One Person Company Registration
Companies Act 2013 gave birth to the concept of One Person Company. Section 2(62) of Companies Act defines ‘One Person Company’ as “a company run by a single person who is acting as a shareholder and director at the same time”. OPC has lower compliance as compared to a Private Limited Company.
Entrepreneurs in the initial stage of their business prefer to create OPCs instead of sole proprietorship business because the advantages that OPCs offer.
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 a company that gives complete authority to the single person to run the business while limiting his liabilities and duties for the business.
Difference between OPCs and Sole Proprietorships
A sole proprietor business may seem similar to a One Person Company in many ways but there are actually some differences between the two.
The major difference is in the nature of the liabilities they carry. One Person Company has its own assets and liabilities. It is a separate legal entity distinguished from its promoter. The promoter of OPC is not personally liable to repay the debts of the company.
In case of sole proprietorship the proprietor and the promoter are the same persons. So, the law allows the attachment and sale of promoter’s own assets in case of non-fulfillment of the business’ liabilities.
Salient Features of One Person Company Registration
OPC is a new concept governed by the Ministry of Corporation under the Companies Act, 2013.
OPC Registration requires only one shareholder to establish a One Person Company in India. The shareholder must have stayed in India for the minimum 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 the responsibility of the shareholder in extreme case of death or incapacity. The nominee should be an Indian citizen and has to give his/her consent as a nominee of the OPC shareholder.
A private limited company requires a minimum number of two directors while public limited requires 7 but OPC registration can be done with minimum one director who himself can be the shareholder and owner of the company. The maximum number of directors an OPC can have is 15.
As per the act, one person company registration can be done with one single member and director, therefore, has less compliance as compared to a private limited company.
Separate Legal Entity
Just like private and public limited companies, OPC is also a separate legal entity.
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 One Person Company
Mostly business personnel prefer to register a Private Limited Company because of its exclusive benefits but they are unaware that OPC can provide them better opportunities with very less compliance.
Some amazing benefits of OPC registration:
Ease In Funding
Just like a private limited company, OPC can also raise its fund through financial institutions, angel investors, venture capitals, etc. An OPC can also graduate itself into a Private 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 pressure of losing 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 can start an OPC by fulfilling the below requirements.
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 play a crucial role 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 and is considered 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 the following 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/She 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?
OPC registration is an easy procedure but to accomplish it you need to collect all the given below documents.
1. Identity proof of the director and nominee
You have to submit an identity proof of the director and nominee. It can either be 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.
3. Consent of the designated Nominee
As discussed earlier, one director and a nominee are required to start an OPC. In case of any mishap, nominee has the authority to take place of the director so that the working of the company won’t be affected. The consent of the designated nominee is filed through the form INC-3. Nominee too has to submit his/her PAN card and Aadhar card for proceedings.
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 place where business activities are performed is submitted 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.
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 essential for the registration purpose. DSC is used to sign the online documents while DIN provides a unique identification number to the director.
What is OPC registration procedure in India?
OPC registration is an online procedure, done as per the provisions of Companies Act, 2013.
Apply for DSC
DSC is obtained by the director to sign all the online documents. It can be obtained from nearby agencies; the fees of obtaining DSC vary from agency to agency.
Application to obtain DIN
Director’s Identification Number can be filed along with the SPICe form. All you need 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.
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. 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 at a time. The name should be unique, reflects the purpose of your company and should be non-offensive. You can avoid resubmission by checking the uniqueness of the name through the free name check availability available at MCA Portal.
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 in the accurate format. Check whether the details of your PAN card matches with the details of your other proof such as address proof. In case of some spelling mistakes, get it corrected before the submission.
Submission of forms
After uploading the documents, 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.
Issuance of Certificate of Incorporation by the authorities
All the documents and forms are verified by the authorities. Once the verification is done Registrar of Companies would issue you a certificate of Incorporation that will contain CIN number.