One Person Company (OPC) Registration in India - Overview
A One Person Company in India is the most recent and a new concept of business that is enforced and proposed by the Companies Act 2013 where the company can be established with just one single person as a member. One Person Company was introduced to support entrepreneurs who are competent of starting a business venture by allowing them to create a single person entity and promote the incorporation of micro-businesses.
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One Person Company registration in India can be obtained under the guidelines of the Companies Act 2013 with one single member and a director. This encourages more people to start their own business easily. The OPC is more suitable for small businesses where the turnover is not likely to cross Rs. 2 Crores. It is to note that for One Person Company Registration, the member should be an Indian citizen and a resident of India.
Nowadays, One Person Companies are benefiting largely in India and is growing across various parts of India. This has greatly influenced more entrepreneurs to start their business more easily and efficiently. By incorporation of OPC, the company can enjoy several privileges in terms of opportunities, incorporation, limited liability, obtaining funds, management of company and much more.
One Person Company Registration Package
- What we provide
- Documents required
- Certificate of Incorporation (CIN)
- Permanent Account Number (PAN)
- Memorandum of Association (eMOA)
- Articles of Association (eAOA)
- Director’s Identification Number (DIN No)
- Digital Signature (DSC)
- GST Registration
- Company 2 Name
- Companies Object
- Address Proof (Rent Agreement, Receipt, Electrical Bill, Owner Property tax)
- Director's PAN, Aadhar, Voter Card
- Director's Electrical Bill
- Director's Driving Licence or Passport (If any)
- Director's Last 6 months Bank statement
- Director's Photo
- Director's Email and Mobile
- Only One Person is required: As the name says only one person can be the shareholder or nominee of the company.
- Resident Director: One director must be a resident of India meaning that he/she has stayed at least for 182 days in the previous financial year and only an Indian resident and citizen can be the shareholder and nominee.
- Capital Requirement: There is no minimum capital required for commencement of business.
- Unique Name of Company: The proposed name of the company should be unique implying that it should not match with the names of other existing company or LLP.
- DSC and DIN: Director Identification Number and Digital Signature Certificate is required
- Signing on annual returns.
1. Documents from Director / Shareholder / Nominee
- Identity Proof: PAN Card/ Aadhar Card/ Passport/ Driving License/ Voter Identity Card
- Address Proof : Any utility bill (telephone/mobile/electricity/bank account statement) not older than 2 months
- Passport size Photographs ( 3 each)
Documents to be Signed by all Director(s)
- Consent to Act as Director: Form DIR-2
- Details for DIN
Address of Registered Office
- NOC from the Owner of property to use it as the Registered Office of the Company.
- Copy of Rent Agreement (in case rented)
- Documents of Property ( if owned)
- Address Proof - In the name of the Owner of Address: Any utility bill not older than 2 months
Let us have a look at the steps for One Person Company Registration Process.
Step 1: Apply for DSC
First apply for DSC for which following documents will be required: Address proof
- Aadhar card
- PAN card
- Email Id
- Phone number
Step 2: Apply for DIN
Once the Digital Signature Certificate (DSC) is obtained, apply for the Director Identification Number (DIN) of the proposed Director in SPICe Form along with the name and the address proof of the director.
Step 3: Name Approval Application
The next step is to finalise the name of the Company which will be in the form of "ABC (OPC) Private Limited".
The name has to be filed in the Form SPICe+ 32 application. Only one preferred name along with the significance of proposing that name can be given in the Form SPICe+ 32 application. If the name gets rejected, another name can be submitted by applying another Form SPICe+ 32 application. Then the name has to get approved by the MCA.
Step 4: Documents Required
Following documents have to be prepared that will be submitted to Registrar of Companies.
- The Memorandum of Association (MoA) which specifies the objectives for which the company is being formed.
- The Articles of the Association (AoA) lays down the rules and regulations that the company will follow.
- Since there are only 1 Director and a member, a nominee on behalf of such a person has to be appointed because in case he becomes incapable or dies and cannot perform his duties the nominee will perform on behalf of the director and inherit his business. His consent in Form INC – 3 has to be submitted along with his PAN card and Aadhar Card.
- Proof of the Registered Office along with the proof of ownership and a NOC from the owner.
- Declaration and Consent of the proposed Director of Form INC -9 and DIR – 2 respectively.
- A declaration by a recognised professional certifying that all compliances have been successfully made.
Step 5: Filing of Forms With MCA
All these documents will be attached to the SPICe Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be submitted to the MCA for approval. The PAN and TAN is generated automatically at the time of incorporation of the Company.
Step 6: Issue of Certificate of Incorporation
Upon verification and approval, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and you can commence your business.
One Person Company enjoys a separate legal entity. As per law, it enjoys the existence of a person that has a common seal, and perpetual succession. It has the authority to exercise all functions of an incorporated person.
OPC has only one shareholder and there is no option of transferring the share because if the share is transferred, the company will lose its identity as a one person company. All the shares of the company are also transferred as then the entire structure and ownership of the company will change. There is no clear guidance or clause that can explain the transfer of shares.
Tax Flexibility and Savings
OPC makes a valid contract with its shareholders or directors. Director’s remuneration, rent, and interest are deductible expenses and this reduces the profitability of the Company, thereby the taxable income of the business is reduced.
Complete Control of the Company with the Single Owner
OPC is managed by a single owner thus there is limited confusion and quick decision-making. Importantly, when there is a sense of ownership thus the business is handled in a better way.
