One Person Company

What Is The Fee For OPC Registration In India?

calendar22 May, 2023
timeReading Time: 16 Minutes
OPC Registration

The concept of a “one-person company” (OPC) was introduced in India’s 2013 Companies Act, with the aim of providing a beneficial framework for small entrepreneurs to start their own business without the need for a co-founder or partner. OPC is a hybrid form of business that combines the advantages of a sole proprietorship and a private limited company.

As the name suggests, OPC allows a single individual to form a separate legal entity, enjoying limited liability protection and a distinct legal identity. This legal structure enables entrepreneurs to operate their business as a separate entity, distinct from their personal assets and liabilities. OPCs provide a viable option for those who wish to start and manage a business on their own, while maintaining a separate legal existence.

The concept of OPC brings several advantages, including limited liability protection, perpetual succession, and ease of compliance. It encourages individual entrepreneurs to take the leap into entrepreneurship without the need for a co-founder, while still enjoying the benefits and credibility associated with a registered company.

The Companies Act of 2013 and the guidelines established by the MCA (Ministry of Corporate Affairs[1]) are two examples of the specific regulations that apply to OPCs. These regulations outline the eligibility criteria, registration process, compliance requirements, and other key aspects relevant to the functioning of an OPC.

In this article’s subsequent sections,  we will delve deeper into the key features, advantages, eligibility criteria, registration process, compliance requirements, and other important aspects of OPC registration in India. In order to choose OPC as their preferred business structure, budding entrepreneurs will need to have a solid understanding of these key concepts.

Understanding the Concept of OPC in India

One Person Company (OPC) is a unique business structure introduced in India to encourage and support individual entrepreneurs who want to start their own business. It provides a legal framework that combines the benefits of a sole proprietorship and a private limited company, allowing individuals to operate their business as a separate legal entity.

The key characteristics of an OPC include:

Single Promoter: An OPC can be formed by only one individual, who becomes the sole member and shareholder of the company. Unlike other types of companies that require a minimum of two directors and shareholders, OPC allows individuals to start a company on their own.

  • Limited Liability:  An OPC provides the sole promoter with limited liability protection, which is one of its key benefits. This implies that the individual’s personal assets are distinct from the company’s obligations. The promoter’s responsibility is capped at the amount of capital invested in the company in the event of any legal problems or financial obligations.
  • Separate Legal Entity:  An OPC is considered a separate legal entity, distinct from its promoter. It can acquire assets, incur debts, enter into contracts, and carry out business activities in its own name. This legal separation ensures that the business has its own identity and existence, providing credibility and opportunities for growth.
  • Perpetual Succession: The concept of perpetual succession means that the OPC continues to exist even in the event of the death or incapacitation of its sole promoter. The nominee appointed by the promoter takes over the management of the company, ensuring the continuity of business operations.
  • Compliance Requirements: OPCs have relatively simpler compliance requirements compared to other types of companies. They are exempt from certain regulations applicable to private limited companies, such as holding annual general meetings (AGMs) and the need for multiple directors. However, OPCs are still required to maintain proper books of accounts, file annual financial statements, and comply with other statutory requirements.
  • Conversion to Private Limited Company: As the business grows and the need for more capital or external funding arises, an OPC can be converted into a private limited company. This provides flexibility and scalability for the business, allowing it to attract more investors and expand its operations.

It’s important to note that there are certain restrictions and eligibility criteria for forming an OPC in India. For instance, an individual can form only one OPC at a time, and certain business activities are not allowed under the OPC structure.

Understanding the concept of OPC is crucial for aspiring entrepreneurs as it offers a favorable framework for starting and managing a business independently while enjoying the benefits of limited liability protection and a separate legal entity. By leveraging the advantages of an OPC, individuals can embark on their entrepreneurial journey with confidence and legal recognition.

