One Person Company Registration process is a very simple and easy process with Corpbiz. An OPC or One Person Company is the newest form of company type introduced in the Companies Act, 2013. It is a form of company that can be formed with just one person. Furthermore, all the requirements for starting an OPC are the least amongst all other company types. The most important fact about One Person Company is that it overrules the drawbacks of the Sole proprietorship entity type.
What is a One Person Company Registration?
The model of One Person Company was first introduced in India through the Companies Act, 2013. This step was taken to support entrepreneurs who on their own want to start a business venture by allowing them to form an entity consisting of just one person.
One of the most significant advantages of a One Person Company (OPC) is that there is a requirement of only one member in the company. While on the other hand, a minimum of two members is required for incorporating and maintaining a Private Limited Company, Limited Liability Partnership (LLP) or a Partnership Firm. Similar to a Company, a One Person Company is a legal entity separate from its promoters, offering limited liability protection to the sole shareholder, while having the continuity of business.
However, if any OPC generates a turnover of Rs. 2 crores or more or acquires a paid-up fund of Rs. Fifty lakhs or more then it has to be converted into a Private Limited Company or a Public Limited Company.
Benefits of One Person Company Registration
OPC registration has its own advantages over any other entity type:
- It has Limited Liability: The directors’ personal property is always safe in a private limited company, no matter the debts of the business.
- The existence of the entity continues for a long time: Unlike a sole proprietorship firm, the body ceases to exist even after the death of the owner. In an OPC, the company is passed on to the nominee director in such a situation.
- It has greater credibility: An OPC is more trusted by venders and lending institutions as it is audited annually.
Who is allowed to Opt for One Person Company Registration?
Only Indian residents are allowed to incorporate a One Person Company. Additionally, only one entity is allowed to be set up as specified by the Ministry of Corporate Affairs[1].
Documents Required for One Person Company Registration
You need to prepare the following documents which are required to be submitted to the Registrar of Companies {ROC}:
- The Memorandum of Association (MoA): It specifies the objects to be followed by a Company and states the type of business for which the company is going to be incorporated.
- The Article of the Association (AoA): It lays down the by-laws on which the company is going to operate.
- Since there are only 1 Director and a member, a nominee on behalf of such a person has to be appointed. This is because in case he becomes incapacitated or dies and cannot perform his duties, the nominee will act his responsibilities on behalf of the director and take his place. The consent in Form INC – 3 need to be submitted along with his PAN card and Aadhar Card.
- You need to submit proof of the registered office (such as a Rent agreement,) along with the evidence of ownership and a NOC of the owner.
- Also, there is a need to submit the Affidavit and Consent of the proposed Director in Form INC -9 and DIR – 2 respectively.
- Lastly, a declaration by professional is required to certify that all compliances have been made.
- Scanned transcript of Current Bank Account Statement/Phone or Mobile Invoice/Gas or Electricity Invoice)
- Scanned transcript of Rental Agreement written in the English language
- Scanned transcript of N-O or No-objection Certificate from the concerned property landowner
- Scanned transcript of Property or Sale Deed printed in English (if the property is owned)
- Scanned transcript of Passport (Foreign Nationals & NRIs) or PAN Card
- Scanned transcript of Passport, Voter’s ID or Driver’s License
- Scanned transcript of Current Bank Account Statement/Phone or Mobile Invoice/Electricity or Gas Invoice
- Scanned passport-sized photo
- Specimen autograph or impression (blank document with autograph)
- Any other specified document
One Person Company Registration Procedure
Follow the given steps to register your One Person Company:
Step 1: Apply for DSC with the documents like Address Proof, Aadhaar card, PAN card, Photo, Email Id and Phone Number
Step 2: Name Reservation- The name of the Company can be applied by using the ‘SPICe+’ utility on the MCA portal under ‘MCA SERVICES’. click on the ‘New Application’ and file in SPICe+ form Part A. Two names can be suggested for name reservation in this case. It is important for the name of the company to have ‘(OPC) Private Limited’ as the suffix
Step 3: Form Filing- DIN of the director’s and subscriber’s, could be applied during the filing of the form. Then shall proceed with filling up all the details in SPICe+ Part B. All the documents together with Form INC-3 shall be uploaded.
Step 4: After SPICe+ Part B is submitted, other forms like AGILE-PRO, SPICe+ AoA and SPICe+ MoA shall also be filled up and uploaded with details. INC-9 will be generated automatically on the basis of information that is filled in SPICe+ Part B.
Step 5: Submit the required forms and attach them to the SPICe+ Form, SPICe+MOA and SPICe+AOA together with the DSC of the Director to the portal of MCA.
Step 6: Finally on verification, the ROC shall issue the Certificate of Incorporation.
Disadvantages of forming an OPC
It is true that incorporating an OPC has its own advantages; however, it can hold certain disadvantages also. The drawbacks of forming a One Person Company are as follows;
- There is a requirement to appoint a nominee for incorporating a One Person Company
- There is a limitation on who can form an OPC
- Also, after a specified limit an OPC has to be converted into a bigger entity type
- One person can only form one OPC
Advantages of One Person Company
- Limited Liability
OPC registration is always a good option for starting any new business as because the shareholder’s financial liability of any private owned business is restricted to the investment amount made in the company by him.
- Easy Funding
It is suitable for the owner to go to other financial institutions rather than banks because these Banking Institutions give priority to companies over the proprietary firms.
- Perpetual Succession
The Nominee shall get the control over the company in case the original owner is unable to discharge his duties due to death or any other reason. As a result, the investment shall not be wasted.
- Total Control
One person company is actually a complete authority over the implementation and decision-making process of the company.
- Less Compliance
There is less compliance in comparison to the Private Limited Company and Annual General Meeting is not required as the sole director can basically himself add the company’s resolution in a minute book and put his signature.
Compliances of a One Person Company
- Income Tax and Annual Return: it is important for the One Person Company to file the annual return of the Income tax filing before 30th September of every financial year.
- GST Filing: it shall be mandatory for the one person companies with the GST registration to file monthly, quarterly and annual GST returns.
- TDS Filing: one person companies should file the quarterly TDS returns and should have TAN and are obligatory to deduct the tax at source in accordance with the TDS rules.
- ESI Return: All the one-person companies with the ESI registration must file ESI return. ESI registration is compulsory if the one person company employs more than 10 employees.
Conclusion
One Person Company is a type of entity best suited for entrepreneurs who can invest less amount of capital at the beginning. Also, OPC is a type of entity which is best suited for MSME Registration, which provides them with the opportunity to partake in major government trade fairs and other schemes, etc. which can help them grow faster.
Read our article:An Outlook on One Person Company (OPC) Formation Procedure in India
