Company Registration

OPC for Entrepreneurs: The Best Business Choice

calendar05 Mar, 2024
timeReading Time: 5 Minutes
OPC for Entrepreneurs

A One Person Company, or OPC, is a corporate structure given under section 2(62), which can be formed with just one member and one director. The director and member can be the same person in an OPC. This type of business style was introduced to reduce the number of compliance requirements and regulatory clearances required for companies. The concept of One Person Company was not present in the Companies Act of 1956 and was introduced in the Companies Act, of 2013.One Person companies are small businesses with annual revenue not exceeding Rs. 2 crores and a maximum capital of Rs. 50 lakhs are better suited for One Person Companies. There may be more than one director in an OPC, but at least one of them needs to be a resident of India. Only Indian citizens are eligible to register an OPC. One important aspect of OPC for entrepreneurs is that foreign direct investment is not permitted in an OPC.

Benefits of OPC for Entrepreneurs

The benefits of OPC for Entrepreneurs are mentioned below:

Easy Incorporation Process

Setting up an OPC for Entrepreneurs is a fairly easy and simple process that does not require much time, effort, or capital. The government has further simplified the registration process of OPC for entrepreneurs by creating specialized online filing portals to make the application and submission of documents easier and more streamlined.

Sole Ownership

One of the key benefits of OPC registration is that it gives the owner/director sole autonomy and control over the affairs of the company. Unlike a Limited Liability Partnership or Private Limited Company, the OPC structure allows entrepreneurs more flexibility and freedom to pursue their incentives without any hindrance from other members.

Limited Compliances 

One key benefit of OPC for Entrepreneurs is that the business structure has greatly reduced compliance and regulatory requirements for OPC businesses. One Person Company registration has done away with several regulatory compliances, such as annual audits and compliance requirements related to the financial details of the company.

No requirement for Minimum Paid-Up Capital   

The Companies (Amendment) Act, 2015 has done away with the requirement of minimum paid-up capital for a company. Unlike other business structures that may have minimum paid-up capital requirements. No minimum paid-up capital requirement is the most important benefit of OPC registration to entrepreneurs.

Ease of Transferability and Closure

OPC for entrepreneurs is a very flexible and transferable business structure that can be transferred easily in the name of another entity or person. Also, just like easy registration, the winding up or liquidation process of OPC is also fairly simple and cost-effective. During the COVID pandemic, the government introduced a concept of pre-packaged insolvency for companies that fell below a certain capital threshold.

Procedure of One Person Company Registration

The procedure of One Person Company Registration has been greatly simplified and made swift. The number of documents required, procedures, compliances, or even the fees have been greatly eased to allow One Person Company Registration or OPC for Entrepreneurs a fairly easy affair. The procedure for starting an OPC for Entrepreneurs is as follows –

Step 1 – Obtain a Digital Signature Certificate (DSC)

A Digital Signature Certificate (DSC) is an electronic identification document that is used to validate and certify the identity of the holder of the DSC. They are used for electronically signing documents such as emails, memos, notices, and other legal documents identification documents. A DSC is issued to the director of the company and can be obtained from the certifying authority by submitting documents such as Address Proof, Aadhar Card, PAN card, and Photo and Email ID of the applicant.

Step 2- Director Identification Number (DIN)

After obtaining the DSC, the Director Identification Number or DIN is required to be procured by submitting the SPICE+ Form. The SPICE+ Form requires details for the director, such as address proof, AADHAR, PAN, etc. DIN serves as the unique identification number for a company director.

Step 3- Application for Name Approval

After obtaining the requisite DSC and DIN documents, the director /shareholder must proceed with applying for a suitable name for the company. The name selected must be original and not identical to any existing company operating in a similar business.

Step -4 Documents required

The next step in the One Person Company registration process is the submission of the Charter Documents to the OPC, which are the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC, Declaration, and Consent of the members, Address Proof of ownership of the registered office, lease/rent agreement, as well as certificate of compliance satisfaction by the OPC.

Step -5 Form Filing with the MCA

For the purpose of One Person Company Registration, the member/shareholder must file the necessary documents and forms with the Ministry of Corporate Affairs. These forms are –

  • SPICE+ form for company incorporation and name approval
  • Memorandum of Association (MOA) and Articles of Association (AOA)
  • Letter of Consent by the member/director in Form INC-9 and DIR-2
  • Certificate of Proof of Compliance
  • Proof of ownership of registered office such as NOC or Lease/rent Agreement
  • Personal Documents of the Owner- AADHAR, PAN, Voter ID Card, etc.
  • Digital Signature Certificate and DIN of the Director/shareholder

Once all the necessary forms are uploaded on the MCA website, along with all the required documents duly attached, they will be reviewed and approved by the officials. Upon approval, the OPC for Entrepreneurs Registration process will be completed, and you will receive your Certificate of Incorporation, as well as your PAN Number and TAN (Tax Deduction and Collection Amount Number).

