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One Person Company

Advantages

  • Limited Liability Protection
  • to Director’s personal assets
  • Separate Legal Entity
  • Perpetual Existence
  • Best option for single owners
  • Less Procedural Compliances

Minimum Requirements

  • Minimum One Director
  • Minimum One Nominee
  • No Minimum Capital required
  • DSC of the director
  • Director shall be Indian resident

Meaning Of One Person Company

According to Section 2(62) of Companies Act, a one-person company is a business entity which has only one individual as its member. Moreover, the company’s members are nothing but either the subscribers to the company’s MOA (memorandum of association) or its shareholders.

Therefore, an OPC can be defined as a company which has a single shareholder as its member.

One Person Company (OPC) registration is a new concept that surpasses the limitations of resources, time and mediums to get more partners for the execution of business plans and enables us to promote the incorporation of micro-businesses & accomplish our entrepreneurial dreams.

OPC can also be considered as the combination of Company and Sole proprietorship. OPC can be registered as a one-person company under Section 2(62) of the Companies Act, 2013 and the rules thereto. The absence of complexities that comes with multiple partners, motivates many people to incorporate an OPC to start their business. Besides, Limited Liability also bolsters the incorporation of OPCs.

Rationale Behind One Person Company

  • An individual can easily transform the business idea into a corporate form.
  • Limited Liability
  • OPC can be solely carried out by the same person.
  • Limited resources are adequate in OPC.
  • No minimum paid-up share capital under the Companies Act, 2013.
  • No perpetual succession

Benefits of One Person Company

  • Limited Liability

Company’s member holds liability to the limit of his share in the company. In an OPC, one person has the complete share and entire authority over the business’s operations. Therefore, the liability of the person is limited to the investment made by him/her.

  • Independent Existence

One Person Company has a separate legal entity and independent existence.

  • Less Tax Burden

In OPC, you can receive remuneration as a director and rent as a lessor. Also, as a creditor, you can advance funds to your commercial entity and earn interest. Rent, Directors’ remuneration and interest are deductible expenses which reduce the profitability of the Company and thus reduces the taxable income of the business entity.

  • Quicker Actions

OPC is entirely ruled and managed by one owner which results in fast decision making and quicker actions.

  • No requirement of minimum capital contribution
  • Compulsory Audit is required only when the Contribution exceeds 25 lakhs or the Annual Turnover exceeds 40 Lakhs

Other Provisions Related With One Person Company

  • An OPC can be started with a minimum Authorized Capital of Rs. 1 lakh. There is no mandatory requirement for a minimum paid-up capital. Hence, you can start as an OPC with a capital contribution as low as Rs. 2. However, when the paid-up capital exceeds Rs. 50 lakh, OPC must mandatorily convert to a Private Limited Company. Also, when the average turnover for 3 consecutive years becomes Rs. 2 crores or more, there is a need to convert into a Private Limited Company.
  • Such a company cannot be incorporated or converted into a Company under Section 8 of the Act.
  • Such Company cannot carry out non-banking financial investment activities including investment in securities of any Body Corporate.
  • No such company can convert voluntarily into any kind of company unless two years is expired from the date of incorporation of one person company, except the threshold limit (Paid Up Share Capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds Two Crore Rupees.
  • Compulsory Conversion of OPC into Private or Public Company: –OPC Shall be required to convert itself, either into a Private Company or a Public Company as per provisions of this Act, within a period of 6 months from the date:-
  1. On which it’s paid-up share capital has been increased beyond 50 Lakhs Rupees; or
  2. On the last day of the relevant period during which it’s average annual turnover exceeds 2 Crore Rupees;
  • Note: – “Relevant Period” Means A Period of Immediately 3 Preceding Consecutive Financial Years.

Documents Required For Incorporation Of A One Person Company

Companies Act, 2013 has listed the following requirements for the incorporation of a Pvt. Ltd. companY

Minimum One Directors

Member: Member is a person who buys and holds shares in a company having a share capital. They become a member once their name is entered on the register of members. Director: A director is a person who leads or supervises a particular business of a company.

PAN Card

Self-attested PAN Card of Members and Directors.

Identity Proof of Directors

Self-attested ID proof of Members and Directors- (Anyone out of the following -Valid Passport/Voter ID/Aadhar Card/Valid Driving License)

Address Proof

Self-attested Address Proof of Members and Directors and Should Not be Older than 2 Months (Anyone out of the following – Bank Statement/Electricity Bill/Telephone Bill/Mobile Bill)

Passport Size Photo

Passport Size Photo 2-2 Passport Size Colored Photos of Members and Directors.

Business Address Proof (Owned/Rent/Leased)

NOC from the Owner of Property/Property Papers (Title Deed)/Utility Bill (Either Electricity Bill or Mobile Bill or Telephone Bill) (Should Not be Older than 2 Months)

Requirement Of Information

  • Authorized and Paid-up Share Capital of the Proposed Company. Explanation: A Company can be started with any amount of capital.
    There is no need for a minimum amount of capital of Rs. 100,000.
  • Place of Birth and Duration of Stay of Sole Member, Nominee and Director at Present Residential Address.
  • Occupation of Sole Member, Nominee and Director.
  • Proposed Object/Business of the Proposed Company.
  • Educational Qualification of Sole Member, Nominee and Director.
  • Email IDs and Contact Number of Sole Member, Nominee and Director.

