What is One Person Company Registration?
As the name suggests, One Person Company is a company formed by a single person. It’s entirely a new concept introduced by MCA (Ministry of Corporate Affairs) in the Companies Act, 2013. Earlier, it wasn’t possible for an individual to start an organization alone. However, now, any single person can form a Company as per the provisions of Section 2(62) of Companies Act, 2013.
The compliance requirements of an OPC are less compared to other Companies such as Private Limited and Public Limited Companies. The main objective of introducing the concept of One Person Company is to encourage single and enthusiastic entrepreneurs.
One Person Company Registration in India
Section 2 (62) of Companies Act, 2013 defines OPC as the company which has only one person as a member. Therefore, OPC Registration in India can be defined as a permit given to an individual for running a company single-handedly.
Besides, OPC registration is a modern approach to Sole Proprietorship business in India. An OPC allows sole entrepreneurs to start a business under Private Limited structure without requiring any co-founder on-board. Therefore, an OPC needs to comply with all the provisions as applicable to private companies.
Furthermore, it provides the owner with full authority over the company. Additionally, it’s a separate legal entity from its sole owner and limits the liability or duties of the owner to contribute to the company.
However, there are some limitations as well. OPCs can’t raise an Equity funding or offer the Employee Stock Option in the initial stage of the business. Moreover, if any time in the business, the OPC hits an average three-year turnover of up to or more than Rs. 2 crores or Paid-Up capital of Rs. 50 lakhs or more, then it will have to convert into a Private Limited Company or Public Limited Company within the six months.
Last but not least, every Company registered as OPC needs to add “One Person Company” at the end of the Company’s name.
Benefits of One Person Company in India
Undoubtedly, a Company registered as an OPC has to offer several advantages. It lets the owner of the company to take complete control over the business and run it accordingly. Apart from this, an OPC is a separate legal entity, has limited liability, etc. Let’s dig into more detail:
You never know when the unfortunate event will occur. Therefore, it’s imperative to secure personal assets before anything actually happens. If you’re registered as an OPC, then any loss incurred in the company may not affect your personal assets anyhow. Further, you won’t need to deal with any loss. However, it’s completely opposite in the case of a sole proprietorship firm.
- No minimum capital requirement
For OPC Registration, there’s no minimum capital requirement. However, the Paid-Up Capital of an OPC shall not surpass Rs. 50 lakhs at any point of the business or it will have to convert into Private Limited Company.
Even if the Director of the Company falls ill or dies, the Company’s process will not be affected since the nominee Director will take hold of the business and continue it.
As compared to other Company Registrations, be it a Private Limited Company or Public Limited Companies, the compliances of an OPC are generally less. Besides, minimum paperwork is required.
Since, in an OPC, there’s only one member and one director; therefore, the chance of any legal disputes doesn’t arise. Further, there aren’t any ego clashes between directors which usually happens in other forms of business with more than one director.
When compared to a Sole Proprietorship firm, OPCs have greater credibility. The reason for the same is that OPCs have to get their books audited annually due to which things are more organized. Hence, in turn, this increases the credibility of the company.
Registering an OPC is an easy process, and with Swarit Advisors, it becomes even easier. We will get your OPC registered within the least possible time.
What are the minimum requirements for OPC registration in India?
To obtain One Person Company Registration in India, you need to fulfill the minimum requirements as follows:
- There should be only one director;
- One nominee is mandatory;
- A total of one member;
- There should be only one shareholder.
What is the eligibility criteria for One Person Company Registration?
Only those are eligible to apply for an OPC registration in India who satisfies the following conditions:
- The applicant should be a citizen of India;
- The sole member of the OPC must appoint a nominee;
- The member must be an Indian Resident who has stayed in the country for at least 132 days in the preceding year;
- The Paid-Up capital of the Company must not exceed Rs. 50 lakhs and the turnover should not exceed Rs. 2 crores.
Documents required for One Person Company Registration
Before you proceed to OPC Registration, it’s essential to keep the following documents prepared:
Documents required from the Director
- Scanned copy of PAN.
- Copy of passport/voter ID etc.
- Latest telephone bill/ bank statement etc.
- Passport size photograph etc.
For the registered office
- Copy of Rent agreement to be notarized.
