Rule 3 of the Companies (Incorporation) Rules, 2014 provides the following information regarding One Person Company:
(A) Only a natural person being an Indian citizen and resident in India can form one person company.
(B) It can carry out non-banking financial investment activities.
(C) Its paid up share capital is not more than Rs. 50 Lakhs.
(D) Its average annual turnover of three years does not exceed Rs. 2 Crores.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A, C and D only
(A) Only a natural person being an Indian citizen and resident in India can form one person company. Correct. Rule 3 allows only a natural person who is an Indian citizen and resident in India.
(B) It can carry out non-banking financial investment activities. Incorrect. A one person company cannot carry out non-banking financial investment activities.
(C) Its paid up share capital is not more than Rs. 50 Lakhs. Correct. This is the limit on paid up capital.
(D) Its average annual turnover of three years does not exceed Rs. 2 Crores. Correct. This is the limit on turnover.
The recognised wording is ‘It cannot carry out non-banking financial investment activities’. NTA took the ‘not’ out of ‘cannot’, and (B) became the odd one out. When two statements look alike, find the one word that differs.
Note: The rules for a One Person Company have changed since the textbook was written. From 1 April 2021 (Companies (Incorporation) Second Amendment Rules, 2021) the limits of Rs. 50 Lakhs on paid up share capital and Rs. 2 Crores on average annual turnover no longer apply, and an Indian citizen who is not resident in India can also form one, while the stay needed to count as resident is 120 days instead of 182. NTA’s question follows the textbook limits, under which (A), (C) and (D) are correct and (B) is not. So the answer is Option (3).
NCERT (2026-27 edition):
|
