Expert Assistance

A One Person Company (OPC) is a unique business structure in India that allows a single individual to operate a company with limited liability. Introduced under the Companies Act, 2013, it combines the benefits of a sole proprietorship with the legal protection of a private limited company.

 

Key Features

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• Single Owner: An OPC can have only one member who is the sole director and shareholder.

• Limited Liability: The owner's liability is limited to their investment in the company. Their personal assets are protected from business debts.

• Separate Legal Entity: The OPC is a distinct legal entity from its owner, allowing it to own assets and incur liabilities in its own name.

• Perpetual Succession: The company's existence is not dependent on its sole owner. It continues to exist even after the death or incapacitation of the sole director, as a nominee is appointed to take over.

• Nominee Requirement: It is mandatory for the sole director to appoint a nominee at the time of incorporation. This ensures the continuity of the business.

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Detailed Process for One Person Company (OPC) Registration

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The entire OPC registration process in India is done online through the Ministry of Corporate Affairs (MCA) portal. It is a streamlined, multi-step procedure that typically takes about 10-15 business days, provided all documents are in order.

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Step 1: Obtain a Digital Signature Certificate (DSC)

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• Purpose: All incorporation forms are submitted electronically on the MCA portal. A DSC is a mandatory tool for the sole director to digitally sign these documents.

• Process: The sole director must obtain a Class 3 DSC from a government-certified agency. This requires submitting identity and address proof.

 

Step 2: Apply for Director Identification Number (DIN)

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• Purpose: A DIN is a unique identification number for any individual who intends to be a director of a company.

• Process: The DIN for the sole director is applied for through the integrated SPICe+ form during the incorporation process itself.

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Step 3: Name Approval

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• Purpose: Reserve a unique name for the company that is not already in use by an existing company, LLP, or registered trademark.

• Process: The name application is filed through Part A of the SPICe+ form. The name must end with "(OPC) Private Limited." You can propose up to two names, and the MCA will check for availability. Once approved, the name is reserved for 20 days.

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Step 4: Draft the Memorandum of Association (MoA) and Articles of Association (AoA)

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• Memorandum of Association (MoA): This is the foundational document of the company, stating its name, registered office, objects/business activities, and the capital clause. It also names the nominee.

• Articles of Association (AoA): This document contains the internal rules and regulations for the company's management.

• Consent of Nominee (Form INC-3): A signed consent from the appointed nominee is also required, along with their identity and address proof.

 

Step 5: File the Incorporation Documents (SPICe+ Part B)

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• SPICe+ Form (Part B): This is the core e-form for incorporation. It is filed on the MCA portal and includes:

  • Application for Incorporation: All company details, director and nominee information, and registered office address are filled in here.

  • Attachment of Documents: The drafted MoA and AoA, along with all supporting documents (proof of identity and address for director and nominee, proof of registered office, and NOC), are attached.

  • Application for PAN and TAN: The application for the company's PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) is automatically filed through the same form.

 

Step 6: Verification and Issuance of Certificate of Incorporation

 

• Review by ROC: The Registrar of Companies (ROC) reviews all the submitted documents and forms.

• Issuance: Once satisfied that all legal requirements are met, the ROC issues a Certificate of Incorporation. This is the official document that legally registers your company.

• Allotment: The ROC also generates a Corporate Identification Number (CIN), and the company's PAN and TAN are automatically allotted.

 

Step 7: Post-Incorporation Compliances

 

After the OPC is officially registered, the following steps are crucial

• Bank Account: Open a current bank account in the name of the OPC using the Certificate of Incorporation, CIN, PAN, and TAN.

• Appointment of Auditor: The company must appoint its first statutory auditor within 30 days of incorporation.

• Other Registrations: Depending on the business activities and turnover, the OPC may need to apply for GST registration, a local Shops and Establishments license, or other specific licenses.

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Why Choose a One Person Company (OPC)?

 

Choosing an OPC is a strategic decision for a solo entrepreneur who wants to grow their business while keeping their personal assets safe. It's a bridge between the simplicity of a sole proprietorship and the legal advantages of a private limited company.

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Here’s a breakdown of why an individual would choose an OPC and the benefits it offers

1. Limited Liability Protection

• Separation of Assets: This is the most significant advantage. An OPC is a separate legal entity from its owner. This means the owner's personal assets—like their home, car, or savings—are legally protected from the company's business debts and liabilities. In a sole proprietorship, the owner's liability is unlimited, putting their personal wealth at risk.

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2. Separate Legal Identity and Enhanced Credibility

• Professional Image: Registering an OPC gives the business a formal, corporate identity. This is far more credible than an informal sole proprietorship.

• Building Trust: Suppliers, customers, and banks are more likely to trust and do business with a registered company. This can lead to better business opportunities, more favorable credit terms, and easier access to loans.

• Contracts and Lawsuits: As a separate legal entity, the OPC can enter into contracts, own property, and sue or be sued in its own name.

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3. Perpetual Succession

• Business Continuity: Unlike a sole proprietorship which ceases to exist upon the owner's death or incapacity, an OPC has perpetual succession. The appointed nominee takes over the business, ensuring it continues to operate without any disruption. This provides stability for employees, customers, and stakeholders.

 

4. Access to Funding

• Easier Loans: Banks and financial institutions are more comfortable lending to a registered company with a formal structure than a sole proprietorship. This can make it easier to secure loans for expansion or operational needs.

• Potential for Investment: While OPCs cannot issue shares to the public, they can attract venture capitalists or angel investors by converting to a private limited company in the future.

 

5. Operational and Compliance Benefits

• Complete Control: The sole owner has full control over all business decisions, which leads to swift and efficient management without the need for consensus among multiple partners or directors.

• Relaxed Compliances: Compared to a private limited company, an OPC has fewer compliance requirements, such as no need to hold an Annual General Meeting (AGM) and fewer board meetings. This simplifies the administrative burden.

 

6. Tax Advantages

• Tax Deductions: An OPC is taxed at a corporate rate, which can be lower than individual income tax slabs for higher-income businesses.

• Deductible Expenses: The company can deduct various business expenses from its taxable income, such as salaries, rent, and other operational costs, which can reduce the overall tax liability.

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Key Benefits of an OPC

• Limited Liability: This is the most significant advantage. The owner's personal assets (like their home and savings) are separate from the company's debts and liabilities. In a sole proprietorship, personal assets are at risk.

• Separate Legal Entity: An OPC is a distinct legal entity from its owner. It can enter into contracts, acquire assets, and sue or be sued in its own name. This enhances its credibility with clients, suppliers, and financial institutions.

• Perpetual Succession: Unlike a sole proprietorship, an OPC's existence doesn't depend on its owner. The appointed nominee ensures business continuity in the event of the owner's death or incapacity.

• Complete Control: The sole owner has full authority over all business decisions, allowing for quick, efficient management and a clear vision without needing to consult other partners.

• Easier Access to Funds: Banks and other financial institutions prefer lending to a registered company due to its structured nature and legal recognition. An OPC can also raise capital by converting to a private limited company later.

• Less Compliance Burden: Compared to a private limited company, an OPC has fewer compliance requirements, such as no need for an annual general meeting, making it administratively simpler to run.

• MSME Benefits: OPCs are eligible to be registered as Micro, Small, or Medium Enterprises (MSMEs), which can provide access to various government schemes and benefits like subsidies, lower interest loans, and priority sector lending.