An overview of One Person Company Registration
An OPC is a business structure that enjoys the benefits of both forms of business, i.e., a sole proprietorship and a company. Thus, it eliminates the hassles of finding the right kind of co-partner/s for starting a business as a registered entity.
One Person Company is bringing the unstructured Proprietorship Business into the structured version of a private company. OPC is opening the path for sole proprietors and start-ups.
According to Section 3(1)(c) of the Companies Act, 2013, the OPC can be formed for any lawful purpose by an individual. Section 2(62) states that the "One Person Company is a company which has only one person as a member".
One Person Company is conceded as a private company. It is a company with one director and one shareholder only. An individual can now avail the benefit of limited liability doing sole proprietorship. The One Person Company is an example of vital growth in the corporate sector of our country.
Benefits of Registering One Person Company
OPC is a company that can be formed with one Director and a member. It provides better opportunities with minimal compliance.
- Easy Incorporation
Under One Person Company, a single person can start a business with very little compliance. For the incorporation of OPC, only one member and one nominee are required. No paid-up capital is required for its incorporation.
- Complete Control by the Individual
Since it is a single-person company, so the complete control remains in the hand of one person only. The decision-making becomes easy and quick as there will be no conflicting opinions, so the running and management of the Company will be easy.
- Easy Compliance and Tax Flexibility
The Companies Act, 2013 provides limited or lesser compliance to One Person Company. Less compliance means less paper, and it also takes less time to carry out such lesser compliance. The OPC need not show the cash flow and avails the benefit of tax availability too. Only the Director has to account book and annual returns.
- Benefits for Small Scale Industries
One Person Company avails the benefits provided to small-scale industries like easy funding, less compliance, loans at a lower interest rate, etc.
- Ease in Funding
The OPC can take its funds through financial institutions, capital ventures, and other investors. To bring up its funds from outside, the OPC can upgrade itself into a private company.
- Least requirements for registration
In the process of registration of One Person Company, the requirements are very less in comparison to the registration of other types of companies.
- Greater credibility
As OPC is owned by a single person so its accounts are audited annually, and thus it has greater credibility.
- Significant growth
The One Person Company is completely based on the sole ownership of the Company and a Centralised Management System that pushes the Company towards achieving significant growth and a bigger contribution to our country's economy.
- Income tax benefits
If your company is unique and has the potential to create larger employment opportunities, then you can register your OPC under the Start-up India scheme of the Government and take the Income Tax benefit for at least five years.
- Sole business ownership
Sole ownership provides stability in business since there will be no possibility of conflict of interest among the shareholder group because only one member is running the whole business.
- Increased transparency
Another benefit of One Person Company is increased transparency while dealing with government authorities. The transparency can be seen on both ends, i.e., the Government and the applicant.
- Beneficial to sectors like MSME and SME
OPC is beneficial to some specific sectors such as MSME and MSE. Businesses in rural areas are prevailing because of MSMEs and SMEs, so by OPC, these services can be enhanced. As one person company needs financial help from public sector undertakings and institutions, the limited liability can save the OPC from any debt. OPC incorporation can positively impact the reputation and growth of MSMEs and SMEs.
Features of One Person Company
- Perpetual Succession
Even if there is only one member still, the OPC has a feature of perpetual succession. After the death of the only member of the Company, the nominee will run the Company.
- Limited Liability and Separate Legal Entity from its Member
In the case of One Person Company, the member has limited liability. Being a company, OPC has a separate legal existence from its member. The separate legal entity gives protection to its member as the liability is limited to his shares, and he is not liable for the loss of the Company. The creditors can sue only the Company and not the Director or member for Company's debt.
The name of another person, i.e., the nominee, will be added to the Memorandum of Association with his prior consent. This nominee would take the place of the proprietor after the sole proprietor's death or his incapacity to form a contract. The written consent of this nominee will also be filed with the registrar of companies during incorporation of the OPC along with the Company's AOA and MOA.
- Sole Director and shareholder
In OPC, the only member will act as Director in the OPC so there is only one Director, and he is the only one to manage the Company, and there is no need for any form of independent or executive Director in this type of Company. Only one single member is needed in OPC; hence the shareholder will hold all the responsibilities.
- Owner of the property
Since the OPC hold an artificial person status, it holds all the property related to business such as machinery, land, factories, residential property, building, and other assets of the Company in his own name, and no person can claim over any of such property. OPC can acquire, alienate and own the property in its name.
Eligibility Criteria for Registering One Person Company
One should fulfil the following eligibility criteria before registering as One Person Company: -
Documents Required for One Person Company Registration
The followings are the documents required for registration of One Person Company:
The documents must be self-attested. The paper works of NRIs must be notarized or apostilled.
Other Documents required by Registered Office:
Procedure for Registering One Person Company
The applicant should follow the requisite steps for registration of One Person Company:
- Step-1- To Get DSC
For registration, it is required for the applicant to get a Digital Signature Certificate (DSC) issued by the Certifying Authority.
- Step-2- To Get DIN
Director Identification Number (DIN) is for the proposed Director. The DIN is applied in the SPICe Form along with the details of the Director.
- Step-3- Approval of Name
The name of the Company will be in the form of XYZ (OPC) Private Limited.
RUN service will be used to check the availability of names, and one name for the OPC can be applied through SPICe (INC 32).
- Step-4- Incorporation of One Person Company
Within twenty days from the date of approval of RUN, i.e., approval of name form SPICe shall be filed for incorporation of OPC. All the requisite documents shall be attached with the form SPICe and will be uploaded on the MCA portal. The PAN and TAN will automatically generate at the time of incorporation.
- Step-5- Obtaining a Certificate of Incorporation
The Registrar of Companies will issue a COI, i.e Certificate of Incorporation if he finds the information along with the documents appropriate.
Restrictions on One Person Company
CorpBiz Procedure for OPC Registration
It is advisable that an attorney with "Company Incorporation experience" must be appointed to overwhelm many of the potential pitfalls that creep around within OPC Registration and to understand the requirement in detail. Hence, to obtain our service for the given procedure:
The elementary information would be mandatory from your end to start the process. The Attorney will begin working on your request once all the information is provided and the payment is received.