One Person Company Registration
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In the Companies Act 2013, a new concept was introduced about an One Person Company. Before Company Act 2013 a minimum of 2 directors and members for a Private Company and a minimum of 3 directors and 7 members for a Public Company were required. There was no opportunity for a single person to open a company.
But after this Act, as per Section 2(62), with just 1 Director and 1 member, a company can be formed. Only a single person is required for opening a One Person Company and he/she can perform both as a shareholder and a director.
Benefits of Registration of Company as an “OPC”
• Independent existence
OPC is considered as a separate legal entity, and in the eyes of the law, One person Company is a person. The person will have a common seal, and perpetual succession and also gets the authority to perform all the functions of an incorporated person.
• Limited liability with greater opportunity
Only one person owns the company, so the liability is limited to the amount of the cost of the share you hold. In an OPC company, the person can take more risks in the business without giving a second thought about harming the loss of personal assets.
• OPC is a separate legal entity and a separate property
One person company is a separate legal entity that can perform all the things that an entrepreneur can do. It gains its own identity and owns its separate property. No member will have any insurable rights in the assets that an OPC owns.
• Only a single owner is all you need for registration of an OPC
For a One Person Company, you are the only owner; you are the shareholder and the director. This makes it easy to establish and run the business without following any long procedures and methods that are adopted in other companies. This sense of belonging encourages the quick decision-making of the owner and the faster growth of the company.
• Flexibility in Taxation
Unlike proprietorship, director’s remuneration is a deductible expense as per income tax law. This feature decreases the profitability of the company and eventually brings down the taxable income of your business.
• Shares Transferability
In a One Person Company, the shareholder is the only owner of the company. Transferring a portion of a share is not feasible as if it is done; the company will cease to be a 'one person' company. If the entire share is transferred, then it will change the entire structure of the company as the owner is changing; thus, it is not practiced in an OPC. Till this issue is not being dealt with we can legally say, transfer of share is not allowed in an OPC.
Guidelines to register a One Person Company
1. The initial step is to obtain the Digital Signature Certificate (DSC) of the proposed Director of the company.
2. After Digital Signature Certificate, you have to apply for the Director Identification Number( DIN) in the SPICe+ Form along with the name and address proof of the director. DIN of 3 individuals can only be apply within the SPICe+ form. In case of more than 3 individuals as a director and shareholder, DIN will be applied separately through form DIR-3.
3. Afterwards, you have to decide on a name for the company. The suffix (OPC) Private Limited will be attached to the company name after a successful registration.
The approval of the name can be done in two ways. One is by making an application in Form SPICe+ and the other process is by using RUN (reserving unique names) Web service of MCA. You have to give one preferred name (two names can be proposed) along with the significance behind keeping that name. MCA also provides one re-submission (RSUB) while reserving Unique Name for the companies.
4. Prepare all the required documents which are to be submitted to the ROC. Prepare Form Spice+ , spice+ MoA (Memorandum of Association) and Spice+ AoA (Articles of the Association), Form AGILE PRO(GST,EPF and ESIC). A nominee has to be appointed because in case the only owner/director/member of the company becomes incapable, then the nominee will take over and perform his duties. The nominee's consent has to be included in Form INC-3 along with his PAN and Aadhar Card. You have to submit the proof of registered office with the proof of ownership along with a NOC from the owner for the proposed Company. Consent of the proposed director is also required in Form DIR-2.
5. After verification of all the documents attach those with SPICe+ Form along with the DSC and upload them to the MCA site.
6. When verification is complete, the ROC (Registrar of Companies) will issue the Certificate of Incorporation along with PAN and TAN and now you can commence your business.
Documents required for registration of an OPC
For proposed Director and nominee of the company:
1. A self-attested copy of the PAN card.
2. Proof of Identity- Voter-Id/Driving License/Passport (Anyone of these and should also be self-attested)
3. Proof of Address- Bank statement/Mobile Bill/Electricity bill (Anyone of these and should not older than 2 months)
4. Mobile number and Email address
5. Passport-sized photo.
Important documents necessary for the Registered Office:
1. Latest Electricity Bill/Water Bill as Proof of registered office with the proof of ownership.
2. NOC (non-objection certificate) from the property land owner.
3. Proof of rental agreement written in English.
4. Print of Sale Deed in English only if the property is owned.
A company that is owned by a single person and the person is the shareholder, director, and member of the company is called One Person Company or OPC. It is a new concept that is introduced in the Company Act 2013. Only a single person is required to open an OPC.
If you want full control over your business and don't want to include any other person in your business, then OPC is the best option for you. OPC has no issues regarding share transfer gives you flexibility in taxation, provides a separate legal entity and identity. As only one person is involved in OPC, the liability is limited, and you can make a quick decision and take risks in business for the company’s growth.
OPC can be registered through MCA (Ministry of Corporate Affairs) by submitting the SPICe+ form along with other specified Spice+ MoA, Spice+ AoA, Agile Pro, and the requisite fees.
A person who is an Indian citizen and resident in India can register for a One person company. The person who is registering for an OPC as the director should be of 18 years or above.
Remember, a private company or LLP cannot join OPC. And if the turnover of an OPC cross Rs. 2 crores or has a paid-up capital of more than 50 lakhs, then the company needs to be transformed into a private or public company within 6 months.
As per the Companies Act 2013, an OPC registration must require one person as a shareholder and director. There should be a nominee for the company. The age of the person who is registering for OPC must be 18 or above and should have all the basic documents related to his identity and address proof.
The beauty of one person company is, there are no minimum capital requirements for the company registration. You can register your OPC company with a capital of rupees 10.
One Person Company has no such drawbacks; rather, it has several benefits over private and public companies. But there is one problem regarding capital, as the turnover of the company goes over 2cr or if the paid-up amount is over 50 lakhs, then it is mandatory to convert your company into Pvt Limited within 6 months.
The turnover of an One person company should be under 2 cr. If this limit is crossed, that means if the yearly turnover of the company crosses over 2 cr, then you need to convert your OPC into a private limited or public company.
In a One Person Company, there is only one person as shareholder and director. Suppose the current shareholder of the OPC becomes incapable of performing his/her duty or any miss-happening occurs. In that case, there must be a person who can take responsibility for the company after the director. That’s why MCA has mandated the presence of a nominee in the incorporation of an OPC.
There is no minimum value or limit to the capital which must be required for an OPC Incorporation. You can start your One Person Company with whatever amount of capital you want.
The basic difference is one person company is registered through MCA while on the other hand other forms of business like a partnership, or sole proprietorship is not registered through MCA. The entity of the company, the liability, taxation, and succession, everything is the difference points between OPC and other business forms.
In an OPC liability is limited as you are the only director and shareholder of the company is liable to pay only that much amount which has been invested or contributed to the company as shares. In case of any debt arises, your assets will be unchanged.
Only a citizen of India who resident in India is eligible to be a member or act as a nominee of the OPC. The age of the performing director or nominee should be 18 or above. The person should be resident in India for not less than 182 days during the instantly heading business year for the registration process.
Registering for a One Person Company can be beneficial in many ways. OPC has its separate identity and separate legal entity. The liability of OPC is limited. Being the only one owner, you can take risks for your company without a worry, making quick-decision, and running the business becomes easy. There are so many advantages of OPC over other business forms.