How to Start a One Person Company Registration

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Overview of One Person Company Registration

A One Person Company Registration is a forward-thinking notion for those who either have entrepreneurial dreams or those who want to incorporate micro-businesses but has no resources, time, or means to attract more partners for executing the business plan. Further, the concept of OPC Registration can be considered as an amalgam structure of the regular Private Limited Company and Sole proprietorship. Hence, the concept of OPC company enjoys the best of two worlds.

What is a One Person Company?

A One Person Company (OPC) can be incorporated with just a single person who will be the director as well as the owner of the company. This concept was introduced under the provisions of the Companies Act, 2013. Further, an OPC is a sort of sole proprietorship firm in the form of a company that offers ultimate authority to a single person for running a business while restricting his liabilities and duties for the business.

Further, according to section 2 (62) of the Companies Act, 2013, a company with only one person as its director and member will fall under the ambit of One Person Company or OPC.

Benefits of OPC Registration in India

Benefits of OPC registration

The following listed are the benefits or the advantages annexed with the concept of registration of One Person Company:

  • No Minimum Capital Requirement

    For obtaining One Person Company Registration, there is no minimum amount prescribed for the capital required. However, the maximum authorised capital in case of a One Person Company shall not anyhow exceed the threshold limit of Rs. 50 lakhs at any point in time.

  • Limited Liability

    Another significant benefit annexed with the concept of registration of One Person Company is of limited liability. This means that the liability of the concerned director is limited to the extent of capital contributed by him or her in the business. Hence, the personal asset and belongings of the Director will not be attached in case of any loss incurred by the business.

  • Fewer Compliances

    The compliances that are to be adhered to for an OPC registration are very less in comparison to any other company. Hence, the registration of an OPC can be done easily that, too, with minimum paperwork.

  • Perpetual Succession

    The term perpetual succession means that the death or illness or the incapacity of the director will not affect the ongoing affairs of the company as the nominee will hold the position of member and director in the business in that case.

  • Greater Creditability

    A One Person Company is obligated to get its books of account audited annually. This will, in return, increase the business credibility and consumer, vendor satisfaction.

  • No Legal Disputes

    It is significant to note that whenever a company registers itself as a One Person Company, it ends the chances of any future legal disputes between the director or any third party.

  • Privileges for Small Scale Industries

    An OPC can avail all the benefits that are offered to the small-scale industries. These benefits include easy funding that, too, without depositing collateral security to certain prescribed limits, lower interest rates loans, privileges under the foreign trade policy, etc. Therefore, these benefits play a significant role in the progress and development of the One Person Company in its initial days of incorporation.

Minimum Requirements for OPC Registration

Minimum requirements for OPC

The minimum requirements that are needed to comply for the registration of a one person company are as follows:

  • For Incorporating a One Person Company, only a single individual who is both a citizen and resident of India is required. Further, the term Resident of India means that the said person must have lived in India for a time period, not less than 182 days in the previous financial year.
  • Business Models such as a Company or an LLP cannot join a One Person Company.
  • The promoter should select a nominee at the time of incorporation.
  • The minimum authorized capital must be at least Rs 1 Lakh.
  • An OPC is restricted from functioning a minor as its member.
  • One thing which is noteworthy to note is that if an OPC surpasses an annual turnover of Rs 2 crore or has the paid-up share capital more than Rs. 50 lakhs, then, in that case, it must be converted into a private limited or a public limited within six months.
  • There must be at least one nominee and one director.