Advantages of Registering as an OPC in India

Registering as a One Person Company (OPC) in India brings several advantages and benefits to entrepreneurs. Here are some key advantages of opting for OPC registration:

  • Limited Liability Protection: One of the primary advantages of an OPC is limited liability protection. The sole promoter’s personal assets are separate from the liabilities of the company. In case of any legal disputes, debts, or financial obligations, the liability of the promoter is limited to the extent of the capital invested in the company. This safeguard protects the promoter’s personal assets from being used to settle business-related liabilities.
  • Separate Legal Entity: OPCs enjoy the status of a separate legal entity, distinct from its promoter. This provides credibility and enhances the company’s reputation in the market. It allows the business to enter into contracts, own assets, and conduct business activities in its own name. The separate legal entity status also enables OPCs to establish a brand identity and build long-term relationships with customers, suppliers, and other stakeholders.
  • Sole Ownership and Control: OPCs provide the advantage of sole ownership and control to the promoter. As the single shareholder and director, the promoter has complete control over the decision-making process and can steer the business according to their vision and objectives. This eliminates the need for co-founders or partners, enabling individuals to start and manage a business independently.
  • Perpetual Succession: The concept of perpetual succession ensures the continuity of an OPC even in the event of the promoter’s death or incapacitation. The nominee appointed by the promoter takes over the management of the company, ensuring the seamless continuation of business operations. This feature provides stability and reassurance to the promoter, as well as the option to pass on the business to a chosen successor.
  • Ease of Compliance: OPCs have relatively simpler compliance requirements compared to other types of companies. They are exempt from certain regulations applicable to private limited companies, such as holding annual general meetings (AGMs) and the need for multiple directors. This reduces the administrative burden and makes compliance more manageable, especially for small business owners.
  • Access to Funding and Investments: OPCs can attract investments and secure funding from banks, financial institutions, and potential investors. The separate legal entity structure and limited liability protection provide a favorable environment for investors to participate in the business. This allows OPCs to raise capital for expansion, innovation, and scaling up operations.
  • Tax Benefits: OPCs are eligible for various tax benefits available to private limited companies. They can enjoy deductions on business expenses, claim depreciation on assets, and utilize tax planning strategies to optimize their tax liabilities. Additionally, OPCs can benefit from the lower corporate tax rate applicable to small businesses, known as the presumptive taxation scheme.
  • Professional Image and Opportunities: Registering as an OPC gives the business a professional image and enhances its credibility in the market. It provides opportunities to participate in government tenders, enter into contracts with larger organizations, and engage in collaborations and partnerships. OPCs often have an advantage over unregistered businesses in terms of gaining trust and attracting customers and clients.

It’s important to evaluate these advantages in the context of your specific business requirements and long-term goals. While OPCs offer several benefits, it’s advisable to seek professional advice and consider the legal and financial implications before making a decision.

Process of Registering an OPC in India

In order to register in India, One Person Companies (OPCs) must adhere to a variety of laws and specifications. This is a general explanation of what occurs:

  • Obtain Digital Signature Certificate (DSC):  Getting a Digital Signature Certificate (DSC) for the intended director or promoter of the OPC is the first step. The Ministry of Corporate Affairs (MCA) requires the DSC for online document filing.
  • Obtain Director Identification Number (DIN): The promoter needs to apply for a Director Identification Number (DIN) from the MCA. DIN is a unique identification number assigned to individuals who wish to become directors of companies.
  • Name Reservation: Choose a unique name for the OPC and apply for name reservation with the Registrar of Companies (ROC). The name should comply with the naming guidelines specified by the MCA. The approval of the proposed name is valid for 20 days from the date of approval.
  • Drafting of Memorandum of Association (MOA) and Articles of Association (AOA): Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) for the OPC. These documents define the objectives, business activities, and internal regulations of the company. The MOA and AOA need to be signed by the promoter in the presence of a witness.
  • Preparation of Required Documents: Gather the necessary documents for OPC registration, including identity proof, address proof, and photographs of the promoter. Additionally, proof of registered office address, such as rental agreement or utility bills, will be required.

