One Person Company Registration in India

One Person Company Registration – An Overview

One Person Company registration was introduced as a whole new concept by The Companies Act, 2013 to safeguard the entrepreneurial interests of solo entrepreneurs in India. This concept provides legal status to OPCs to operate freely in India. Principally, OPC is a company established by a single person who is also responsible for managing its business operations.

An OPC fully functions as any other company and enjoys all features such as limited liability, standing of a separate legal entity and perpetual succession. OPCs provide a gateway to single owners seeking a formal business structure.

However, prior to The Companies Act, 2013 solo entrepreneurs did not have the option to incorporate a single person company. Such people could only set up sole proprietorship. To start a company, a minimum of two directors and two members is a must, which has changed due to the structural framework of an OPC.

Section 2(62) of the Company’s Act 2013 allows the incorporation of a company with just 1 director and 1 member, wherein the director and member can be the same person. OPCs do not have stringent compliances as that of a company. An Indian citizen, or even an NRI, is eligible to incorporate an OPC.

Benefits of One Person Company Registration

One Person Company (OPC) offers various benefits to single entrepreneurs in the business landscape of India. Amongst other benefits, it has simplified the business ownership of a company by a single owner. Let us explore the benefits of OPC in detail below:

1. Simple Incorporation Process – The process to incorporate an OPC is simple and hassle free. It requires just one member and one nominee, and the member can also become the director. However, the OPC needs INR 1 Lakh as the minimum authorised capital, but at the same time, it does not need a minimum paid-up capital.

2. Separate Legal Entity – The OPC is a fully functional separate legal entity. It is entitled to operate its business and conduct operations within the legal and regulatory frameworks. The OPC gives immunity to the person who incorporates it in terms of limiting their liabilities.

3. Limited Liability – Since the OPC is a separate legal entity, it functions independently from the status of its members. It offers protection to its single shareholder by limiting his liabilities to the shares. The single shareholder is not personally liable for any losses that the OPC incurs during the course of its operations. While the OPC can be sued, this does not hold true for the single shareholder as they function independent of each other.

4. Fund Raising Made Easy – OPC is a legal and fully functional private company entitled to raise funds for its operations. OPCs explore various fundraising alternatives such as venture capitals, angel investors, and incubators etc. Since banks and other financial institutions prefer companies over proprietors in lending, it is easy for OPCs to raise funds from them as well.

5. Fewer Compliances – According to The Companies Act, 2013, OPCs have fewer compliances to meet during their incorporation. They are exempt from making cash flow statements. They are also exempt from getting the books of accounts and annual returns signed by the company secretary. Instead, the director of the OPC is eligible to do that.

6. Easy to Manage – Since only one person establishes an OPC, managing its operations is easy because decision-making lies with that single shareholder. It is easy to pass the ordinary and special resolutions by simply entering them into the minute book. The entry requires to be signed by a single member. Therefore, all company matters can be dealt without any conflict of interest and opinions.

7. Perpetual Succession – Despite having one single shareholder, an OPC enjoys the benefit of perpetual succession. At the time of incorporation, the single member appoints a nominee, who, in case of the member’s death or incapacitation, takes over the charge of running the company in his place.

Features of One Person Company (OPC)

One Person Company (OPC) offers a unique business structure to single entrepreneurs so that they can operate their businesses as independent legal entities. Here are the details of some of the important features of an OPC:

1. Private Company – An OPC has been classified as a type of private company with one single shareholder as per Section 3(1)(c) of The Companies Act, 2013.

2. One Member/Shareholder – An OPC is formed with just one member who is also the single shareholder of the company. However, this feature is unique only to an OPC, unlike the other types of private companies.
3. Nominee – One of the important features of an OPC is that it is entitled to a nominee at the time of incorporation. The nominee takes over the business in case of the shareholder’s death or incapacitation to keep the OPC functional.
4. One Director – An OPC needs just one director at the time of its incorporation. It can, however, have a maximum of 15 directors.
5. No Paid-up Share Capital – As per The Companies Act, 2013, an OPC is exempt from producing any amount as the minimum paid-up capital at the time of its incorporation.
6. Annual General Meetings—All OPCs are exempt from hosting annual general meetings for annual performance reviews or to discuss prospective business strategies.
7. Director Remuneration – An OPC is entitled to pay more remuneration to its directors than other companies.
8. Conversion to Private Limited Company – In case the OPC’s paid-up share capital exceeds INR 50 Lakhs or its annual turnover exceeds INR 2 Crores. It is eligible to convert to a private limited company in accordance with compliance and regulations.
9. Exclusive Benefits – An OPC enjoys various exemptions, privileges and benefits exclusive to it, which the other types of private companies do not enjoy.

Eligibility Criteria for One Person Company (OPC) Registration

One has to adhere to specific eligibility criteria to be able to register a One Person Company (OPC) in India. These include the following:

• An OPC can be incorporated only by a natural person who is an Indian citizen and a resident of the country.
• NRIs are now eligible to register for an OPC in India.
• OPCs can be incorporated only by natural persons, and no other legal entity or company is entitled to establish a new OPC.
• The person who intends to incorporate an OPC must have attained the age of 18 years. Age criteria is a must.
• Since an OPC is formed by a single person, therefore it is entitled to just one shareholder and one director.
• It is important for the person incorporating an OPC to appoint a nominee. However, the nominee cannot be the shareholder of the OPC and must be a different person.
• Like the shareholder, the OPC nominee must be an Indian citizen and resident. The nominee takes over the OPC's operations once the shareholder dies or is unable to run the company.
• The shareholder incorporating the OPC must not be disqualified under the Companies Act 2013.
• Not every business can be registered as an OPC in India. Non-profit organizations, banking/ financial institutions, and businesses involved in investing in securities are not eligible to register as OPCs.
• One shareholder is entitled to incorporate just one OPC at a time. If the shareholder has a preexisting OPC, he is not eligible to register another OPC.
• An OPC is not eligible to conduct any activity that is illegal in the eyes of Indian law.
• An OPC is suitable for small-scale business operations with an annual turnover limit not exceeding INR 2 Crore.

