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Mumbai University · FY LLB · Sem II
Naveen incorporated a "One Person Company" making his sister Navita as the nominee. Navita is leaving India permanently
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Naveen incorporated a "One Person Company" making his sister Navita as the nominee. Navita is leaving India permanently due to her marriage abroad. She is withdrawing her consent of nomination in the said OPC. Answer: (i) If Navita is leaving India permanently, is it mandatory for her to withdraw her nomination? (ii) If Navita maintained the status of Resident of India after her marriage, can she continue her nomination?
Q3Answer the following questions by giving reasonsAttempt Any Two • 6 marks each • Total: 12 marks2024
(2)Naveen incorporated a "One Person Company" making his sister Navita as the nominee. Navita is leaving India permanently due to her marriage abroad. She is withdrawing her consent of nomination in the said OPC. Answer: (i) If Navita is leaving India permanently, is it mandatory for her to withdraw her nomination? (ii) If Navita maintained the status of Resident of India after her marriage, can she continue her nomination?
Facts

Naveen has incorporated an OPC with his sister Navita as nominee. Navita is permanently leaving India due to marriage abroad and wishes to withdraw her nomination consent.

Background — OPC and Nominee Requirements

Under Section 3(1)(c) read with Section 2(62), a One Person Company (OPC) can have only one member. The member must nominate a person who shall become the sole member of the OPC in the event of the member's death or incapacity. The nominee must be:

  • An Indian citizen; and
  • A Resident of India (as defined — a person who has stayed in India for not less than 182 days in the preceding financial year).

These eligibility conditions apply at the time of nomination and must be maintained.

(i) Is it mandatory for Navita to withdraw her nomination if she leaves India permanently?

Yes, it is mandatory for Navita to withdraw her nomination (or for Naveen to change the nominee) if Navita is permanently leaving India. The reason is:

  • A nominee for an OPC must be an Indian citizen and a Resident of India. Permanent departure from India typically results in a person losing their "Resident" status under Indian law (for Companies Act purposes, residency = 182+ days in India in the preceding financial year).
  • Rule 3 of the Companies (Incorporation) Rules, 2014 requires the nominee to be a natural person who is an Indian citizen and resident of India.
  • Once Navita ceases to be a resident of India, she becomes ineligible to be a nominee. Naveen must file Form INC-4 (change of nominee) with the RoC and appoint a new eligible nominee within a reasonable time.
  • If Navita herself wishes to withdraw her consent, she may do so by giving notice in writing to Naveen and the company (Form INC-4); Naveen must then appoint a new nominee.

Consequence of non-compliance: if no eligible nominee is appointed, the OPC risks being in violation of the statutory requirement, which may attract penalties and regulatory action.

(ii) If Navita maintains Resident of India status after marriage, can she continue?

Yes, she can continue as nominee if she maintains her status as a Resident of India after her marriage abroad. If Navita continues to reside in India for at least 182 days per financial year and retains Indian citizenship, she continues to satisfy both eligibility conditions (Indian citizen + Resident) and there is no legal bar on her continuing as nominee of the OPC. Merely marrying a foreign national does not automatically result in the loss of Indian citizenship or resident status — it depends on whether she acquires foreign citizenship. As long as she holds an Indian passport and satisfies the residency requirement, her nomination remains legally valid.