What is a One Person Company?

Section 2 (62) of Companies Act says a company with only one person as its member falls under the criteria of One Person Company or OPC. OPC is owned and managed by one person only. Moreover, all the members of the OPC are followers to its memorandum of association or its shareholders.

What is One Person Company Registration?

One Person Company is a brand new concept which gives full authority over the company to the single promoter while limiting its liability or duties to contribute to the business.

However, there is no road to raise equity funding or offering the employee stock option in One Person Company in the early stage of the period. Into the bargain, if One Person Company anytime hits an average three- year turnover of over Rs 2 crore or has paid-up capital of over Rs 50 lakhs then it must be turned into the private limited company or public limited company within the six months.

Keeping the current economic scenario in mind, OPC registration can be considered as the most convenient and modern form of business in India. Companies Act, 2013, introduces the concept of OPC with the idea to promote micro-businesses in the Indian economy. One Person Company Registration in India has uplifted the confidence of people with entrepreneurial ideas and at the same time has given boost to entrepreneurs in the Indian economy. OPC registration online also saves the time and effort of the individual.

One Person Company registration is an easy process which can be done under the silhouette of the companies Act 2013. Under OPC registration process, an individual can act as a single person company and enjoys the freedom to work independently without the complexity of having partners. The nominee or director should be an Indian citizen in order to get OPC registration done.

OPC incorporation has proven beneficial to the overall growth and development of the economy. More and more people are coming forward to invest in their ideas. Incorporation of OPC offers several benefits to the company, such as; the company becomes eligible for banking loans and credits. So if you are dreaming of incorporating One Person Company, then accessing networks become quite feasible.

One Person Company consists of a single person; it can be formed by subscribing to the memorandum of association and fulfilling other details provided in the Companies Act 2013. Information related to the nominee and who will hold the authority in case of demise of the original owner should be provided in the memorandum of association.

Once the memorandum of association is completely available on paper; submit it along with the nominee’s consent to his nomination to the Registrar of Companies. Though nominee can extract his/her name at any point in time by submitting the application to the Registrar.

Why to Choose OPC?

• Easy to create and run
• Minimum Paperwork
• A Separate Legal Entity
• Easy Funding
• Limited Liability
• Minimum one director
• Exemption from the third party
• Free from multiple compliances
• No minimum paid-up share capital
• Increase Trust
• Receive Interest on any late payment
• Remains unaffected with the credit rating
• Deduction under Income Tax Law

Process of OPC Registration

OPC Registration – Eligibility Criteria

The following is the eligibility criteria for OPC Registration in India. Only a natural person who is a citizen of India and resident in India-

• is  a person who is eligible to incorporate an OPC
• is eligible to be a nominee for the sole member of an OPC
• A resident of India is a person who has stayed in India for at least 182 days in the preceding one year
• If an OPC exceeds a turnover of over Rs 2 crores or has a paid-up capital above Rs 50 lakhs. It must be turned into a private or public within six months.

Advantages of One Person Company Registration

1. No Minimum Capital

There is no minimum capital required for OPC registration. However, the maximum Authorize capital of One Person Company shall not exceed Rs 50 lakhs at any point in time.

2. Liability on Director is Limited

There is a limited liability related to One Person Company which means the liability on the Director is limited. The personal asset of the Director won’t be attached to the debt of the business. The property is safe.

3. Fewer Compliances

The compliances under OPC registration are very less as compared to any other company. OPC registration process can be done with minimum paperwork.

4. Continuous Existence

The death or illness or incapacity of the director won’t disturb the ongoing process of the company as the nominee director will hold the rope to continue the business.

5. Greater Credibility

As an OPC needs to have its books audited annually, it has greater credibility among the vendors and the lending institution.

6. No legal Disputes

Now, when the company is registered with one person, then there is no chance of any legal disputes arises between the director or any other third party.

Steps for OPC Registration

Apply for DSC

The proposed directors must obtain Digital Signature Certificate (DSC), which cannot be obtained without submitting the following documents:

• Address Proof
• Aadhar Card
• Photo
• Email-id
• PAN Card
• Phone Number

Apply for DIN

Obtain the Director Identification Number (DIN) of the proposed Director. Provide the details like name and address proof of the proposed director in SPICe form. Now up to three directors can apply for the DIN within SPICe form.

Name Approval Application

Once you have applied for DSC and DIN, the next step is to process for name approval application. The name of the company will be available in the form of “ABC (OPC) Private Limited”.

There are two ways to get name approved: first is to make application in Form SPICe 32 or the second way is to use RUN Web service of MCA by providing one preferred name along with the reason of keeping it. Though, on March 23, 2018, Ministry has come to a decision to permit two proposed Names and one re-submission (RSUB) at the time of preserving Unique Names (RUN) for the companies.

Documents for One Person Company Registration

• Memorandum of Association (MoA); states why the company come into existence.
• Article of Association (AoA), consists of the laws on which the company will operate.
• A proof of nominee consent in Form INC-3 along with nominee’s PAN card and Aadhar card
• NOC from the owner and proof of registered company office
• Affidavit of the proposed director in the Form INC-9 and DIR-2 respectively

Filling of forms with MCA

Attach all the documents to SPIce Form, SPICe-MOA and SPICE –AOA. Also, provide the DSC of the directors and the professional, and upload all the details to the MCA site for approval.

Once you have uploaded the file, you will receive Form 49A and 49B for the PAN and TAN which have to be uploaded to MCA after affixing the DSC of the proposed Director.

Issue of Certificate of Incorporation

Once your all documents are verified, the Registrar of Companies will issue a Certificate of Incorporation.

Mandatory Compliance for OPC Registration

• Conducting minimum two board meetings as stated under the Act.
• Statutory audit of financial statements by chartered accountant
• Appointment of Auditor
• Filing of ITR
• Annual filings to the registrar of companies
• Keeping up statutory registers
• Form AOC-4 for financial statement
• MGT-7 for an annual return

Tax rule for One Person Company Registration?

Filling for Income Tax Returns is a mandatory thing for One Person Company.

TDS should be filed quarterly mentioning the TAN. If company has employees then deducting tax at source become necessary.

If OPC has more than ten employees then getting an ESI registration by law becomes necessary

As per the Income-tax law, an OPC is liable to pay 30% of its income to the taxation authority in the fiscal year.

Comparison Chart of OPC/Private Company/LLP