Documents Required for One Person Company Registration

The following documents must be submitted to the Registrar of Companies (ROC) to ensure the seamless One Person Company registration:

1. Memorandum of Association (MOA): An MOA is a document that highlights the objectives for which the company has been incorporated.

2. Articles of Association (AOA) – The AOA is the legal document outlining the company’s internal rules, regulations and by-laws.
3. Nominee Appointment – The OPC is registered by a single shareholder and member; therefore, it is mandatory to appoint a nominee who takes charge in case of a shareholder’s incapacitation or death. Along with the nominee’s name, his consent with PAN card and Aadhaar card must also be submitted through Form INC-3.
4. Address Proof of Registered Office – It is mandatory to submit the address proof of the registered office along with ownership proof, and a No Objection Certificate (NOC) from the owner in case the property is rented. The shareholder of the OPC has the option to register the residential address if he does not own a commercial space.
5. Declaration and Consent – It is mandatory to submit the declaration from the proposed director via Form INC-9 and consent via Form DIR-2.
6. Compliance Certificate- It is a document signed by a qualified professional, usually a Company Secretary, stating that the OPC has fulfilled all compliance and regulatory requirements as mandated by the Companies Act, 2013.
7. Identity and Address Proof of Directors – The directors have to furnish the following-

• Aadhar Card
• Driving License
• PAN Card/DIN (Director Identification Number)
• Email address and Mobile Number
• Utility Bills – Electricity/Broadband bills
• Latest Bank Statement (not more than 2 months old)

Procedure for One Person Company (OPC) Registration

Any person who wishes to register One Person Company (OPC) has to submit the duly filled SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which replaced the SPICe form to streamline the incorporation process. OPC registration comprises two phases:

Part 1—The first step of the OPC registration process involves finalising the company name and getting it approved. The next step involves applying for the proposed director's Director Identification Number (DIN) and Permanent Account Number (PAN).

Part 2- The next step requires furnishing incorporation details such as the registered office address for the OPC, share capital information, and details about the director and the shareholder.

Step-By-Step Procedure to Register the One Person Company Includes:

Step 1 – Obtaining a Digital Signature Certificate (DSC)

The first step involves getting a Digital Signature Certificate DSC) for the proposed director. DSC is used to electronically sign all documents related to the incorporation of the OPC.

Step 2 – Obtaining Director Identification Number (DIN)

The next step involves getting a Director Identification Number (DIN) for the proposed director. It can be done by filing the SPICe+ form through the Ministry of Corporate Affairs (MCA).

Step 3 – Reserving the Name for the OPC

The next step involves reserving the name for the OPC. This can be done via the SPICe+ form through the Ministry of Corporate Affairs (MCA) portal. However, one must be careful in choosing a distinct name that does not violate any existing company or trademark.

Step 4 – Preparation of MOA and AOA

The next step involves drafting the Memorandum of Association (MOA) and Articles of Association (AOA) for the OPC. The MOA and AOA outline the company’s objectives, structure, rules and internal regulations.

Step 5 – Submission of Forms

The next step involves the submission of duly filled forms for OPC registration with the Ministry of Corporate Affairs (MCA) portal. The applicant must attach all the relevant documents with the SPICe+ form, including the MOA, AOA, declarations, address proof of the registered office, nominee appointment, and any other documents mandated by the MCA.

Step 6 – Certificate of Incorporation

After the approval of the Registrar of Companies (ROC) and verification of the mandated compliances, the ROC issues the Certificate of Incorporation, signifying the completion of the registration process of the OPC. However, PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are automatically generated during this process. It eliminates the process of applying for these documents separately, saving the time and effort of the applicant.  

The Certificate of Incorporation is the official recognition of the OPC, giving it the legal standing to commence operations in India.

Update on One Person Company Registration

As per The Companies (Incorporation) Amendment Rules, 2023, introduced by the MCA, the shareholder of the One Person Company (OPC) is now required to mention the nominee’s name in the Memorandum of Association (MOA) of the OPC. Nominee name and details must be declared via Form INC-32 (SPICe+).

In accordance with The Companies (Registration Offices and Fees) Rules, 2014, the form and applicable form must be submitted to the Registrar of Companies (ROC) during the incorporation process. Also, the e-memorandum and AOA must be submitted at the same time.

Fees for One Person Company Registration

The professional consultants at Corpbiz offer end-to-end guidance to help you complete the OPC registration process seamlessly. The OPC Registration fees start from INR 7,500, including Digital Signature Fees, Government and Consultation charges.

Timeline for One Person Company Registration

It takes anywhere between 7 to 10 working days to register a One Person Company (OPC) in India. However, this is subject to the verification of documents by the Ministry of Corporate Affairs (MCA) and approval.

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