Forms Required for OPC Registration

Forms required for OPC Registration

The following listed forms must be filed to complete the process of One Person Company Registration:

  • Application for the Company Registration
  • Digital Signature Form
  • Declaration of Promoter in the form INC-9
  • Declaration of the Promoter-Non-Deposit under the FEMA (Foreign Exchange Management Act) and SEBI (Securities Exchange Board of India)
  • Consent of Director in the form DIR-2
  • MOA (Memorandum of Association) and AOA (Article of Association) Subscriber Sheet
  • No-Objection from the actual owner

Documents Required for OPC Registration

Documents for OPC Registration

The documents required for the registration of a One Person Company in India are as follows:

  • Copy of the owner’s PAN (Permanent Account Number) Card
  • Passport-sized photograph of the concerned owner
  • Copy of the Aadhaar Card or Voter identity card or Driving License of the concerned owner
  • Copy of the Rent agreement (If in case a rented property)
  • Electricity Bill or Water Tax Receipt of the Registered Office
  • Copy of the Property papers or the ownership proof (In the case of an owned property)
  • No-Objection Certificate from the actual owner

Procedure for OPC Registration

Process of OPC registration

The steps included in the registration of an OPC are enumerated below:

  • Obtain DSC and DIN

    The first and the foremost step is to obtain a DSC (Digital Signature Certificate) and DIN (Director Identification Number).

  • Reservation of Name

    An application in Form No. INC-1 must be filed for the reservation of a suitable name for the concerned company. Further, the name of the company will have a suffix “OPC Pvt Ltd.” Furthermore, there are two ways of reserving a name. Firstly, by making an application in Form SPICe 32 and secondly by using RUN (Reserve Unique Name) Web service of the MCA (Ministry of Corporate Affairs) by giving one preferred name together with the reason for reserving it.

  • Provisions of Entrenchment

    If in case the AOA (Articles of Association) of the said company contains provision for entrenchment. The concerned company is then required to inform the Registrar regarding such provisions in Form No.INC-2. The Form concerned must be filed at the time of the company’s incorporation. However, the same can be done just by amending an article of association in the case of existing companies, and moreover, the same shall be filed in Form No. MGT-14 within a period of 30 days starting from the date of entrenchment of the articles.

  • Application for the Registration of a One Person Company

    In order to register a One Person Company, the promoters are required to apply with the ROC (Registrar of Companies) within whose jurisdiction or territory the registered office of the concerned company is proposed to be located. The Application for the Incorporation must be filed in the Form No.INC-2.

  • Signing of MOA and AOA

    The MOA (Memorandum of Association) and the AOA (Article of Association) of the concerned company shall mandatorily be signed by the company’s sole member. This sole member is also a subscriber to the said memorandum. Further, the sole concerned member is required to provide details regarding his name, description, occupation, and address, in the presence of at least one witness who must also give his basic details and attest his signature.

  • Affidavit of the Director and the Subscriber

    In the next step, a duly signed affidavit must also be submitted by the sole member who has subscribed to the MOA and has been named in the Articles of Association in the Form No. INC-9.

  • Particulars of Subscribers

    Further, the sole member must file the particulars of subscription with the Registrar of Company at the time of incorporation.

  • Declaration by Professionals

    In the next step, a declaration made either by an Advocate, a CA, a Cost accountant, or CS in practice shall be filed in Form No. INC-8.

  • Submission of the Forms and Documents

    Now, all the documents required will be annexed to the SPICe Form, SPICe-MOA and SPICe-AOA together with the DSC (Digital Signature Certificate) of the Director, and same will be uploaded to the MCA (Ministry of Corporate Affairs) website for the approval.

    Further, subsequent uploading the documents, Form 49A and 49B will be generated, which will be used for the generation of TAN and PAN of the concerned Company. Furthermore, the said forms are to be uploaded to the Ministry of Corporate Affairs after affixing the DSC of the proposed Director.

  • Issuance of the Certificate of Incorporation

    Once the process of verification is complete, the ROC (Registrar of Companies) will grant a Certificate of Incorporation for the commencement of the business.

What are the Taxation Rules applicable to a OPC?

The taxation rules applicable to a one person company are mentioned below:

  • It is mandatory for the company to file Income Tax Returns.
  • TDS (Tax Deducted at Source) is to be filled for all the quarters by mentioning the TAN.
  • Getting an ESI (Employee State Insurance) registration is compulsory for an OPC if in case it employs more than ten persons.
  • Under the tax rates slab, the income of an OPC is taxed at 30 percent of its entire income in the financial year.

