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.
What are the Benefits or the Privilege of an 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 and 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.
What are the Minimum Requirements for the Registration of One Person Company?
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.
What are the Documents Needed for Incorporating a One Person Company?
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
What are the Steps included in the Registration of a One Person Company?
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 Forms Required for Obtaining Registration of a One Person Company?
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
What are the Taxation Rules applicable to a One Person Company?
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 Obtaining OPC Registration?
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.
- Restriction on voting rights.
- Voting by show of hands.
- Voting by electronic means.
- Demand for poll.
- Postal ballot.
- Circulation of the members’ resolution
What are the Mandatory Annual Compliances regarding 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
Package Inclusions for OPC Registration
- DSC and DIN
- OPC Name Reservation
- MOA and AOA
- Corporate Identification Number (CIN)
- Registration in 15 days assured
FAQs for One Person Company
The following listed are the steps included in the procedure of obtaining an OPC Registration:
- Apply for DSC (Digital Signature Certificate)
- Apply for DIN (Director Identification Number)
- Application for Name Approval
- Documents Required
- Filling required Form with the MCA (Ministry of Corporate Affairs)
- Issuance of the Certificate of Incorporation
Section 2(62) of the Companies Act, 2013, defines the term “One Person Company” as a company that requires just one person as its member. Further, members of this business structure are nothing but subscribers to its MOA (Memorandum of Association), or its shareholders. Hence, an OPC (One Person Company) is effectively a company or a business structure that has only one shareholder as its member.
Yes, according to section 2(62) of the Companies Act, 2013, a company can be incorporated with just one Director and one member. Further, OPC is a type of company where the compliance requirements are comparatively lesser than that of a Private Limited Company.
Point of Difference
One Person Company
Not Compulsory in this business model
Is mandatorily registered to get itself registered under the Companies Act, 2013
Legal status of the entity
Not recognized as a separate legal entity
Separate legal entity
Limited up to the extent of the share capital
Minimum number of members required
A Sole Proprietorship does not require members
A Minimum of one person is required
Maximum number of members required
Maximum one person
Maximum two persons
Not allowed in the case of Sole Proprietorship
Allowed to one person only
Existence of the sole proprietorship comes to an end on the death or retirement of the owner
Existence will not come to an end as the nominee will become the owner of the said company
Taxed as an individual
The Tax rate is 30 percent on the profits plus cess and surcharge.
Income tax returns (ITR) with the registrar of the company.
Filed with the (ROC) registrar of the company.
Only the natural persons who are the citizens and residents of India are qualified to form a One Person Company. The same condition applies to the nominees of One Person Company.
The requirements for converting a private company to a one person company have been listed below:
- The private limited company should not have a total paid-up capital of more than Rs 50 Lacs.
- The Average Annual Turnover in the previous three consecutive years shall be less than Rs 2 Crore. Further, in case the company where the said company is newly formed and has not completed the period of three years, the company turnovers shall be calculated from the date of its incorporation.
- There should be only 1 shareholder of the resulting One Person Company, that, too, a natural individual having an Indian nationality.
- Further, the concerned shareholder must be a resident person. A person is considered to be an Indian Resident if he or she stays in India for 180 days during the immediately preceding financial year.
- Lastly, it is noteworthy to note that a minor cannot be considered as a member or nominee of a One Person Company.
The following listed are the benefits annexed to the concept of One Person Company:
- 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
- Increased Trust and Prestige
The features of a one person company are as follows:
- Easy to Run and Create
- Minimum Paperwork
- A Separate Legal Entity
- Limited Liability
- Easy Funding
- Minimum One Director
- Exemption from the Third Party
- Various Deductions under the Income Tax Law
- Increase Trust
- No Minimum Paid-up Capital
- Free from Multiple Compliances
Yes, an OPC can raise funds by way of angel investors, venture capital, financial institutions, etc.
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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