Legal Status and Social Recognition for Your Business
OPC is the most popular form of business and most large organizations prefer to deal with private limited companies rather than proprietorship firms. OPC enjoys a corporate status in society and hires the desired workforce. The workforce can be assigned good positions and thus are interested in the work and give good performance.
Received Interest Rate on Any Late Payment
OPC enjoys several benefits under Enterprises Development Act, 2006 as newly incorporated OPC is a Micro, Small, or Medium as covered under the act. Under the law, if the buyer or seller receives any late payment then they are entitled to receive an interest rate, which is three times the rate of the bank.
Suitable for Small Businesses
If the paid up capital of an OPC exceeds Rs.50 lacs and its annual turnover exceeds Rs.2 crores, then the OPC needs to convert into a private limited company. Hence, while small businesses can benefit from it, the concept is not suitable for the larger ones.
Restrictions on Business Activities
An OPC cannot be incorporated under Section 8 of the Companies Act 2013. OPCs cannot carry out non-banking financial investment activities.
As OPC is deemed as a separate entity under the Income Tax Act, 1961, the tax norms for a private limited company apply to an OPC too. This indicates higher tax rate which is a disadvantage for any company.
Chances of an Unsuccessful Perpetual Succession
In an OPC, the nominee takes charge of the business if the sole member becomes incapable of entering into a legal contract. As the nominee does not take part in the daily operations of the business, there’s a high probability that the perpetual succession might not be as successful.
More Expensive to Start as Compared to Sole Proprietorships
A person willing to start a business alone usually chooses between a sole proprietorship or OPC as both this type allows a single person to start the venture. However, the cost of registering an OPC and its mandatory compliances are much higher than a sole proprietorship.
OPC and Sole Proprietorship sound similar and both involve a single member for establishing a business. OPC and Sole Proprietorship are different in terms of laws and legislations and its activities. OPC is considered as a Private Company having separate legal entity and limited liability. A Sole Proprietorship on the other hand is not a legal entity. Costs are minimal to start this kind of business. Tax returns are signed under the name of the member. They have flexible working hours. They don’t hold annual general meeting or board meeting. Income and losses are taxed on the individual’s personal income tax return. It simply refers to an individual who owns the business and is personally responsible for the debts of the business.
Let's have a glance at the differences between OPC and Sole Proprietorship.
|Basis||Sole Proprietorship||One Person Company|
|Registration||Not Compulsory||Can be registered under MCA and Companies Act 2013|
|Legal status of entity||Not considered as a separate legal entity||Considered as separate legal entity|
|Member's liability||Unlimited liability||Limited to the extent of share capital|
|Minimum number of members||1 Person||1 Person|
|Maximum number of members||1 Person||2 Person|
|Foreign ownership||Not permitted||Allowed if one is the director and the other is the nominee. Both the director and the nominee cannot be foreign citizens|
|Transferability||Not allowed||Allowed to 1 person only|
|Survival||Business comes to end upon death or retirement of the member||Existence is independent of directors or nominee|
|Taxation||Taxed as an individual||Tax rate is 30% on profits plus cess and surcharge|
|Annual filings||Income tax returns with the registrar of the company||Filed with the registrar of the company|
The DSC and DIN of the shareholders and directors can be obtained in 1 day. The Certificate of Incorporation of an OPC is obtained in 3-5 days. The whole incorporation process of an OPC takes approximately 10 to 15 days, subject to approval from respective departments and reverts from the respective departments.
OPC Registration fees can range from Rs. 7,500 to Rs. 20,000.
Tax Seva Kendra is one of the best online OPC consultant in India to help register OPCs in India. We have several years of experience in the application of OPC registration. Tax Seva Kendra has 200+ regional offices in India and expands its network continuously. You can avail our free consultancy service as well. We are time oriented and have complete transparency in our operations.
One Person Company registration or incorporation is the subject of involving a legal process which should be handled by a professional tax consultant. As per the Indian act, a Public Limited Company has a separate legal identity from its owners. A private limited company has no right to raise capital from public or issue shares for public subscription. The registration of Public Limited Company is complicated compared to proprietorship and partnership firm. Tax Seva Kendra offers online incorporation service of One Person Company for Indian citizen at a much affordable price.
How many owners are there in OPC?
As the name suggests OPC has a single owner.
Who is not eligible to incorporate OPC?
Minor, foreign citizen, a person who is not eligible to get into contracts are restricted from forming OPC.
Can OPC be converted into a Private Limited Company?
OPC does not have the option of the transfer of shares but it can be converted into a Private Limited Company.
Who can register one person company?
Any individual who may be a resident of India or NRI can register an OPC in India.
How much capital is to be invested to start OPC?
The least capital required is Rs. 1 Lakh. Authorised capital and investment are different in OPC Company. You can invest as much as you want to but you need to start with Rs.1 Lakh as capital.
What is the difference between Sole Proprietorship and One Person Company?
A Sole Proprietorship is not considered as a separate legal entity unlike an OPC. There is unlimited liability in case of Sole Proprietorship whereas the liability is limited to the extent of share capital in case of OPC. The business comes to an end upon the death/inability of the member in case of Sole Proprietorship but for an OPC, the nominee takes over the business upon death/inability of the member.
Can OPC be converted into Pvt. Ltd?
Voluntary Conversion: If the paid-up capital exceeds Rs. 50 lakhs or if its annual turnover exceeds Rs. 2 crores, then OPC can convert into a private limited company within 2 months.
Mandatory Conversion: In case,
- paid up share capital exceeds Rs. 50 lakhs and
- the yearly turnover of immediately previous three consecutive financial years is more than Rs.2 Crores
It is obligatory for such company to convert into a private limited company within a period of 6 months.
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