One Person Company Registration

One Person Company

A One Person Company (OPC) is a type of business entity introduced under the Companies Act, 2013 in India. It allows a single entrepreneur to run a company with limited liability, offering a hybrid structure that combines the benefits of a sole proprietorship with some advantages of a private limited company.

Key Features and Advantages of a One Person Company

Single Member: As the name suggests, only one person is required to form and run an OPC. This individual acts as both the director and the shareholder.
Limited Liability: The personal assets of the member are protected from business debts, limiting their liability to the extent of their investment in the company.
Separate Legal Entity: An OPC has a legal existence separate from its owner, providing it with the capacity to enter into contracts, own property, and sue or be sued in its own name. This enhances credibility.
Perpetual Succession: Unlike a sole proprietorship that ceases to exist with the death or incapacity of the owner, an OPC has perpetual succession. The company continues to exist, and a nominee appointed by the original member takes over.
Easier Management: With a single owner, decision-making is quicker and simpler compared to companies with multiple directors or shareholders.
Lower Compliance Burden: OPCs generally have fewer compliance requirements compared to other private limited companies (e.g., exemptions from holding an Annual General Meeting, fewer board meetings required).
Access to Funding: As a registered company, an OPC may find it easier to access loans and other financial assistance from banks and financial institutions compared to a sole proprietorship.
Increased Credibility: Being a registered entity under the Companies Act, an OPC often enjoys greater credibility with customers, suppliers, and other stakeholders.

Benefits of OPC

Limited Liability: Owner’s personal assets are protected.
Separate Legal Identity: Easier to raise funds and establish credibility.
Simple Compliances compared to Pvt. Ltd. company.
Full Control: Sole ownership with limited liability.

Disadvantages of a One Person Company

Limited Capital Infusion: Raising capital can be challenging as there is only one owner, limiting the potential for equity funding.
Restrictions on Certain Activities: OPCs cannot be incorporated as Section 8 (non-profit) companies and cannot voluntarily convert into any other type of company for two years from incorporation.
Higher Tax Liability: OPCs are taxed at the corporate tax rate, which might be higher than the individual income tax rates applicable to sole proprietorships in some cases.
Compliance Requirements (Compared to Sole Proprietorship): While lower than other private limited companies, the compliance burden is still higher than that of a sole proprietorship (e.g., mandatory filing of annual returns and financial statements).
Nominee Requirement: Appointing a nominee is mandatory, which adds another layer to the process.

Eligibility to Form a One Person Company

The person must be a natural person.
Must be an Indian citizen, whether resident in India or otherwise (as per recent amendments).
Must be at least 18 years old.
Cannot be a member or nominee in more than one OPC.
Must not be disqualified under the Companies Act, 2013.

Registration Procedure for a One Person Company

Obtain Digital Signature Certificate (DSC): The proposed director (sole member) needs a DSC to digitally sign the incorporation documents.
Obtain Director Identification Number (DIN): The proposed director must have a DIN. This can now be applied for through the SPICe+ form during incorporation.
Name Approval: Apply for the company name through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form (Part A) on the Ministry of Corporate Affairs (MCA) portal. You can propose a couple of names in order of preference. The name must end with "(OPC) Private Limited".
Prepare Memorandum of Association (MOA) and Articles of Association (AOA): These are the charter documents of the company. The MOA outlines the company's objectives, while the AOA contains the rules and regulations for its internal management.
Nominee Appointment: The sole member must appoint a nominee who will take over in case of their death or incapacity. The nominee's consent in Form INC-3 along with their PAN and Aadhaar card is required.
Prepare Other Necessary Documents:
- Proof of Registered Office: This could be a rental agreement with a No Objection Certificate (NOC) from the landlord or ownership documents (utility bill not older than 2 months).
- Identity and Address Proof of the Director/Member and Nominee: PAN card, Aadhaar card, passport, voter ID, driving license, bank statements, or utility bills (not older than 2 months).
- Declaration and Consent of the proposed Director: Form INC-9 and Form DIR-2.
- Declaration by the professional (Chartered Accountant, Company Secretary, or Advocate) certifying that all compliances have been met.
File Incorporation Documents with MCA: All the above documents are attached to the SPICe+ form (Part B), along with the MOA (SPICe-MOA) and AOA (SPICe-AOA), and uploaded to the MCA portal. The DSC of the director and the certifying professional will be required for signing.
PAN and TAN Application: The application for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) is usually integrated with the SPICe+ form. Separate applications are generally not required.
Certificate of Incorporation: Once the Registrar of Companies (RoC) is satisfied with the documents, they will issue the Certificate of Incorporation, which marks the official registration of the OPC.
Post-Incorporation Formalities:
- Appointment of the first auditor within 30 days of incorporation (Form ADT-1 for subsequent appointments).
- Filing Form INC-20A for commencement of business (not currently mandatory for OPCs but it's good to confirm the latest regulations).
- Opening a bank account in the company's name.
- Obtaining necessary licenses and registrations based on the business activities.
- Maintaining statutory registers and complying with annual filing requirements (financial statements in Form AOC-4, annual return in Form MGT-7A).

Important Considerations:

The entire registration process is now primarily online through the MCA portal.
It's advisable to seek professional help from a lawyer or a company secretary to ensure smooth and accurate registration.
Keep abreast of the latest rules and regulations issued by the Ministry of Corporate Affairs.