The OPC or One Person Company structure is a sole proprietorship business structure refinement. It offers complete authority of the company to a single promoter who is the sole director and shareholder, limiting their liability towards the company. Also, there are no scopes for contributing to equity funding or employee stock options. As per Section 2(62) of the Companies Act of 2013, one-person company registration is legal in India and requires one director and one member to represent the entire company. Also, OPC company registration in India has only a few compliance requirements.
One-Person Company Registration Process
Before enforcing the Companies Act of 2013, a single individual could not form an organization. If they wanted to establish a company, it could be a sole proprietorship business with at least two members and two directors. But as per Section 2(62), now just one director and one member can form a company with the member and the director being the same person. An OPC has all the attributes of a private limited company, like limited liability, separate legal entity and perpetual succession.
Eligibility Criteria for One-Person Company Registration
Though online company registration fees are minimal, individuals need to meet the following eligibility requirements before opting for OPC registration online:
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A resident of India can opt for OPC company registration online in the preceding calendar year.
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The company name must be unique; it should not have any similarity to any existing trademark or company.
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Only one member can establish an OPC.
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A single individual cannot go for more than one online registration of OPC, or a person cannot be the nominee of more than one OPC.
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At least one director should be there.
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The paid-up capital limit for one-person company registration online is INR 50 Lakhs, with an average annual turnover of INR 2 Crore in the preceding fiscal year. Nevertheless, according to the latest budget, there are no paid-up capital and turnover limits for one-person company online registration in India.
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A company should include (OPC) Private Limited in its name for effective and successful online OPC registration.
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There's a prior condition to include the name of some other person as the nominee. So, if a subscriber dies, the nominee becomes an OPC member.
Documents Needed for One-Person Company OPC Registration
Some important documents you need for online one-person company registration are as follows:
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Passport or PAN card
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Scanned transcript of driver's license or voter ID
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Foreign individuals and NRIs should present a passport
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Latest electricity or gas invoice/landline or mobile phone invoice or bank account statement.
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Passport-size photographs
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Specimen signature
All these documents should be self-attested, and those from NRIs must be apostilled or notarized.
One-person company registration in Bangalore may also require the following documents:
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Scanned transcript of the rental agreement.
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Scanned transcript of band account statement/landline or mobile phone invoice and electricity or gas invoice.
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Scanned transcript of NOC or No Objection Certificate from the land owner. If the member is the property owner, he or she must present a scanned transcript of the sale deed.
Steps to Follow in One Person Company Registration Procedure
Applicants must follow the steps below for one-person company registration in India:
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Online application for OPC registration starts with applying for DSC or Digital Signature Certificate, which the Certifying Authority issues.
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You must apply for the DIN or Director Identification Number in the SPICe+ Form along with all details of the Director. The DIN is for the proposed company director.
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The next step is company name approval. The company name should be XYZ OPC Private Limited Company. At this step, you can use the RUN service to check name availability and apply for one OPC name through SPICe+ (INC 32).
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You must file a SPICe+ form for OPC registration within 20 days of the approval date of the company name, along with all documents. Once you upload everything on the MCA portal, it will automatically generate your TAN and PAN.
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The Registrar of Companies will give the COI or Certificate of Incorporation if they find all your documents and details appropriate.
It takes just one day to obtain the DIN and DSC of the proposed directors while obtaining the Certificate of Incorporation takes 3 to 5 days upon due payment of the one-person company registration fees. On that note, the one-person company registration charges will not be too high if you can find the best online CA services for OPC registration and registration of GST. The entire one-person company registration process in India takes around ten days, provided respective departments revert with the approvals on time.
Limitations of One-Person Company Registration
A few restrictions on one-person company registration include the following:
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Minors cannot hold shares with beneficial interests in an OPC.
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Minors cannot become a nominee or members of an OPC.
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An OPC cannot be converted or registered as a company as per Section 8 of the Companies Act.
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A one-person company cannot opt for voluntary conversion before completing 2 years from the registration date.
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An OPC cannot take up non-banking financial investment activities.
Advantages of OPC Registration
Some primary advantages of OPC registration in India include the following:
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Limited liability protection for the Director's assets.
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It is very easy to manage a one-person company. OPCs do not need to conduct AGMs or annual general meetings and file very few ROC filings with the Registrar of Companies.
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In India, OPCs are considered private limited companies. Therefore, there's better credibility of OPCs in the market with government agencies, vendors and corporate customers willing to work with them.
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Startup entrepreneurs can use the OPC business structure to test their business model and the marketability of their products.
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Since only a single owner controls the company, it takes little time to execute decisions.
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It is easy to sell a one-person company as there's less cost and documentation involved.
Conclusion
So, there you go! You do not need much time to register a one-person company. The provisions for OPC registration in India are present in the Companies Act 2013. Also, OPC registration has several advantages, like limited compliances, limited liability and separate legal entity. However, you can opt for expert advice if you need help with the process.
FAQS
Is registration compulsory for a Person Company?
Yes, one-person company registration is compulsory as it enhances the legitimacy of a business and offers several benefits, such as a secure company name, less compliance, limited liabilities for the director, low-income tax rate, no third-party intervention, easily transferable ownership and perfect for credits and banking loans.
Why is OPC better than private limited?
An OPC is better than a private limited company because it offers the limited liability advantages of a private limited company or PLC and the flexibility of a limited liability company.
What is a dormant company?
A company that cannot meet its annual compliances is dormant and can be struck off anytime. However, reviving a struck-off company for up to 20 years is possible.
What is the Director's Identification Number?
A unique number that all proposed and assigned company directors possess is the Director Identification Number. This number does not expire; a director can have a single DIN.
Is audit compulsory for OPC?
Yes, an audit is mandatory for an OPC. An OPC must appoint a chartered accountant as company auditor to verify its books of accounts and issue a Statutory Audit report.
Can OPC raise funds?
Yes, an OPC can easily raise funds through financial institutions and venture capital. It can also raise funds by transforming into a Private Limited Company.
Is GST mandatory for OPC?
Yes, GST is mandatory for one-person companies involved in product supply and services through different e-commerce platforms.
