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One Person Company

As per Companies Act, 2013, OPC is defined as a company having one person as its member meaning thereby OPC is effectively a company that has only one shareholder as its member. One of the biggest advantages of an OPC is that there can be only one member in an OPC, while a minimum of two members is required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership. Similar to a Company, an OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is easy to incorporate.

Every OPC must nominate a nominee Director in the MOA or AOA who will become the owner of the OPC in case the promoter Director is disabled. It must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year. Therefore, it is important for the Entrepreneur to carefully consider the features of an OPC before incorporation. Legal Suvidha Providers can help incorporate a One Person Company (OPC) in India. So, before incorporating OPC following things must be kept in mind:

• Only a Natural person who is a resident of India can form OPC but not AOP, Body corporate, Company, etc.
• One can only be the member of one OPC or the nominee of one OPC only.
• Conversion of OPC is necessary after paid-up share capital exceeds Rs. 50 L or the average annual turnover exceeds Rs. 2 Cr. in 3 immediately preceding financial year.
• Rules of OPC do not permit Non-Banking Financial Institutions.
• An OPC should not be confused with Sole proprietorship i.e. promoter is not personally liable in case of an OPC.

Why One Person company?

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.
LIMITED LIABILITY 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.
SINGLE OWNER There is only one owner who can act both as a shareholder as well as the director.
COMPLETE CONTROL 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.
EASY COMPLIANCES 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.
PERPETUAL SUCCESSION 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.
BORROWING CAPACITY 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.
EASY TRANSFERABILITY 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.
OWN PROPERTY 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.

One Person Company Registration Process

Documents required

For Directors & Shareholders

1. Self Attested PAN Card copy

2. Self Attested copy of any one of the Identity Proof(Voter's ID/Passport/Driver's License)

3. Self Attested copy of Address Proof in the name of the director (Any utility bill i.e., mobile bill/water bill/ electricity bill, or bank statement which should not be older than two months)

4. Passport-sized photograph

For Registered Office

1. Rent Agreement (Notarised: For rented property)

2. Sale Deed/Property Deed in English (in case of owned property)

3. No-objection Certificate from the property owner

4. Latest Electricity Bill / Mobile or Telephone Bill / Latest Bank Statement/Gas Bill

Frequently Asked Questions

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.

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.

All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.

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.

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.

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.

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.

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.

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.

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.

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.

Voluntary conversion
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.

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.

No, an NRI or Foreign National cannot be a shareholder for an OPC.

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.

• 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.

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.

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.

Compare your options

Private Limited Company Limited Liability Partnership One Person Company Partnership Firm
Preferred for Start-ups Professional Services Firms Sole Proprietors Small-medium sized businesses
Limited Liability Protection Yes Yes Yes No
Minimum Requirement 2 Shareholders 2 Designated Partners 1 Director
1 Nominee
2 Partners
Fund Raising Options High Low Low Low
Tax Advantage Few Most Few Minimal
Statutory Compliance's High Low High Minimal
Compliance Cost High Medium Medium Low
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