All about the OPC Registration Procedure in India
Table of Contents
One person Company and its registration process
One person company was introduced by the company’s Act 2013. There is a requirement of a minimum number of Two members and Two directors in a private company as well as a minimum No of 3 directors along with Seven members in a public company. Earlier a company cannot be register by a single person only.
Such companies are generally formed by a single person. Companies Act, 2013 gives power to a person to establish one person company. An individual cannot establish his/her business before the commencement of section 2(62) under Companies Act, 2013. If he/she wants to set a new business, he has to opt for sole proprietor which needs minimum number of 2 director and 2 members for establishing a company.
According to Section 2(62), only one member and one director can registered a company. Private company has more compliance requirements than that of a one person company.
an individual can start a business with just one member and one director according to the Companies Act of 2013. It is possible for the director and member to be the same individual. As a consequence, a one-person company means that one person, whether a resident or an NRI, can organise a business that has the qualities of a company but the potential benefits of a sole proprietorship.
What is OPC Registration Process?
Step 1: Apply for Digital Signature Certificate (DSC)
Firstly, digital signature certificate of the proposed director is needed with following documents:
- Photo
- Email id
- Proof of address
- Adhaar card
- PAN card
- Phone number
Step 2: Apply for Director Identification Number (DIN)
After taking the Digital Signature Certificate (DSC) from the proposed director next step is to apply for (DIN) in the space attached with the name and address proof of the director. Only existing companies have the option to file Form DIR-3 which means Form DIR-3 need not be filled separately from January 2018. Also, DIN can be applied within SPICe form for up to 3 directors.
Step3: Application for the ROC approval for OPC Name
- Deciding the name of the company is a relevant and second step while incorporating an OPC. Formation of the name will be in the form of ‘’XYZ (OPC) Private Limited’.
- The name of the company gets approval in the Form SPICEe+ 32 also the significance of keeping that name can be given in the Form SPICe+ 32 application.
- After getting the approval from MCA go-ahead for the next upcoming step.
Step 4: Requirement of documents for OPC incorporation
- Preparation of the following documents is mandatory as they need to be submitted to the ROC:
- MOA is essentially required as an object to be followed by company or it will state the business for which the company is going to be incorporated.
- AOA will direct the company for conducting lawful operation.
- A nominee will be required to perform the duty of the member as there is only one director and a member and in case if the director and member will die or become incapable to perform his duty than the nominee will take his place. His consent will be taken with pan card and adhar card in Form INC- 3.
- Proof of the registered office of the company is required with the proof of ownership also a NOC from the owner.
- Also the declaration and consent with of the proposed Director OF Form INC-9 along with DIR-2.
- A declaration certificate is required from the professional that all compliances have ben made.
Step 5 : Filing of OPC incorporation Forms With ROC
All the above documents need to attach with the SPICe Form, SPICE-MOA with DSC of the director and the professional after this upload it to the MCA site for approval.It will automatically generate the Pan number and Tan number while incorporating the company, as a result, no need of filling out a separate application for obtaining the PAN number and Tan number.
Step 6: Finally Issue of the OPC Certificate of Incorporation
On verification, the ROC will issue a Certificate of Incorporation and we can commence our business.
Checklist for One Person Company Registration
- One member is required (Minimum & Maximum 1 Directors)
- Appointment of a nominee before incorporation
- Obtain consent of nominee in Form INC-3
- Selection of the company have to be done according to the provisions of the Companies (Incorporation Rules)2014
- DSC of the proposed director
- Proof of registered of the One Person Company
Time limit for One Person Company Registration
- There is a limited time of one day for obtaining the Digital signature & Director identification No of proposed directors. Also there is a time limit of 3 to 5 days for obtaining the certificate of Incorporation of an One Person Company. The entire process will take time of Ten days subject to departmental approval & revert from the respective dept.
