One Person Company Registration

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One Person Company Registration in India - An Overview

An One Person Company (OPC) in India, as outlined by the Companies Act of 2013, is a novel business structure that allows an individual to establish a company single-handedly. This concept blends the features of limited liability and perpetual succession into a single-person entity.

Before the enactment of the Companies Act of 2013, the formation of a company required at least two individuals. However, the Act introduced the OPC framework, simplifying the process for individual entrepreneurs. Unlike a private or public company, which necessitates a minimum of two directors and members, an OPC can be formed and operated by a single individual.

Under Section 262 of the Companies Act of 2013, registering an OPC is a legally recognized process in India. This company type requires only one director and member, significantly reducing the administrative and compliance burden compared to a private company.

Process of Incorporation of One Person Company

Begin by obtaining Digital Signature Certificates for the proposed directors. This is a crucial step as it ensures the security and authenticity of documents submitted electronically.

Obtain a Director Identification Number for all directors. DIN is a unique identification number required for anyone looking to be appointed as a director of a company.

Gather and prepare all necessary documents as per the requirements, including but not limited to identity proof, address proof, and photographs of the directors.

Check the availability of the proposed company name. It should be unique and not similar to any existing registered entity. This can be done through the Ministry of Corporate Affairs (MCA) portal.

Once the name is approved, proceed to file an online application using the SPICE+ (Simplified Proforma for Incorporating Company Electronically) form. Submit all required documents, including the Memorandum of Association (MOA) and Articles of Association (AOA), online with the Registrar of Companies (ROC).

Upon successful completion of the application process and verification by the ROC, the company will be issued a Certificate of Incorporation. This certificate officially establishes the existence of the one person company.

It’s important to note that the specific requirements and procedures may vary by jurisdiction.

Documents Required for One Person Company Registration in India

PAN Card of proposed Directors

Both PAN and Aadhaar Card of all Indian Shareholders and Directors.

Business Address Proof

Either of the latest Utility Bill (Electricity, Telephone, Gas, Water) or Property Tax Bill of the registered office address. Rent agreement and NOC from the owner in case of rented property.

Aadhaar Card/ Passport of proposed Directors

Either Voter ID, Passport, or Driving License of the Shareholders and Directors.

Mail id and Mobile number

Mail id and Mobile number of proposed Director along with Draft Articles of Association and Draft Memorandum of Association.

Latest passport size photograph of proposed Directors

Latest passport size photographs of all the Shareholders and Directors.

Advantages of an OPC in India

An OPC is a distinct legal entity from its owner. This separation protects the owner’s personal assets; liabilities are limited to their investment in the company. This structure allows the OPC to be subject to legal proceedings, not the individual owner.

As a recognized private entity, an OPC can attract investments from venture capitalists, angel investors and other financing sources, facilitating easier access to capital.

OPCs enjoy certain relaxations in compliance under the Companies Act of 2013. They are exempt from preparing cash flow statements and there’s no obligation for company secretaries to compile annual reports or maintain detailed account books.

Incorporating an OPC is straightforward, with minimal legal complexities. A single individual can efficiently manage the company, streamlining decision-making processes. Resolutions can be passed easily with documentation in the minutes book, eliminating internal conflicts and delays.

Despite having only one member, an OPC benefits from perpetual succession. During incorporation, the sole member nominates a successor who will assume control of the company in the event of the member’s demise, ensuring continuity.

These features make an OPC an attractive option for individual entrepreneurs in India, combining the advantages of a company’s structure with the simplicity of sole proprietorship.

Features of One Person Company

Unlike traditional companies that require at least two shareholders, an OPC can be formed by a single person. This sole shareholder is the owner and can also be the director of the company.

The shareholder’s personal assets are protected in the case of business failure or debt. Liability is limited to the amount invested in the business.

OPCs are simpler to set up and manage due to their single-owner structure. The administrative burden is lesser compared to other types of companies.

