When it comes to starting up a business alone, nothing can be better than starting up as a One Person Company. OPC registration is a simple and easy way to start a business with the least documentation and formalities.
What is OPC?
OPC or One Person Company can be formed with a single person who is the owner and director of the company. It was introduced under the Company’s Act, 2013. It is a type of sole proprietorship business in the form of company that gives full control to a single person while limiting his liabilities and duties for the business.
Salient Features of One Person Company
- New format: OPC is a new concept governed by the Ministry of Corporation under the Companies Act, 2013.
- One Shareholder: It requires only one shareholder to establish a One Person Company in India. The shareholder must have stayed in India for least period of 182 days, hence should be an Indian resident.
- An immediate nominee: though the company can be started with a single person there should be a nominee who can take place of the shareholder in extreme case of his death or incapacity. The nominee should be an Indian citizen and has to give his/her consent as a nominee of the OPC shareholder.
- One director: A private limited company requires a minimum number of two directors while public limited requires 7 but OPC can be formed within one director who himself can be the shareholder and owner of the company. The maximum number of directors an OPC can have is 15.
- Fewer Compliances: as per the act, One Person company be formed with one single member and director, therefore, has fewer compliances as compared to a private limited company.
- Separate legal entity: just like other companies such as private and public limited companies, OPC is also denoted as a separate legal entity.
- Limited Liability: OPC is benefitted with the limited liability of its directors according to which there personal assets and funds cannot be used to incur the debt of the company.
Benefits of registering as One Person Company
Most of the Indians prefer to register as a Private Limited Company because of its exclusive benefits but they are unaware that OPC can provide them better opportunities within very less compliance. Here are some amazing benefits of OPC:
Ease in funding:
Just like a private limited company, OPC can also raise its funds through financial institutions, angel investors, venture capitals, etc. An OPC can also graduate itself into a Pvt. Limited company to raise its funds.
OPC has better opportunities and is benefitted with limited liability according to which, the company would be limited to the values of the share you hold in it. Due to which it gives you more chances to take risks and explore better opportunities without any tension of loss on personal assets. Hence, it is an encouraging option for the young, new and innovative entrepreneurs.
Incorporation with least requirements:
No one can beat OPC when it comes to starting a company with the least requirements. You only require below given requirements to start an OPC firm:
• 1 shareholder
• 1 director
• 1 nominee
• Letter OPC in the name of the company
In this case, the shareholder and director can be the same person and should be a citizen of India. Due to little compliances and burden, a person has more time to focus on his company and functional areas.
Benefits for Small Scale Industries:
An OPC can avail all the benefits provided to small scale industries such as easy funding without depositing security to certain limits, loans at lower interest rates, benefits under foreign trade policy, etc. these benefits can be very helpful in the progress of the company in its initial days.
Recognized as a trustful separate legal entity:
Any business that is registered under the Company Act, 2013 and has a separate legal entity is recognized as more trustworthy as compared to the non-registered ones.
What is the eligibility criterion for obtaining OPC Registration in India?
To register your company as an OPC you have to fulfill below-given conditions:
Only a person who is a citizen of India:
- Can incorporate an OPC
- Can be a nominee for the member of the company
- He should be staying in India for at least 182 days from the prior one year.
- In case the turnover limit of OPC exceeds Rs 2 crores, it has to be turned into a Private limited or a Public Limited company within a time duration of 6 months
What are the Documents Required for OPC registration?
Though OPC registration is an easy procedure and to accomplish it you require to collect all the documents as given below:
1. Identity proof of the director and nominee:
You have to submit an identity proof of the director and nominee it can be either their voter card, Aadhar card, driving license, PAN card, etc.
2. Memorandum of Association (MOA) and Article of Association (AOA):
Both of these documents are very important and submitted during the registration process. Make sure to highlight all the objectives of your company before submission. It is advised to take the help of someone experienced while preparing these documents.
3. Consent of the designated Nominee:
As discussed earlier, one director and a nominee are required to start an OPC. In case of any mishappening nominee can take place of the director and the work of the company remains unaffected. The consent of the designated nominee is filed through the form INC-3. Documents required are the PAN card and Aadhar card of the nominee.
4. Affidavit of nominee and director:
The designated director and nominee have to submit their affidavit in form INC-9 and DIR-2
5. Residential Proof of the office:
Residential proof of the business place where the business activities are carried out has to submit at the time of registration. It can be any utility bill (electricity, gas, telephone) not older than two months attached with the proof of ownership along with a No Objection Certificate. In case you are working on a rented property, you will have to submit the rent agreement along with all the documents as mentioned.
6. PAN card:
A copy of the PAN card of the director and nominee would be submitted during the registration process.
7. Passport Size photographs:
Passport size photographs of the designated director and nominee would be attached along with the form.
8. DSC and DIN:
Both these documents are very essential for the registration purpose. DSC is used to sign the online documents while DIN is the identification number of the Director.
What is OPC registration procedure in India?
OPC registration is an online procedure followed as per the provisions of Companies Act, 2013. Here are the steps you need to follow to get your registration done:
Step 1: apply for the DSC
STEP 2: Application to obtain DIN
Step 3: Company’s Name Approval
Step 4: Recheck the Documents
Step 5: Submission of forms
Step 6: issuance of Incorporation Certificate by the authorities
1. Apply for DSC:
DSC is a short term used for Digital Signature Certificate. It is to be obtained by the director to sign all the online documents. It can be obtained from nearby agencies and the fees of the DSC vary from agency to agency.
2. Application to obtain DIN:
Director’s Identification Number can be filed along with the SPICe form. All you require is the name and residential proof of the designated director. Before January 2018, Form DIR-3 was used to obtain the Director’s Identification Number. But now applicant can obtain DIN for three directors along with SPICe form.
3. Company’s Name Approval:
Once you have obtained DSC and DIN, now it’s time to decide the name of the company and get it approved by the Ministry of Corporate Affairs. That name of the company should be in the format of “XYZ (OPC) Private Limited.” An applicant can get name approval in two ways via RUN services available at MCA portal or through Form SPICe 32. You can provide up to two names and one would be selected. The name should be unique and effective and non-offensive. You can avoid resubmission by checking the uniqueness of the name through the free name check availability available at MCA Portal. Once the company’s name has been approved you can move ahead to the next step.
4. Recheck all the documents:
It’s quite obvious no one wants to resubmit their documents, so it’s better to recheck them and make sure all the documents are attached in the format as described above. Check whether the details of your PAN card matches along with the details of your other proof such as address proof. In case of some spelling mistakes, get it corrected before the submission.
5. Submission of forms:
Well! when you have collected all the documents and have rechecked them it’s time to submit them along with the SPICe Form, MOA, AOA to the MCA site for further process. After uploading the documents at the site Form 49A and Form 49B would be generated for the company’s PAN and TAN. You can use them to file PAN and TAN of the company which will further help you to open a bank account for the company.
6. Issuance of Certificate of Incorporation by the authorities:
All the documents and forms would be verified by the authorities and after the verification Registrar of Companies would issue you a certificate of Incorporation that will contain CIN number.