Filing of Forms with MCA: File the necessary forms with the MCA. The key forms to be filed include:

  1. SPICe (Single-Person Company Incorporation): This form is used for the incorporation of an OPC and includes details of the director, registered office address, and subscription to shares.
  2. SPICe MOA and SPICe AOA: These forms contain the MOA and AOA of the company and need to be filed along with the SPICe form.
  3. DIR-12: This form is used for appointing the sole director and providing their consent to act as a director.
  4. Payment of Fees: Pay the required fees, which include the registration fee and stamp duty based on the authorized share capital of the OPC.
  5. Verification and Approval: The ROC will verify the submitted documents and forms. If there are no discrepancies, the ROC will issue a Certificate of Incorporation (COI) and allocate a Corporate Identification Number (CIN) to the OPC.
  6. PAN and TAN Application: Once the COI is received, apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the OPC. These are essential for tax-related compliances.
  7. Compliance Requirements: After the registration, ensure compliance with ongoing requirements such as maintaining proper books of accounts, filing annual financial statements, and conducting regular board meetings.

It is important to note that the exact process and requirements may vary based on the specific circumstances and location of the OPC. It is advisable to consult with a professional, such as a company secretary or chartered accountant, to ensure compliance and a smooth registration process.

Minimum Capital Requirement for OPC

The minimum capital requirement for a One Person Company (OPC) in India has been abolished as per the Companies (Amendment) Act, 2020. Previously, under the Companies Act, 2013, OPCs were required to have a minimum authorized share capital of Rs. 1 lakh (Indian Rupees). However, this requirement has been removed to make it easier for entrepreneurs to start and operate OPCs.

With the removal of the minimum capital requirement, individuals can now set up an OPC without any prescribed minimum capital. This flexibility allows entrepreneurs to start their businesses with a nominal capital amount based on their specific needs and industry requirements.

It is important to note that while there is no minimum capital requirement, the promoter of an OPC is still required to contribute to the company’s share capital based on their ownership and investment plans. The capital infusion can be in the form of cash, property, or any other tangible or intangible assets.

The removal of the minimum capital requirement for OPCs aims to encourage more individuals to start their own businesses and promote entrepreneurship by eliminating the burden of high initial capital investment. However, it is advisable to carefully assess the capital needs of the business and determine an appropriate capital infusion based on the nature of the business, industry standards, and growth plans.

Fees for registering an OPC in India:

The fee to register an OPC in India can vary depending on several factors, including the authorized capital and the professional fees charged by consultants or service providers. Here is a general breakdown of the registration fees:

  • Government Fees: The government fees for registering an OPC in India primarily include the fee for Digital Signature Certificate (DSC) and the fee for filing the required forms with the Ministry of Corporate Affairs (MCA). These fees are subject to change, so it is advisable to check the latest fee structure on the MCA website.
  • Professional Fees: Many entrepreneurs engage the services of professionals such as company secretaries or chartered accountants to assist with the OPC registration process. The professional fees can vary based on the scope of services provided and the experience of the professional.

It is important to note that the fee structure and requirements for OPC registration are subject to change, so it is recommended to consult with professionals or refer to the latest information provided by the MCA or relevant authorities for accurate and up-to-date fee details.

Rights and Liabilities of an OPC Director

As a director of a One Person Company (OPC) in India, there are certain rights and liabilities that you should be aware of. Here is an overview of the key rights and liabilities of an OPC director:

Rights of an OPC Director:

  • Management and Decision-making: An OPC director has the right to manage and make decisions relating to the operations and affairs of the company. They have the authority to represent the company and act on its behalf in various matters, subject to the provisions of the Companies Act, 2013, and the company’s Memorandum of Association (MOA) and Articles of Association (AOA).
  • Voting Rights: As a director, you have the right to vote on matters discussed at board meetings or general meetings of the company. Your voting rights enable you to actively participate in the decision-making process and influence the company’s direction.
  • Access to Information: Directors have the right to access relevant information and records of the company. This includes financial statements, minutes of meetings, legal documents, and other records necessary to understand the company’s financial position and operations. Access to information empowers directors to fulfill their fiduciary duties and make informed decisions.
  • Remuneration and Benefits: OPC directors are entitled to receive remuneration for their services, subject to the provisions of the Companies Act, 2013, and the AOA of the company. The remuneration can be in the form of salary, commission, or any other benefits as determined by the company and approved by the shareholders.

