Ashish Garg & Associates One Person Company

One Person Company

One-Person Company (OPC) Registration

Introduction to One Person Company (OPC)

A One-Person Company (OPC) is a business entity where only one individual can form a company with limited liability. It was introduced under the Companies Act, 2013 to encourage entrepreneurship by allowing a single person to operate a company with benefits of limited liability and separate legal identity.

Eligibility Criteria

To form an OPC in India, certain eligibility criteria must be met:

  1. Only One Shareholder: Only one individual can be a shareholder.
  2. Indian Citizen: The sole member must be a resident of India (meaning they must have stayed in India for a period of not less than 182 days during the preceding calendar year).
  3. Indian National: The individual should be an Indian national.
  4. Director: There should be a minimum of one director, who must be a natural person, and can be the same as the shareholder.

Advantages of One Person Company (OPC)

  1. Limited Liability Protection: The member’s personal assets are protected from business debts and liabilities.
  2. Separate Legal Entity: The OPC has its own legal identity distinct from the owner.
  3. Sole Ownership and Control: The member has complete control over decision-making and business operations.
  4. Easy to Convert: OPCs can easily convert into a private or public limited company once they meet specific criteria.
  5. Fewer Compliance Requirements: Compared to a private limited company, OPCs have lesser compliance requirements.
  6. Tax Benefits: OPC enjoys a lower tax rate than other business structures like sole proprietorships.

Disadvantages of OPC

  1. Limited Growth Potential: Since only one member is allowed, it might limit the ability to raise large funds or share the burden of responsibilities.
  2. Restriction on Paid-up Capital: OPC cannot have a paid-up capital exceeding INR 50 lakhs or an annual turnover of more than INR 2 crores.
  3. No Access to Funding from Venture Capitalists: OPCs face challenges when seeking investments from external sources due to the limited scope for raising capital.
  4. Mandatory Director Appointment: OPCs must appoint a nominee who will take over in case of the sole member’s death or incapacity.

Required Documents for OPC Registration Online

  1. Identity Proof of the Sole Member: Aadhaar card, PAN card, passport, voter ID, etc.
  2. Address Proof of the Sole Member: Utility bills like electricity or water bills, bank statement, etc.
  3. Photograph of the Sole Member: Recent passport-sized photo.
  4. Director’s Proof: PAN card of the proposed director (if different from the member).
  5. Registered Office Proof: Rent agreement, utility bills, or property documents if the registered office is owned by the member.

Registration of One Person Company (OPC) in India

The OPC registration process can be done online through the Ministry of Corporate Affairs (MCA) portal. The following steps are typically involved:

  1. Obtain Digital Signature Certificate (DSC): Since the registration process is online, obtaining a DSC for the proposed director is mandatory.
  2. Obtain Director Identification Number (DIN): The proposed director needs to apply for a DIN if they do not already have one.
  3. Apply for Name Approval: The first step is to select a unique company name and get it approved from MCA.
  4. Draft the Memorandum and Articles of Association: These documents outline the objectives and structure of the company.
  5. File the SPICe+ Form (Simplified Proforma for Incorporating Company Electronically): This form is submitted to the MCA with necessary documents for incorporation.
  6. Obtain Certificate of Incorporation: Upon approval, the MCA will issue a Certificate of Incorporation for the OPC.

Post-Incorporation Formalities for OPC

After the OPC is registered, the following post-incorporation formalities need to be carried out:

  1. Appointment of Auditor: The OPC is required to appoint an auditor within 30 days of incorporation.
  2. Comply with GST Registration: If the annual turnover exceeds the prescribed limit, the company must apply for GST registration.
  3. Issue Share Certificates: Share certificates should be issued to the sole member.
  4. Maintain Statutory Registers: Keep updated registers of members, directors, and shareholders.
  5. File Annual Returns: OPC must file annual returns with the Registrar of Companies (RoC).
  6. Obtain PAN and TAN: Apply for a PAN and TAN for the OPC.
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