Benefits of one person company
Legal status
- One person company has a status of separate legal entity from the member. A single individual who has incorporated it gets protection from a separate legal entity. The member is not personally liable for eh loss as he/she is limited by liability. Therefore, only One person company can be sued by the creditors and not the director or member.
Easy to get/acquire funds
- As we know One person company is a private company, so it is simple for it to collect funds via capitals, incubators, angel investors etc. A company gets more preference from Banks & financial institutions for loans rather than a proprietorship firm. Hence, OPC becomes easy to collect funds.
Less compliances
- The OPC gets certain exemptions from the Companies Act, 2013 in relation to compliances. There is no obligation on OPC to prepare the cash flow statement. Director of the company signs books of accounts and annual returns it cannot be signed by Company secretary.
Easy incorporation
- There is a requirement of only one member along with one nominee for the incorporation of OPC. The director can be from a member. Rs 1 lakh is required as minimum authorized capital but there is no requirement of minimum paid-up capital. However, it becomes easy to incorporate as compared of other firms.
Easy to conduct/ Mange
- One person company can be established and ruined by a single person, in result managing its affairs becomes easy. Decision making become easy and its procedure becomes quick. Member has the right to pass ordinary and special resolution by entering them into the minute book and it can be duly signed by the sole member. Hence it becomes easy to run and manage the company without any conflict or delay.
Perpetual succession
- There is only one member in One person company still it has the feature of perpetual succession. A nominee has been appointed by a single member in the incorporation of OPC. After the death of the member, the nominee will run the company in the place of the member.
Drawbacks of One person company
Suitable for only small business
- Small business structures can opt for OPC. The OPC can only have one member at all times. It cannot include more members or shareholders in OPC to raise further capital. Thus, more members cannot be included in OPC for the purpose of growth and expansion of business.
Business activities can be restricted
- Non- Banking Financial or Investment activities along with investments in securities of any body corporate cannot be carried by One person company. As per Section 8 of the companies Act, 2013 One-person company cannot convert itself into a company with charitable objects.
Management and Ownership
- There is no difference between management & ownership as the sole member can also become the director of the company. Decisions can be taken or approved by the sole member. Also, there is a thin line between ownership and control which might result in unethical business practices.
FAQ on One Person Company Registration
Q.: Who has the eligibility to hold the position of member in One Person Company?
Ans.: A person who is an Indian citizen and also a resident in India has the eligibility to act as a member and nominee of an OPC. Here, a person is known as a resident of India if stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
Q.: Can a person be a member of more than 1 One person company ?
Ans.: No, a person cannot become a member of more than 1 One person company at a time
Q.: Is there any tax benefit on incorporation of an One person company?
Ans.: No, does not provide any specific tax benefit to an One person company over any other form of company. Also there is a flat tax rate of 30% , other tax provisions like MAT & DDT apply as they apply to any other form of company.
Q.: Is there any threshold limits for an One person company to compulsory get converted into either a private or public company?
Ans.: No, there is no mandatory conversion of One person company is needed upon meeting the criteria of exceeding the minimum paid-up capital and average annual turnover as it was removed from the companies (Incorporation) Amendment Rules, 2021. As a result, now, One person company needs no conversion into either a public or private company upon an increase in its paid-up capital and average annual turnover.
Q.: What is the compulsory applicable compliance that an One person company needs to observe?
Ans.: The basic compulsory One person company compliance comprises as mention below :
- There has to be one board meeting held in each half of the calendar year & there has to be a time gap of not less than 90 days between the two Board Meetings.
- Proper books of accounts need to maintain every year
- Financial statements required to get audited.
- Income tax return of business needs to file every year before 30th September
- Financial statements required to file in Form AOC-4 and ROC Annual return in Form MGT 7.
Q.: Who are not eligible form an One person company?
Ans.: Following are not eligible form a One-person company.
- A minor
- A foreign citizen
- Non-resident
- A person who is incapable by the contract is not eligible to become a member cannot for an One person company.
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