Liabilities of an OPC Director:

  • Fiduciary Duties: OPC directors have fiduciary duties towards the company, its shareholders, and stakeholders. They are legally obligated to act in the best interests of the company, exercise due diligence, and avoid conflicts of interest. Directors must act with care, skill, and diligence and make decisions that promote the success and sustainability of the company.
  • Compliance Responsibilities: OPC directors have a responsibility to ensure compliance with various legal and regulatory requirements. This includes filing of annual financial statements, holding board meetings, maintaining proper books of accounts, and adhering to other statutory obligations. Directors are accountable for the accuracy and completeness of the company’s financial records and compliance with applicable laws.
  • Liability for Breach of Duties: OPC directors can be held personally liable for any breach of their duties, such as acts of fraud, mismanagement, negligence, or non-compliance. In such cases, directors may be subject to legal action, penalties, fines, or even disqualification from holding directorship positions.

It is important for OPC directors to be diligent, knowledgeable, and proactive in fulfilling their rights and responsibilities. Seeking professional advice, maintaining good corporate governance practices, and staying updated with changes in laws and regulations can help directors mitigate risks and protect their interests as well as the interests of the company and its stakeholders.

Compliance Requirements for OPCs

Compliance requirements for One Person Companies (OPCs) in India include various legal and regulatory obligations that must be fulfilled to ensure proper governance and adherence to applicable laws. Here are some key compliance requirements for OPCs:

  • Annual Filings: OPCs are required to file annual financial statements and other relevant documents with the Ministry of Corporate Affairs (MCA). The annual filings include:

a. Annual Return (Form MGT-7):  OPCs must submit their yearly return no later than 60 days following the conclusion of the fiscal year. The annual return provides details of the company’s share capital, directors, shareholders, and other prescribed information.

b. Financial Statements (Form AOC-4):  Within 30 days of the end of the fiscal year, OPCs are required to complete and submit their financial statements, which include the balance sheet, profit and loss statement, and cash flow statement.

c. Director’s Report: OPCs are required to prepare and attach a director’s report with the financial statements. The report provides an overview of the company’s operations, financial performance, and other relevant information.

  • Board Meetings: OPCs are required to conduct a minimum of one board meeting in each half of the calendar year, with a gap of at least 90 days between the two meetings. The board meetings should comply with the provisions of the Companies Act, 2013, and the AOA of the company. Minutes of the board meetings should be maintained and kept on record.
  • Statutory Registers and Records: OPCs must maintain various statutory registers and records, including:

a. Register of Members: This register contains details of the shareholders of the company.

b. Register of Directors: This register contains details of the directors of the company, including their appointment, resignation, and other relevant information.

c. Register of Charges: This register maintains details of any charges created on the company’s assets.

d. Minutes Book: OPCs should maintain minutes of the board meetings, general meetings, and other significant meetings.

  • Compliance with Income Tax Laws: OPCs are required to comply with income tax laws, including filing of income tax returns and payment of taxes as per the applicable rates and provisions. OPCs should obtain a Permanent Account Number (PAN) and fulfill their tax-related obligations, such as tax deduction at source (TDS) and goods and services tax (GST), if applicable.
  • Other Regulatory Compliance: OPCs may have additional compliance requirements based on the nature of their business activities and industry-specific regulations. This may include compliance with sector-specific laws, obtaining necessary licenses and permits, and adhering to labor and employment laws.

It is advisable for OPCs to engage the services of a qualified professional, such as a company secretary or chartered accountant, to ensure proper compliance with the applicable regulations and timely fulfillment of the compliance requirements. Non-compliance can lead to penalties, fines, and even disqualification of the director.

