|STATUS OF PRIVATE COMPANY
||As per S. 3 of the Companies Act, 2013, OPC is given the status of Private Companies.
|VARIOUS EXEMPTIONS FROM
||An OPC enjoys various statutory exemptions from holding annual or extraordinary general meetings; signature on annual returns can be done by Director himself, restriction on voting rights, demand for the poll, notice for the meeting, Signature on financial statements, etc.
||The liability of the shareholder is limited and personal assets are safe. The liability of the shareholder will only be limited to the unpaid subscription money in his name. OPC is a separate entity and there will be a true distinction between the promoter and the company.
||There is only one owner who can act both as a shareholder as well as the director.
||This leads to fast decision making and execution. Yet he/she can appoint as many as 15 directors in the OPC for administrative functions, without giving any share to them.
|LEGAL STATUS & SOCIAL RECOGNITION
||One Person Company is a Private Limited Structure in the eyes of law, which gives suppliers and customers a sense of confidence in business.
|SEPARATE LEGAL ENTITY
||A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has a wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.
||OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct the Annual General Meeting (AGM), so lesser compliance cost.
||A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
||A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
||Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with a share certificate can easily transfer shares.
||A company being a juristic person, can acquire, own, enjoy and alienate, property in its name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Why should I form an OPC?
An OPC is a good alternative to running a sole proprietorship, largely because it gives limited liability to the business owner. This means that your liability is limited to the amount you’ve invested in the business; business debts cannot be recovered from personal possessions. Also, a sole proprietorship ceases to exist on the death of its promoter. In the case of an OPC, the nominee director takes over and the entity continues to exist. Single entrepreneurs who do not have another partner to start a private limited company may also consider it.
Who can register an OPC?
Only Indian residents can register an OPC, and that, too, only one at a time, as per the specifications of the Ministry of Corporate Affairs.
What are the mandatory requirements of an OPC?
All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.
How much capital is required to start an OPC?
There is no difference in capital requirement between an OPC and a private limited company. It needs an authorized capital of Rs. 1 lakh to begin with, but none of this needs to be paid-up. This means that you don’t need to invest any money into the business.
What are the tax benefits available to an OPC?
No general advantages; though some industry-specific advantages are available. Tax is to be paid a flat rate of 30% on profits, Dividend Distribution Tax applies, as does Minimum Alternate Tax.
What is the main drawback of an OPC?
The MCA is skeptical about a single person in charge of a large corporation. Therefore, it requires all OPCs to be converted into private limited or public limited companies on crossing a certain revenue number. Currently, in case of an average turnover of Rs. 2 crores or more for the three consecutive years or a paid-up capital of over Rs. 50 lakh, the OPC must mandatorily be converted into an OPC.
How many directors can there be in an OPC?
An OPC has certain limitations. The person starting the business is its only director and shareholder. There can be a maximum of 15 directors in OPC. There is also a nominee director, but this person has no power whatsoever for raising equity funds or offer employee stock options. The nominee exists only to take over in case of the death or incapacitation of the director. The nominee is chosen by the director and can be anyone, such as your spouse, parents or siblings. The nominee will need to provide identity proof during registration.
Is OPC is a Private Limited Company?
Yes, One Person Company will be formed as similar to a "Private Limited Company". It can be formed a company limited by share capital or limited by guarantee or unlimited company. The words "One Person Company" will have to be mentioned in brackets below the name of such a company, wherever its name is printed, engraved or affixed.
Is OPC required to follow fewer compliances than a Private Limited Company?
OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct the Annual General Meeting (AGM), so lesser compliance cost than a private limited company.
Who can incorporate an OPC?
Only a person, who is an Indian citizen and resident in India, shall be eligible to incorporate a One Person Company. For becoming a director in a company, no professional or educational qualification is required. Any individual can become a shareholder in a one person company.
What are the Requirements to become nominee in an OPC?
Only a natural person who is an Indian citizen and a resident in India is eligible to be a nominee member. A nominee must also be over 18 years of age.
Can an OPC convert into a Private Limited Company?
When a One Person Company gets incorporated, it cannot convert itself to a Private or Public company for a period of not less than two years from the date of incorporation. Means if you want to get converted voluntarily you have to wait for two years to over.
Compulsory Conversion When a One Person Company has a paid-up capital more or equal to Rs. 50 lakhs or, the Annual turnover for the relevant financial year exceeds Rs. 2 crores, then in such conditions, the company has to compulsorily convert itself into Private Limited Company or Public Limited Company.
How long is the company valid for?
Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and may be struck off from the register after some time. A struck-off Company can be revived for a period of up to 20 years.
Can an NRI / Foreign National be a director in a One Person Company?
No, an NRI or Foreign National cannot be a shareholder for an OPC.
Can a Salaried person become the director in One Person Company?
Yes, a salaried person can become the director in an OPC, there is no legal bondage in this, but you have to go through with your employment agreement if it contains any restrictions on doing so.
How to inform RoC about changes in OPC?
• Change in membership to be informed in Form INC-4 for providing new member’s details.
• Inform RoC in Form INC-5 about the requirement of conversion into the private or public company if the threshold limits exceed within 60 days.
Which form is to be filed for the conversion of OPC?
Form INC-6 shall be filed by an OPC for conversion into the private or public company within 30 days in case of voluntary conversion & within 6 months in case of mandatory conversion.
Which form to be filed in case of a change in Nominee?
Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in the case of intimation of change in nominee by the member.