The Companies Act, 2013 introduced the new concept of One Person Company (OPC). As the name suggests, an OPC is a company established by a single person. A single individual establishes and manages the company. An OPC has all the features of a company, such as perpetual succession, limited liability and a separate legal entity.
Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company.
In a Private Company, a minimum of 2 Directors and 2 Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 Members. A single person could not incorporate a Company previously.
As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. The director and member can be the same person. It is a form of a company where the compliance requirements are lesser than that of a private company. Thus, one person company means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.
At Startup Station, we specialize in simplifying the OPC registration process, ensuring that entrepreneurs can smoothly navigate the complexities of legal formalities. Our experienced team is dedicated to assisting you at every step, from document preparation to filing, we offer expert guidance to help you make informed decisions regarding your OPC setup.
Contact us now and take the first step toward building your entrepreneurial dream!
Introduction to One Person Company (OPC)
A One Person Company (for short “OPC”) is a company incorporated by a single individual. Before the Companies Act 2013, one person alone could not get a company incorporated and had to go for a Sole Proprietorship. As per Section 2(62) of the Companies Act 2013, a Person Company is a company with one member, and all legal liabilities are restricted to the company and not its members. An OPC is required to follow and act as per the provisions made by law for a “Private Limited Company” and only a naturally born Indian resident can set up such a company as per the law.
One Person Company was introduced in the Indian company law regime by the enactment of the Companies Act, 2013. This new concept was in furtherance of the objective of creating the necessary environment for the present global corporate structure in India and supporting people who set up small businesses.
The main aim behind the adoption of such a concept is to support and encourage entrepreneurs in the micro-level and field and also in search of a business structure that ensures lesser effort, compliance, time, and monetary requirements for starting such a business.
The lawmakers understood the need to promote such a type of company so as to foster and encourage the development of ideas that will in turn benefit the country and its economy.
Eligibility Criteria
Before you go ahead and register a one-person company (OPC), it’s crucial to understand the specific eligibility criteria and limitations that govern its formation. The Companies Act sets out clear requirements that must be met to ensure that the individual promoting the OPC is eligible to do so.
- Natural Person and Indian Citizen: Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs cannot create an OPC.
- Resident in India: The promoter must be a resident in India, meaning they should have lived in India for at least 182 days during the previous calendar year.
- Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company’s capital clause during the registration.
- Nominee Appointment: The promoter must appoint a nominee during the OPC’s incorporation. This nominee would become a member of the OPC in the event of the promoter’s death or incapacity.
- Restrictions on Certain Businesses: Businesses involved in financial activities such as banking, insurance, or investments cannot be established as OPCs.
- Conversion to Private Limited Company: If the OPC’s paid-up share capital exceeds 50 lakhs or its average annual turnover surpasses 2 Crores, it must be converted into a private limited company to comply with the regulatory requirements for larger companies.
It’s worth noting that an individual can establish only one OPC, and an OPC cannot have a minor as its member.
Advantages of One Person Company (OPC)
Advantages of One Person Company (OPC) include the following:
- Legal Status: An OPC obtains a separate legal entity status, safeguarding the individual who founded it from personal liability for company losses.
- Easy Fundraising: Being a private company, OPCs find it easier to raise funds through venture capitalists, angel investors, and banks compared to proprietorship firms.
- Reduced Compliance: OPCs enjoy certain exemptions from compliance requirements under the Companies Act, 2013, simplifying administrative obligations.
- Simple Incorporation: OPCs can be established with just one member and one nominee, with the member also serving as the director. No minimum paid-up capital requirement simplifies the incorporation process.
- Efficient Management: With a single person managing the OPC, decision-making is swift, leading to efficient company management without conflicts or delays.
- Perpetual Succession: OPCs maintain perpetual succession, ensuring the company’s continuity even with only one member.
In conclusion, OPCs offer several advantages, including limited liability, ease of fundraising, reduced compliance, straightforward incorporation and management, and perpetual succession.
Disadvantages of OPC
While OPCs offer advantages, there are also limitations:
- Suitable for Small Businesses: OPCs are primarily suitable for small-scale businesses as they can only have one member. This limits their ability to raise additional capital as the business expands.
- Restriction on Business Activities: OPCs are restricted from engaging in certain activities, such as non-banking financial investments and charitable objectives.
- Ownership and Management: There’s a lack of clear distinction between ownership and management in OPCs, as the sole member can also be the director. This can potentially lead to ethical concerns or conflicts of interest.
Required Documents
Several essential documents must be prepared and submitted to the Registrar of Companies (ROC) as part of the OPC registration process:
- SMemorandum of Association (MoA)
- Articles of Association (AoA)
- The nominee’s consent, along with their PAN card and Aadhaar card, must be submitted via Form INC-3.
- Proof of Registered Office
- The proposed director should furnish a declaration in Form INC-9 and their consent in Form DIR-2.
- A declaration by a qualified professional certifying that all necessary legal compliances have been adhered to.
Registration of One Person Company (OPC) in India
In India, the registration of a One Person Company (OPC) is facilitated through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which has replaced the previous application forms for company incorporation.
The registration process for an OPC consists of two parts:
- Part A: This initial section of the SPICe+ form is dedicated to securing approval for the desired company name and applying for the Director Identification Number (DIN) or Permanent Account Number (PAN) for the proposed director.
- Part B: The subsequent segment, known as Part B, involves furnishing incorporation-related details. Here, essential information such as the registered office address of the OPC, details about share capital, particulars of the director, and information about the shareholder is provided.
Here are the steps involved in the OPC registration.
Step 1: Obtain a Digital Signature Certificate (DSC)
Secure a Digital Signature Certificate (DSC) for the intended director of the OPC. The DSC is utilized for electronically signing crucial documents.
Step 2: Obtain Director Identification Number (DIN)
Acquire a Director Identification Number (DIN) for the proposed director from the Ministry of Corporate Affairs (MCA).
Step 3: Name Reservation
Apply for name reservation through the MCA portal using Form SPICe+ (Part A). Ensure that the chosen name for your company is distinct and does not resemble any existing company or trademark.
Step 4: Prepare MOA and AOA
Draft the Memorandum of Association (MOA) and Articles of Association (AOA) for your company. These documents define the company’s objectives and internal rules.
Step 5: File the Forms
File the necessary forms with the MCA for OPC registration. Attach the relevant documents to the SPICe+ form, including MOA, AOA, declarations, proof of the registered office, nominee appointment, and other documents as required by the MCA.
Step 6: Certificate of Incorporation
Upon approval by the ROC and verification of compliance requirements, the ROC will issue a Certificate of Incorporation, signifying the successful registration of your One Person Company. Notably, the PAN number (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are generated automatically during the incorporation process, eliminating the need for separate applications.
With this Certificate of Incorporation, your OPC is officially recognized and ready to commence its operations in India.
Why Startup Station for OPC Registration?
Startup Station is the ideal partner for One Person Company (OPC) registration for several compelling reasons. With years of expertise in company registration and a deep understanding of the regulatory landscape, Startup Station simplifies the often complex OPC registration process.
We offer expert guidance, from name reservation to document preparation and submission. Our commitment to accuracy and compliance guarantees that your OPC registration adheres to all legal requirements, while our dedicated support team is readily available to address any queries or concerns you may have.
Get started now and embark on your entrepreneurial journey with confidence!
Post-Incorporation Formalities for OPC
Following the successful incorporation of a One Person Company (OPC), specific compliance formalities must be adhered to, akin to those applicable to private limited companies. Our experts are ready to assist you in fulfilling OPC compliance requirements, ensuring that your business remains in full legal compliance.