Taxation and Benefits for OPCs

Taxation:

  • Income Tax: OPCs are taxed as per the income tax rates applicable to private limited companies. The profits earned by the OPC are subject to income tax at the applicable corporate tax rate. OPCs are eligible to claim deductions on business expenses, depreciation on assets, and other tax benefits available to companies.
  • Presumptive Taxation Scheme: OPCs with a turnover of up to Rs. 2 crores (Indian Rupees) can opt for the presumptive taxation scheme under Section 44ADA of the Income Tax Act, 1961. Under this scheme, the taxable income is presumed to be 8% of the gross receipts, and the OPC is not required to maintain detailed books of accounts. However, certain conditions and reporting requirements need to be met to avail of this scheme.
  • Dividend Distribution Tax (DDT): OPCs are not liable to pay Dividend Distribution Tax on the distribution of dividends to shareholders. Dividends are taxed in the hands of the shareholders as per their applicable income tax rates.
  • Goods and Services Tax (GST): OPCs are required to comply with the GST regulations if their turnover exceeds the threshold limit specified under GST laws. OPCs need to obtain a GST registration, file periodic GST returns, and pay GST on the taxable supplies as per the applicable rates and rules.

Benefits:

  • Limited Liability Protection: OPCs provide limited liability protection to the promoter, separating their personal assets from the debts and liabilities of the company. This ensures that the personal assets of the promoter are not at risk in case of any financial obligations or legal disputes.
  • Separate Legal Entity: OPCs have a separate legal entity distinct from the promoter. This enhances the credibility and reputation of the company, making it easier to enter into contracts, attract investors, and engage in business transactions.
  • Sole Ownership and Control: OPCs allow for sole ownership and control, where the promoter has full authority over decision-making and business operations. This provides flexibility and autonomy in managing the company’s affairs.
  • Perpetual Succession: OPCs have perpetual succession, meaning the company continues to exist even in the event of the promoter’s death or incapacitation. The nominee appointed by the promoter takes over the management of the company, ensuring continuity and stability.
  • Access to Funding and Investments: OPCs can attract investments and secure funding from banks, financial institutions, and potential investors. The separate legal entity structure and limited liability protection create a favorable environment for investment and growth opportunities.
  • Professional Image: Registering as an OPC gives the business a professional image, enhancing its credibility in the market. OPCs often have an advantage over unregistered businesses in terms of gaining trust, attracting customers, and participating in government tenders and contracts.

It is important to consult with a qualified tax professional or chartered accountant to ensure proper tax planning and compliance with the tax laws and regulations applicable to OPCs.

Comparison: OPC vs. Sole Proprietorship and Private Limited Company

Comparison: One Person Company (OPC) vs. Sole Proprietorship and Private Limited Company

Ownership and Liability:

  • OPC: An OPC has a single owner who has limited liability protection, meaning the personal assets of the owner are separate from the company’s debts and liabilities.
  • Sole Proprietorship: A sole proprietorship is owned and operated by a single individual who has unlimited liability. The owner is personally responsible for all the debts and liabilities of the business.
  • Private Limited Company: A private limited company has a minimum of two shareholders and can have a maximum of 200 shareholders. The liability of shareholders is limited to their shareholding, and their personal assets are generally protected.

Legal Entity:

  • OPC: An OPC is a separate legal entity, distinct from its owner. It can enter into contracts, acquire assets, and sue or be sued in its own name.
  • Sole Proprietorship:  A sole proprietorship lacks a distinct legal entity. Because the owner and the company are seen as one and the same, the duties of the company fall under the owner’s personal responsibility.
  • Private Limited Company: A private limited company is a separate legal entity, distinct from its shareholders. It has its own rights, obligations, and perpetual succession.

Formation and Registration:

  • OPC: OPCs require registration with the Ministry of Corporate Affairs (MCA) and compliance with the Companies Act, 2013. It involves filing necessary documents and fulfilling statutory requirements.
  • Sole Proprietorship: Sole proprietorships do not require any formal registration. The business can be started by obtaining necessary licenses and permits, if applicable, and operating under the proprietor’s name or a trade name.
  • Private Limited Company: Private limited companies require registration with the MCA. The process involves drafting and filing the Memorandum of Association (MOA) and Articles of Association (AOA), along with other necessary documents.

Minimum Capital Requirement:

  • OPC: The minimum capital requirement for an OPC has been abolished, allowing flexibility in the capital structure of the company.
  • Sole Proprietorship: There is no specific minimum capital requirement for a sole proprietorship. The business can be started with any amount of capital as per the owner’s discretion.
  • Private Limited Company: Private limited companies are required to have a minimum authorized capital of Rs. 1 lakh (Indian Rupees) at the time of incorporation, although there is no requirement to bring in the entire amount.