What are the Exemptions available after OPC Registration?

Exemptions for OPC

The following listed are the exemptions available after obtaining OPC Registration:

  • Sign on Annual Returns
  • Hold Annual General Meetings (AGM) and Board Meetings (BM).
  • Sign on the Company’s Financial Statements.
  • Option to give out with the requirement of conducting an AGM
  • Power of the Tribunal to call meetings of its members.
  • Calling of EGM (Extraordinary General Meeting).
  • Notice of the meeting.
  • Statement to be annexed with the notice.
  • Quorum for meetings.
  • Chairman of meetings.
  • Proxies
  • Restriction on voting rights.
  • Voting by show of hands.
  • Voting by electronic means.
  • Demand for poll.
  • Postal ballot.
  • Circulation of the members’ resolution

Mandatory Annual Compliances for One Person Company

Annual-Compliances for OPC

The mandatory annual compliances to be followed by a One Person Company have been listed below:

  • Minimum 2 Board Meetings are required as per the Companies Act, 2013.
  • Statutory Audit by a Practising Chartered Accountant.
  • Appointment of Auditor
  • Filing of ITR (Income Tax Return)
  • Annual filings to the ROC (Registrar of Companies)
  • Maintaining Minutes and Statutory Registers
  • Form AOC-4 for the financial statement
  • MGT-7 for an annual return

Difference between OPC and Private Limited Company

Basis of Difference

One Person Company

Private Limited Company

Regulating Act

Companies Act, 2013

Companies Act, 2013

Registration Requirement

Obtaining Registration is Mandatory

Obtaining Registration is Mandatory

Number of members Required

Only 1

2 – 200

Status of Separate Legal Entity

Yes, enjoys the status of Separate Legal Entity

Yes, enjoys the status of Separate Legal Entity

Liability Status

Limited Liability

Limited Liability

Requirement of Statutory Audit

Getting Statutory Audit done is Mandatory

Getting Statutory Audit done is Mandatory

Ownership Transferability

Transfer of Ownership is not Allowed

Restricted

Perpetual Existence

Yes

Yes

Foreign Participation

Not Allowed

Allowed

Tax Rates

Moderate

Moderate

Statutory Compliances

Moderate

High

Difference between OPC and Limited Liability Partnership

Basis of Difference

One Person Company

Limited Liability Partnership

Regulating Act

Companies Act, 2013

Limited Liability Partnership Act, 2008

Registration Requirement

Obtaining Registration is Mandatory

Obtaining Registration is Mandatory

Number of members Required

Only 1

2 -Unlimited

Status of Separate Legal Entity

Yes, enjoys the status of Separate Legal Entity

Yes, enjoys the status of Separate Legal Entity

Liability Status

Limited Liability

Limited Liability

Requirement of Statutory Audit

Getting Statutory Audit done is Mandatory

Dependent

Ownership Transferability

Transfer of Ownership is not Allowed

Transfer of Ownership is Allowed

Perpetual Existence

Yes

Yes

Foreign Participation

Not Allowed

Allowed

Tax Rates

Moderate

High

Statutory Compliances

Moderate

Moderate

Difference between OPC and Sole Proprietorship Firm

Basis of Difference

One Person Company

Sole Proprietorship Firm

Regulating Act

Companies Act, 2013

No specified Act

Registration Requirement

Obtaining Registration is Mandatory

Not Required

Number of members Required

Only 1

Only 1

Status of Separate Legal Entity

Yes, enjoys the status of Separate Legal Entity

No, does not enjoy the status of Separate Legal Entity

Liability Status

Limited Liability

Unlimited Liability

Requirement of Statutory Audit

Getting Statutory Audit done is Mandatory

Getting Statutory Audit done is not mandatory

Ownership Transferability

Transfer of Ownership is not Allowed

Transfer of Ownership is not Allowed

Perpetual Existence

Yes

No

Foreign Participation

Not Allowed

Not Allowed

Tax Rates

Moderate

Low

Statutory Compliances

Moderate

Less

FAQs of OPC Registration

The One Person Company registration process in India including applying for DSC and DIN; Application for Name Approval; Documents Required; Filling required Form with the MCA; and Issuance of the Certificate of Incorporation.