An OPC has the feature of perpetual succession, meaning the company continues to exist even if the sole owner dies or leaves the business. This is ensured through the nomination of a successor during the company’s formation.

There is no minimum capital requirement for starting an OPC. It can be formed with any amount of capital.

The sole member of an OPC is required to appoint a nominee during incorporation. This nominee will become the shareholder in case of the original owner’s death or incapacity.

OPCs enjoy several exemptions and concessions under the Companies Act, which reduces the compliance burden compared to private companies.

An OPC is a separate legal entity distinct from its owner, capable of entering into contracts, owning property, incurring debts and suing or being sued in its own name.

An OPC can be converted into a private or public company if it crosses certain thresholds in revenue or share capital, as specified in the Companies Act.

An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate. It’s also not allowed to convert into a Section 8 Company (a company with charitable objects).

These features make the OPC a desirable option for entrepreneurs in India who wish to start a venture on their own while enjoying the benefits of limited liability and less regulatory burden.

Restrictions with regard to One Person Company

One Person Companies (OPCs) in India, while offering numerous advantages and flexibility, also come with certain restrictions as per the Companies Act 2013. Here are some of the key limitations:

These restrictions ensure that the OPC model is used by genuine entrepreneurs and not misused for large-scale business operations meant for other types of corporate structures.

How apkireturn team will help in the One Person Company Registration Process?

We believe in complete hand holding of our client, we will assign a personal manager to help you complete the entire process of OPC registration.

We will assist you in following areas:

Steps to be taken care of Post Incorporation of the One Person Company

There are few compliances which needs to be done as per the schedule of the MCA, major activities are listed below for your reference, as our time will also help you out not to miss any of the compliances.

This is a one-time activity, to be done once every year.

Now-a-days, all the companies getting registered in India, need to obtain Business Commencement Certificate within 180 days of its incorporation. It’s a One Time Activity. For this compliance, the directors are required to deposit the Paid-up capital in the account of the company, and share the Bank statement to the MCA for verification purposes.

This is a one-time activity, to be done once every year. As per Income Tax Laws ITR-6 needs to be filed by the Companies alongwith Tax Audit report (if applicable) to be digitally signed.

As per Companies Act, within 30 days of incorporation, the company is required to appoint the C.A. for conducting the ROC audit.

This is a one-time activity, to be done once every year. At the end of the financial year, when income tax return has been filed and ROC Audit report has been prepared, the Annual Return under Form AOC-4 & Form MGT-7 are required to be uploaded on the MCA portal which are required to be digitally signed by Director’s and C.A. who has conducted the Audit.

FAQs

An OPC is a business entity where a single individual can form and operate a company. It combines the benefits of a sole proprietorship with those of a company, providing limited liability and perpetual succession.

Any Indian resident can form an OPC. Non-resident Indians (NRIs) and foreign nationals are not eligible to incorporate an OPC in India.

The key requirements include having only one member and at least one nominee, minimum one director, and a unique name for the company. The process involves obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), and registration through the Ministry of Corporate Affairs (MCA) portal.

Yes, an OPC can be converted into a private or public limited company after meeting certain criteria, such as minimum paid-up capital and a specific period of existence.

The owner’s liability in an OPC is limited to the extent of their share in the company, protecting personal assets from business liabilities.

OPCs are taxed like private companies. There are no specific tax benefits for OPCs; they are subject to the same tax regime as other corporate entities.

Yes, OPCs can raise funds through venture capital, financial institutions, angel investors, and other methods. However, they cannot issue shares or securities to the public.

OPCs are required to maintain financial records, file annual returns with the MCA, and have their accounts audited annually. However, they have fewer compliance burdens compared to other types of companies.

When forming an OPC, the sole member must nominate a person who will become the member in case of the original member’s death or incapacity. This ensures business continuity.

No, an individual cannot form or be a nominee of more than one OPC at any given time as per the Companies Act, 2013.

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