One Person Company (OPC) REGISTRATION
As per the Companies Act, 2013, an One Person Company (OPC) is an unique entity where an individual can form a company. It combines the concept of a company with limited liability and succession, allowing a person to own and operate a company in their name.
Prior to the implementation of the Companies Act of 2013 only two people could form a company. The Companies Act of 2013 supports the formation of One Person Company (OPC) in India. It governs the registration and functioning of one person company in India. In comparison with a public company a private company should have at least two directors and two members however on the contrary, one person company registration doesn't need any group of people to be incorporated. As per the Section 2(62) of Companies Act of 2013, official registration of OPC in India is legal. One person company registration in India requires a single director and a single member representing the whole firm. This corporation type has very few compliance requirements in comparison with a private corporation. The structure of the one person company (OPC) in recent times was launched as a refinement of the structure of a sole proprietorship firm. In an OPC, a single promoter gains full authority over the company thereby, restricting his/her liability towards their contributions to the enterprise. Therefore, the said person will be the sole shareholder and director (however, a director nominee is present, but has zero power until the real director proves incapable of carrying on). Also, there can be no opportunity for contributing to employee stock options or equity funding. Additionally, if an OPC has an average turnover of ?2 crores thrice in a row and over or acquires a paid-up fund of ?50 lakh and over, it has to be converted to a private limited company or public limited company within six months.
Key Features of One Person Company:
1. Single-owner
2. Limited Liability
3. Distinct Management Structure
4. Entitlement to 100% Profits
5. Perpetual Succession through Nominee
Advantages of OPC
1. Legal status - The OPC receives a separate legal entity status from the member. The separate legal entity of the OPC gives protection to the single individual who has incorporated it. The liability of the member is limited to his/her shares, and he/she is not personally liable for the loss of the company. Thus, the creditors can sue the OPC and not the member or director.
2. Easy to obtain funds - Since OPC is a private company, it is easy to go for fundraising through venture capitals, angel investors, incubators etc. The Banks and the Financial Institutions prefer to grant loans to a company rather than a proprietorship firm. Thus, it becomes easy to obtain funds.
3. Less compliances - The Companies Act, 2013 provides certain exemptions to the OPC with relation to compliances. The OPC need not prepare the cash flow statement. The company secretary need not sign the books of accounts and annual returns and be signed only by the director.
4. Easy incorporation - It is easy to incorporate OPC as only one member and one nominee is required for its incorporation. The member can be the director also. The minimum authorised capital for incorporating OPC is Rs.1 lakh but there is no minimum paid-up capital requirement. Thus, it is easy to incorporate as compared to the other forms of company.
5. Easy to manage - Since a single person can establish and run the OPC, it becomes easy to manage its affairs. It is easy to make decisions, and the decision-making process is quick. The ordinary and special resolutions can be passed by the member easily by entering them into the minute book and signed by the sole member. Thus, running and managing the company is easy as there won’t be any conflict or delay within the company.
6. Perpetual succession - The OPC has the feature of perpetual succession even when there is only one member. While incorporating the OPC, the single-member needs to appoint a nominee. Upon the member’s death, the nominee will run the company in the member’s place.
Disadvantages of OPC
While OPCs offer advantages, there are also limitations:
1. 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.
2. Restriction on Business Activities- OPCs are restricted from engaging in certain activities, such as non-banking financial investments and charitable objectives.
3. 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.
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.
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
Documents Required for One Person Company Registration
The followings are the documents required for registration of One Person Company:
1. Voter's ID, Passport, PAN, Driver's License, or Aadhaar Card
2. Passport, in case of NRIs and foreign nationals
3. Scanned transcript of voter's ID and driver's license
4. Latest gas or electricity invoice/ bank account statement/ mobile phone or landline invoice
5. Specimen signature
6. Passport-size photographs
7. The documents must be self-attested. The paper works of NRIs must be notarized or apostilled.
Other Documents required by Registered Office:
1. Scanned transcript of gas or electricity invoice/ bank account statement/ mobile phone or landline invoice
2. Scanned transcript of rent agreement
3. Scanned transcript of No-objection Certificate (NOC) from the owner of the land, in case the member owns the property, then scanned transcript of sale deed.
How to Register One Person Company?
OPC Registration Process in India can be completed in a series of steps. A form must be filed with necessary OPC documents required for registration. The ROC will examine the filed application and if successfully verified, will issue a Certificate of Incorporation in the OPC’s name. The Certificate of Incorporation becomes a conclusive proof for OPC registration in India.
Step-1: Documentation - One Person Company company registration process begins with preparing all necessary documentation. To register OPC in India, you will need the basic KYC documents of the promoters and documents of the registered office. Refer to the list of documents above for complete information. Also, since the application is to be signed digitally, make sure the promoters have their Class 3 digital signature certificates.
Step-2: Select a name for your One Person Company- The next step in OPC Registration process is selecting a valid name for the OPC as per MCA guidelines. After selecting the name, you must get it approved and reserved by the ROC. For this, an application can be filed in the PART A of SPICE Plus form to the (Registrar of Companies) ROC. Once the name is reserved, it is valid for 20 days and the OPC must be incorporated within this time.
Step-3: Drafting of MoA and AoA - MOA is the constitution of the one person company, and the AOA is its document of internal rules and regulations. These are important OPC documents required to be submitted during the one person company registration process. So, make sure these are drafted beforehand in the appropriate legal format. They must be signed by all the shareholders, and stamped by a public notary after the payment of applicable stamp duty.
Step-4: Filing application for OPC Registration Online - Once all the documents and drafts are ready, you can finally file the SPICe+ application for OPC incorporation online. The form must be accompanies by the necessary documents and drafts, uploaded in their digital formats. Finally, the authorised director can sign the form using his class 3 Digital Signature Certificate. The form is further certified by a practicing professional such as a CA, CS, CMA.
Step-5: Issue of Certificate of Incorporation- The SPICE Plus application, after submission, reaches the office of Registrar of Companies. The ROC examines all the details and documents submitted for accuracy and authenticity. If satisfied with the submissions, ROC approves the application and proceeds with the OPC Company Registration process. It registers the OPC and issues a Certificate of Incorporation in its name.
Compliance carried out after OPC registration process
The following compliance have to be carried out after the OPC registration process:
1. Conducting Annual Board Meetings - This requirement has to be complied in accordance with the requirements of the Companies Act, 2013.
2. Filing of Income Tax Returns.
3. Filing of Tax Deducted at Source.
4. Filing Annual Financial Statements through Form AOC- 5.Filing Annual Returns through MGT-7.
6. Complying with the requirement of statutory audit by appointing a practising Chartered Accountant.
7. Filing Tax at the rate of 25%.
8. Dividend Distribution Tax if profits are provided to shareholders of the OPC.
9. Tax Deducted at Source for the OPC- TDS returns have to be filed quarterly by the OPC.
10. ESI Registration would be mandatory for an OPC if it employs more than 10 employees.
Timelines for OPC Registration
The DSC and DIN of the proposed directors can be obtained in 1 day. The Certificate of Incorporation of an OPC is obtained in 3-5 days. The whole incorporation process of an OPC takes approximately 10 days, subject to departmental approval and revert from the respective department.
Why The Startup Trends for OPC Registration?
The Startup Trends 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, The Startup Trends 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.