Registration Process of One Person Company

The Ministry of Corporate Affairs vides its notification dated 18th February 2020 effective from 23rd February 2020 has further amended the Companies (Incorporation) Rules, 2014 thereby substituting the old Form INC-32 (SPICe) with web service SPICe+ along with certain other amendments.

1. Acquirement of Members’ Digital Signatures

Obtain digital signature of the proposed member and OPC

2. Application for Name Reservation

The second step is to make an application for reservation of name which shall be reserved by using the web services (SPICe+) available at www.mca.gov.in along with the specified fees. Before Applying for a name, kindly check that the name is available on MCA as well as no trademark is there no such name under the Class of work you are going to apply for. Click on the link- Trademark Registration, to check.

The new integrated form consists of two parts i.e. PART A and Part B. The Name(s) of a company can be reserved in Part A of SPICe+. In case the applicant wants to apply for name, incorporation and other integrated services together, he can do so together by filling necessary information in Part A and Part B.

3. Filing Part B of SPICe+

The third step is to fill the Part B of SPICe+ for registering the Company. The said form contains various sections which allow you to save and modify information if required.

Following attachments are required while filing PART B:-

  • Consent to act as Director in Form DIR-2
  • Self-attested copy of PAN of all the proposed member/Directors/nominee
  • Self-attested copy of driving license/passport/voter ID card of all the proposed member/Directors/nominee
  • Self-attested copy of bank statement/utility bill (not older than two months) of all the proposed member/Directors/nominee
  • NOC from the owner of the proposed registered office along with utility bills (not older than two months) and ownership proof such as municipal tax paid receipt, sale deed, conveyance, etc.
  • Consent of Nominee in form INC-3
  • Preparation of MOA and AOA electronically.

 

4. Conversion of SPICe+ form into pdf

The fourth step is to convert the SPICe+ form into pdf format to affix the DSC.

5. Filling of AGILE-PRO

The fifth step is to fill the AGILE-PRO, where certain changes have been introduced which are as follows:-

  • Mandatory registration of EPFO and ESIC;
  • Mandatory opening of Bank account ;
  • Facility to obtain the GSTIN using the said form.
  • The said form is also required to be converted into pdf form and DSC is to be affixed.

 

6. Forms Uploading on MCA

After affixing the DSC on the said forms are required to be uploaded on the Ministry of Corporate Affairs following the existing process.

7. Declaration of Company’s Subscribers and first Directors

Declaration of all Subscribers and first Directors of the company which is currently being filed in Form INC-9 will be automatically generated in pdf format and shall be submitted only through Electronic form.

Register your OPC now and give your corporate entity wings to soar high with limited liability protection. Contact us, for more information about OPC Registration.

FAQs on One Person Company

Who is eligible for incorporating a One Person Company?

A natural person who is citizen of India and resident of India:- 
  1. is eligible for incorporating an One Person Company; 
  2. shall be a nominee for the sole member of a One Person Company. 

How many One Person Company's can be formed by one person?

A person can only form one One Person Company at a time.

What are the requirements of nomination?

A subscriber to the Memorandum of an One Person Company shall be nominating a person to become the member of the One Person Company in the event of death of the subscriber or in his/her incapacity to contract.

In what form consent of nominee is required and whether he/she can withdraw the same?

A prior consent of nominee shall be required in the e-form INC-3 and yes he/she can withdraw the same by giving a notice in writing and the subscriber has to nominate another person within the 15 days on the receipt of such withdrawal.

Can a subscriber has power to change a nominee?

Yes, the subscriber or the member can do so by giving a notice in writing along the changed name of the person nominated by him at any time and the reason for the change also if the case pertains to death or incapacity to contract then he/she shall nominate another person by following the prescribed procedure.

Can a OPC be converted into a Private Limited Company or a Public Limited Company?

Yes, it is possible convert the One Person Company in Private Limited Company or Public Limited Company. No such Company shall be allowed to convert itself voluntarily into any kind of company unless 2 years have been expired from the date of incorporation, except where the capital or turnover threshold limit has been reached.

Under which circumstances an One Person Company shall be required to convert itself into a Private Limited Company or Public Limited Company?

Compulsory Conversion of OPC into Private or Public Company: –OPC Shall be required to convert itself, either into a Private Company or a Public Company as per provisions of this Act, within a period of 6 months from the date:-
  1. On which it’s paid-up share capital has been increased beyond 50 Lakhs Rupees; or
  2. On the last day of the relevant period during which it’s average annual turnover exceeds 2 Crore Rupees;
Note: – “Relevant Period” Means A Period of Immediately 3 Preceding Consecutive Financial Years.

Can a Proprietorship business be converted into a One Person Company knowing the fact that the brand name is already established?

Yes , a Proprietorship business can be converted into a One Person can retain the brand name while registering the same on Ministry of Corporate Affairs.

What if the One Person Company makes loss during the year , whether the statutory returns needs to be filed?

Annual Compliances are the mandatory compliances to be carried out despite of the fact that no business transaction was done during the year. Financial Statements shall be filed with the Registrar of Companies within 180 days from the date of incorporation.

Can a One Person Company become a member of another Public Limited Company ?

Yes, there is no such restriction with respect to the One Person Company for becoming a member of Private Limited Company.

What will be the form of One Person Company ?

One Person Company shall be regarded as a Private Limited Company and can be formed as a company limited by a share capital or as a guarantee

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