Step -6 Obtaining Certificate of Incorporation

After all the documents are submitted and duly verified by the authorities, the Ministry of Corporate Affairs issues a Certificate of Incorporation for the One Person Company. Now, the entity is legally formed and can carry out business operations as an incorporated company.

Annual Compliances Required for OPC Registration

One of the key benefits of registering an OPC for Entrepreneurs is that the annual and regular compliances required are greatly reduced and made easier for the member/shareholder to follow. The compliances required for OPC registration are –

  1. The Number of Board Meetings has been set to 2 instead of 4 in the case of other companies, where as the maximum gap between two board meetings has been increased to 90days.
  2. A Statutory Audit of the OPC should be done by a Chartered Accountant.
  3. The Minutes of the Meetings should be maintained di statutory registers.
  4. Annual Returns of the company shall be filed in form MGT -7.
  5. The Financial Statement shall be filed in form AOC – 4.
  6. The Income Tax Returns should be filed in form ITR – 6.
  7. A Statutory Auditor is required to be appointed.

Conclusion

Registering a business as an OPC for entrepreneurs is an excellent way of running a business in an effective manner and without much regulatory red-tapism. It can be formed easily, with low cost and capital, can be wound up with ease, and also provide fringe benefits to the members such as greater control over company affairs, tax exemption, ability to attract investments from seasoned investors with ease, and greater reliability in the market.

If you are an entrepreneur and looking to kick-start your entrepreneurial journey, One Person Company is an ideal choice for your dream business, and Coprbiz is your partner in turning dreams into Reality. To learn more about setting up a one person company in India, you can avail our professional services.

Frequently Asked Questions

  1. What is a One Person Company?

    A One Person Company or OPC is a business structure that can be incorporated and operated by a single member/director only.

  2. Who is eligible to form a one person company?

    The member of an OPC must be a natural person who is a citizen of India as per the law of the country.

  3. Is Foreign Direct Investment allowed in an OPC?

    No, an OPC cannot accept foreign direct investment.

  4. What are the statutory capital requirements for an OPC?

    An OPC must not have paid up share capital exceeding Rs. 50 lakhs, or the annual turnover of the past three years, exceeded Rs. 2 crores. If the above thresholds are breached, the OPC must mandatorily convert itself into a Private or Public Company.

  5. What Documents are required for registering OPC for Entrepreneurs?

    The Documents that are required for One-Person Company Registration in India are the director Identification Number (DIN), Digital Signature Certificate (DSC), PAN card, Address Proof, and Aadhar of the member/director, along with the charter documents of the company, such as the AOA, MOA, Lease deed, proof of residence, NOC and Certificate of Compliance etc.

  6. What Benefits of OPC registration does the member/director enjoy?

    Selecting OPC for Entrepreneurs as the business structure allows the members of the OPC to enjoy a host of benefits such as an easy incorporation process, less cost of registration, more flexibility and freedom of running operations, easy winding-up and liquidation, tax benefits, and more reliability and credibility in the market in terms of acquiring funds from investors and venture capital funds.  

  7. Can a person become a member of more than one OPC?

    No, a person is only allowed to belong to one OPC at a time. It is not, however, prohibited for an OPC member to join any other private corporation.

  8. Can OPC be registered as a startup?

    Yes, OPC can be registered as a startup under the Startup India Scheme. As per the scheme, a company can be registered as a startup provided that the company is not more than 7 years old, does not have an annual turnover exceeding Rs. 25 crores in any preceding financial year, and is working towards improvement, development, or innovation of products and services that constitutes a scalable model with high capital and employment generation potential.

  9. Is OPC better than sole proprietorship?

    An OPC for Entrepreneurs is better than Sole-proprietorship because in a sole proprietorship, the owner has unlimited liability towards the company, in respect of its debts, obligations, and legal issues. In OPC, however, the proprietor of the company is only liable to the company to the extent of his/her investment in the venture, hence safeguarding their personal assets from legal and financial liability.

  10. Can I convert sole proprietorship to OPC?

    Yes, you can convert a sole proprietorship to an OPC by following the steps of converting a sole proprietorship into an OPC and transferring the assets, liabilities, control and management of the company to a new entity.

Read Our Article: One Person Company (OPC) Registration in India

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