Kamal said that the Government is planning to comprise a new provision into Law titled, ‘One Person Company’ into the Companies Act, 1994 (The Daily Star, 9th Sept 2020). Our neighbour country India already inserted this rule into their legal system and it seems successful. In India, the Companies Act, 2013 Section- 149(1) (a) states that, OPC as a company which has only one shareholder as its member. Bangladesh has the highest unemployment rate among the neighbouring countries of South Asia (International Labour Organizations, 23rd January, 2020). On the other hand, India provides a way for framing OPC to operate with little capital. The government of Bangladesh made a move to amend the Companies Act, 1994 with include a provision which may run by a single person mainly to seek attraction local and foreign investments. According to the Company Act 1994, Company is an artificial person and have separate legal entity and OPC will demonstrate such entities of Limited companies. In the case of Salomon v. A Salomon and Co Ltd [1897] AC 22, represents the orthodox view of separate legal entity under English law. Though Salomon was the owner of the company and Salomon was the maximum share holder of Salomon & Co Ltd but both were separate from each other and the company was treated as an artificial legal person. In this regard, Solomon had justifiable right to seek compensation from his own company and the principle ‘Corporate Vail’ established. For forming OPC, owner is bound to follow the same procedure, the registered documents must have a nominee after the death of owner, the responsibility is vested on the nominee. According to Indian Companies Act, 2013, one-person company may at any time can change the name of such other person who is nominated as a nominee, by giving notice (Section- 4(1) (f)). For framing OPC some legal issues should be followed. According to Companies (incorporation) Rules 2014 in India, no foreigner has any right to frame OPC but easy to do for natural people (Rules 3.1) and one such person cannot form more than one OPC (Rule 3.2). According to Companies Act, 2013 of India Section 173(5) One Person Company will assemble meeting for once in six months. There are a number of indicators which said the possibility of OPC in Bangladesh namely:
1. OPC Company has separate legal existence.
2. The liability of the director /shareholder is limited
3. Easy to get a loan from banks
4. It is too susceptible to make a fast decision and execute the plan
5. Easy to manage
6. Tax flexibility and savings benefit
7. OPC should be registered for operating the business and it is too easy to get a loan facility for OPC
8. The value of OPC is huge and money can be borrowed from lenders in OPC.
It is too easy for allocation, OPC can raise funds through venture capital or financial institutions and easy to raise funds thus graduating itself to a private limited company. But for Bangladesh, there are some challenges also. They are following namely:
1. The share capital is restricted.
2. Numbers of the members are restricted, which is just one
3. A minor cannot be a member of OPC or nominee.
4. The concept of perpetual succession is not workable in OPC
5. Minimum paid-up is not in one person company
6. According to Companies (incorporation) Rules, 2014 of India under Rule 3.1, only a natural person who is a citizen of India shall be eligible to incorporate one person company but this provision discourages foreign and multinational companies.
7. By following some legal rules and statutes OPC is required to be registered. In this regard, compliance cost is so much high.
Introduction of OPC in India was promising initiative by Indian Govt. OPC company in India involved in agriculture, hunting and forestry and many more. Overpopulation is an unexpected condition. We the people of Bangladesh and the number of our population is 164,875,800 (Worldometer, 10th August, 2020). Hence, entrepreneurship is badly needed for the Bangladeshi people and for this one person company (OPC) is the reasonable way to start a company. In India, OPC is one of the significant milestones of the Companies Act,2013, introduced to encourage self-employment with a vital backbone of India’s legal system. So why not Bangladesh? The liability is limited and OPC has more opportunities.
In this regard, people can enjoy all the privileges accessible to private limited company like, separate legal entity, limited liability, credit, bank loans and legal protection for the business. Basically, OPC requires one member who subscribes to the memorandum, holds shares of the company and one nominee, who comes to be the member of the company in case of death or any kind of incapability of the original person. For pursuing vision to become a sole entrepreneur in Bangladesh, the government of Bangladesh should unlock the door for everyone. OPC is providing the sole owner or young businessman all advantages of a private limited company.
(Shahriar Islam Shovon, Department of Law & Human Rights, University of Asia Pacific)