As per Section 2 (62) of the Companies Act, 2013, a company that needs just one person as its member is known as One Person Company. Further, the member or shareholder of this business structure is also the subscriber to its MOA (Memorandum of Association).

Yes, as per Section 2 (62) of the Companies Act, 2013, a single person can start a One Person Company as it requires just one director and shareholder. Further, an OPC involves fewer compliance requirements in comparison to a Private Limited Company.

The key difference between a Sole Proprietorship and One Person Company is that the former does not require compulsory registration. However, the latter needs to mandatorily obtain OPC registration under the provisions of the Companies Act, 2013. Further, a sole proprietorship does not enjoy a separate legal entity's status, and thereby the sole proprietor suffers unlimited liability. In contrast, an OPC enjoys the status of a separate legal entity, i.e. its member enjoys the feature for limited liability.

Only Natural Persons who are Indian Residents and Citizens are eligible to incorporate a One Person Company in India. The same precondition applies to nominees of OPCs. Furthermore, the natural person cannot be a nominee or member of more than one OPC at any point in time.

The key requirements for converting a Private Company into a One Person Company are that the company must have a total paid-up capital of up to Rs 50 Lakhs or an Average Annual Turnover of Rs 2 crores for the last three consecutive years.

In India, the advantages of a One Person Company include having a separate legal entity; easy funding; limited liability; more opportunities; minimal requirements; benefits of being an SSI (Small Scale Industries); single owner; credit rating; benefits under Income Tax Law; receive interest on any late payment; and increased trust and prestige.

The key features of a One Person Company in India are that is is easy to run and create, involves minimum paperwork; has a separate legal entity; has limited liability; has secure funding; needs just one director; is exempted from the third party; can avail various deductions under the Income Tax Law; enjoys increased trust; requires no minimum paid-up capital; and is free from multiple compliances.

Yes, an OPC can raise funds through angel investors, venture capital, financial institutions, etc.

When the paid-up capital of an OPC exceeds the limit of Rs 50 lacs or the annual turnover is above Rs 20 crores, it mandatorily needs to convert itself into a private company. Moreover, the said conversion must be done within a period of six months.

No, a foreigner is not eligible to become a nominee in an OPC. The director of an OPC needs to mention the name of the person nominated as the nominee in Form INC-2. Further, the consent of such a nominee is required to be filed in Form INC-3.

Yes, the subscriber of the memorandum needs to file an Affidavit in Form INC-9.

No, a Public Limited Company is not eligible to be converted into an OPC.

In India, Swarit Advisors is one of the most chosen legal service providers. We have an in-house expert team of professionals including CA, CS, and Lawyers. We not only guarantee on-time delivery but also customised services at the most reasonable rates in India.

In India, the process of OPC Registration generally includes a period of 7 business days.

In India, an OPC needs to maintain the books of accounts complying with the statutory audit requirements, details of ITR (Income Tax Returns) and annual filings with the ROC (Registrar of Companies).

An OPC Registration has lifetime validity, i.e. the OPC registration is valid until the company survives.

In India, an OPC needs Rs 1 crore as its authorised share capital.

In India, a flat charge of30% is levied on an OPC, and it does not enjoy any tax benefit.

No, only a person who is an Indian Citizen or resident is eligible to register an OPC.

No, FDI is not allowed for an OPC in India.

The director of an OPC needs to file Form INC 5 within sixty days of exceeding the threshold limit.

No, one person can become a member of only one OPC.

Any person who is an Indian Citizen and resident is eligible to become a member of an OPC.

In case of a change in the membership, the director of an OPC needs to file Form INC- 4 with the Registrar of Companies (ROC). This form must also contain the details of the new member.

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