- NOC obtained from owner of property where applicable.
- Copy of Property deed/ copy of sale deed (if owned property).
- Others if required.
How to register One Person Company in India?
Once you have prepared the documents, you can now proceed for OPC registration by following the steps described below:
Step 1: Obtain DSC (Digital Signature Certificate)
Likewise in every Company Registration, for OPC Registration as well, you are required to obtain DSC. You can use this DSC later for other purposes such as filing returns, ROC with compliances etc.
Step 2: Obtain DIN (Director Identification Number)
The next important step after obtaining DSC is acquiring DIN of the proposed Director. One can apply for the DIN in SPICe form along with his/her KYC such as name and an address proof.
Step 3: File the application for name approval
Choosing a name for the company plays one of the most vital roles in the company incorporation process. Therefore, one needs to ensure that the proposed name is unique and doesn’t hurt the sentiment of any religion, community, or anybody.
The applicant can propose a maximum of two names in SPICe Form 32 or by using RUN service on the MCA portal.
Step 4: Drafting of MOA and AOA
The applicant needs to prepare and draft the MOA (Memorandum of Association) and AOA (Articles of Association) for the OPC registration. MOA explains the objective of the company while the AOA describes rights and duties, rules & regulations of the company.
Preparing such kinds of documents require intensive research and in-depth knowledge of the law. Therefore, we advise you to take the help of professionals to draft these documents. Swarit Advisors has a team of experts who are well-versed in the law and have good hands on experience in preparing these documents.
Step 5: Filing of SPICe with MCA
Attach all the documents including MOA and AOA of the company along with the SPICe form and upload it to the MCA site for approval. After you have uploaded, the website will generate Form 49A and 49B for the PAN and TAN generation of the Company. You need to upload these forms to MCA after affixing the Digital Signature of the Director.
Step 6: The Certificate of Incorporation
Firstly, the ROC (Registrar of Companies) will verify the documents. If it finds everything valid and satisfying, it will issue the Certificate of Incorporation to the applicant.
- 1 Complete drafting and filing of incorporation forms for OPC registration.
- 2 MOA and AOA filling
- 3 Drafting of Board resolutions, authorization letter, and other documents.
- 4 End to end solutions for OPC registration.
- 5 Name approval from MCA
- 6 DIN, DSC certificates from the government authority.
- 7 Legal agreements, drafts, samples, advisory related to OPC.
Restriction on OPC Registration
- Conversion or incorporation of OPC into section 8 company is not possible.
- It cannot carry out non-banking activity, including investment in securities of any corporate body.
How many types of OPC Registration can be incorporated under the Act?
- A company limited by shares or;
- A company limited by guarantee or;
- An unlimited company.
What all exemptions under Companies Act 2013 are there for OPC?
- OPC is not mandatorily required to file annual returns.
- OPC is exempted from holding Annual General Meetings and Board Meetings.
- Signing on Financial Statements is not necessary.
- Tribunal enjoys the power to call meetings of members.
- Notice of the meeting is not mandatory.
- Statement to be annexed to notice is not required by law.
- The quorum for meetings is relaxed.
- Restriction on voting rights is not imposed as in other forms of the company.
- Adherence to rules and regulation pertaining to the Companies Act, 2013 regarding voting by show of hands, voting through electronic means, Demand for the poll, Postal ballot, Circulation of members’ resolution is exempted.
The penalty for Non-Compliance of OPC in India
If One Person Company or its director doesn’t follow the compliances or contravenes with the provisions of Company Incorporation Rules, 2014, then the entity will be punishable with a fine of up to Rs. 10,000. Further, if the contravention continues, the fine may extend up to Rs. 1000 every day.
Frequently Asked Questions (FAQs)
An OPC is mandated under the Companies' Act 2013 to compulsorily convert into the Private Company on occasions when it's Paid-Up capital increases above 50 lacs or turnover is above 20 crore. The conversion must be done within 6 months.
No, a foreigner cannot be appointed as a nominee in an OPC. The name of the person nominated shall be mentioned in the. Form No INC-2 along with consent of such nominee obtained in Form No INC-3 is to be filled.
Yes, the Affidavit in Form INC-9 is required to be filed by the subscriber of the Memorandum.
No, a Public Limited Company cannot be converted into an OPC.
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