Compliance and Governance:

  • OPC: OPCs have certain compliance requirements, including annual filings, maintenance of statutory registers, conducting board meetings, and adhering to other legal and regulatory obligations.
  • Sole Proprietorship: Sole proprietorships have fewer compliance requirements compared to OPCs and private limited companies. The owner is responsible for maintaining necessary records and fulfilling tax-related obligations.
  • Private Limited Company: Private limited companies have more stringent compliance requirements, including annual filings, holding board meetings, maintaining statutory registers, conducting audits, and adhering to various provisions of the Companies Act.

Taxation:

  • OPC and Private Limited Company: OPCs and private limited companies are taxed as separate legal entities, subject to corporate tax rates and other tax provisions applicable to companies.
  • Sole Proprietorship: In a sole proprietorship, the business income is considered the owner’s personal income and is taxed at the individual income tax rates applicable to the proprietor.

The choice between an OPC, sole proprietorship, or private limited company depends on various factors, including the owner’s risk appetite, business goals, scalability, compliance preferences, and long-term vision. It is advisable to consult with legal and tax professionals to determine the most suitable business structure based on

Case Studies: Successful OPCs in India

  • Paytm: Paytm started as an OPC in 2010 by Vijay Shekhar Sharma. It initially began as a mobile recharge and bill payment platform and later expanded into a leading digital payments and e-commerce company in India. Paytm’s success story showcases how an OPC can transform into a thriving enterprise in the technology and financial services sector.
  • UrbanClap (now Urban Company): UrbanClap, founded by Abhiraj Bhal as an OPC in 2014, began as an online marketplace for local services such as home repairs, beauty services, and event planning. The company rebranded as Urban Company and became one of India’s leading home services platforms, connecting customers with trusted professionals in various domains.
  • Practo: Practo, founded by Shashank ND in 2008 as an OPC, is a healthcare technology company that provides an online platform for booking doctor appointments, teleconsultations, and health records management. Practo has grown significantly and expanded its services to multiple cities, becoming a prominent player in the digital healthcare industry.

These examples demonstrate that OPCs can evolve into successful and well-established companies across different sectors. However, it’s important to note that the success of an OPC depends on various factors, including the business model, market demand, effective execution, and the entrepreneurial vision behind it. Each case is unique, and success may vary depending on the specific circumstances and strategies employed by the founders.

Final view:

In conclusion, One Person Company (OPC) registration in India offers several advantages and opportunities for entrepreneurs who wish to start their own business with limited liability and separate legal entity status. OPCs provide a favorable environment for sole ownership and control, while also providing the benefits of limited liability protection.

The process of registering an OPC involves fulfilling certain legal and compliance requirements, including annual filings, maintenance of statutory registers, and adherence to applicable laws and regulations. Engaging the services of professionals such as company secretaries or chartered accountants can help ensure proper compliance and governance.

OPCs enjoy tax benefits, including the ability to claim deductions on business expenses, flexibility in the capital structure, and eligibility for the presumptive taxation scheme for smaller businesses. The separate legal entity status and limited liability protection of OPCs attract investments, enhance credibility, and offer opportunities for growth and expansion.

While specific case studies of successful OPCs in India may vary, examples such as Paytm, UrbanClap (Urban Company), and Practo highlight the potential for OPCs to transform into thriving enterprises across various sectors.

When considering OPC registration or choosing between OPC, sole proprietorship, or private limited company structures, it is important to evaluate individual business requirements, risk appetite, compliance preferences, and long-term goals. Seeking professional advice and staying informed about legal and regulatory updates will contribute to the success of an OPC and ensure compliance with the applicable laws and regulations.

Conclusion

Overall, OPCs provide a viable option for entrepreneurs in India, offering the benefits of limited liability protection, ease of operation, and potential for growth and success in the business landscape.

Read our Article:One Person Company (OPC) Registration In India

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