One Person Company

Introduction to One Person Company (OPC)

What Is a One Person Company?

The Companies Act, 2013 introduced the concept of One Person Company (OPC), allowing a single individual to establish a company with the benefits of a corporate structure. OPCs offer features such as limited liability, perpetual succession, and a separate legal entity status. This structure provides an alternative to sole proprietorships, combining simplicity with the advantages of a company.

What Is a One Person Company?

The Companies Act, 2013 introduced the concept of One Person Company (OPC), allowing a single individual to establish a company with the benefits of a corporate structure. OPCs offer features such as limited liability, perpetual succession, and a separate legal entity status. This structure provides an alternative to sole proprietorships, combining simplicity with the advantages of a company.

Procedure for One Person Company Registration

Obtain Digital Signature Certificate (DSC)

  • Required for proposed directors.
    Documents required:-
    Address Proof, Identity Proof, PAN Card, Photograph, Email & Mobile No.

Apply for Director Identification Number (DIN)

  • File e-Form DIR-3 online to get the DIN for the proposed directors.
    Up to three directors can apply for DIN together in the SPICe+ form.

Name Approval

  • Select and provide suitable names proposed for the SPICe+ form. The name should be in the format (ABC) Private Limited.
    If the name is rejected, resubmission can be provided.

Prepare Required Documents

  • Memorandum of Association (MoA).
    Articles of Association (AoA).
    Nominee Consent (Form INC-4).
    Residential Proof.
    Declaration and Consent forms.

File Forms with the Ministry of Corporate Affairs (MCA)

  • Attach all documents in SPICe+, eMoA, eAoA, and AGILE-PRO forms.
    Submit forms online with the DSC of the director and the professional.

Certificate of Incorporation

  • Once submitted, the Registrar of Companies (RoC) issues the certificate of incorporation.
    PAN and TAN are automatically generated.

Advantages of One Person Company (OPC)

Separate Legal Status: Protects the owner’s personal assets from business liabilities.
Ease of Fundraising: Banks and investors prefer companies over sole proprietorships.
Simplified Compliance:
- No requirement for cash flow statements.
- Annual returns can be signed by the director alone.
Easy Incorporation: Requires only one member and one nominee. No minimum paid-up capital.
Efficient Management: Quick decision-making due to single ownership.
Perpetual Succession: The nominee ensures the company continues after the owner’s demise.

FAQ's

1. Who can be a member of an OPC?

Any natural person who is an Indian citizen and resident (staying in India for at least 182 days in the preceding financial year).

2. Can someone be a member of more than one OPC?

No, a person can only be a member of one OPC at a time.

3. Is there a tax advantage for OPCs?

No specific tax benefits. OPCs are taxed at a flat rate of 30%, similar to other companies.

4. Are there any limits for converting an OPC to a private or public company?

No. The mandatory conversion requirement was removed in 2021.

5. What are the compliance requirements for OPCs?

  • At least one board meeting every six months.
  • Maintain proper books of accounts.
  • Annual financial statement audit.
  • File income tax returns by September 30 each year.

6. Who cannot form an OPC?

  • Minors, foreign citizens, non-residents, and individuals legally incapacitated by contract.

7. How to convert an OPC into a private limited company?

  • Pass a special resolution, increase the number of directors and members to two, and obtain a No Objection Certificate (NOC) from creditors.

Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. Procedures, benefits, and outcomes may vary depending on the applicable laws of each state, and responses to frequently asked questions may differ based on individual circumstances.

Advantages of One Person Company (OPC)

Separate Legal Status: Protects the owner’s personal assets from business liabilities.
Ease of Fundraising: Banks and investors prefer companies over sole proprietorships.
Simplified Compliance:
- No requirement for cash flow statements.
- Annual returns can be signed by the director alone.
Easy Incorporation: Requires only one member and one nominee. No minimum paid-up capital.
Efficient Management: Quick decision-making due to single ownership.
Perpetual Succession: The nominee ensures the company continues after the owner’s demise.

FAQ's

1. Who can be a member of an OPC?

Any natural person who is an Indian citizen and resident (staying in India for at least 182 days in the preceding financial year).

2. Can someone be a member of more than one OPC?

No, a person can only be a member of one OPC at a time.

3. Is there a tax advantage for OPCs?

No specific tax benefits. OPCs are taxed at a flat rate of 30%, similar to other companies.

4. Are there any limits for converting an OPC to a private or public company?

No. The mandatory conversion requirement was removed in 2021.

5. What are the compliance requirements for OPCs?

  • At least one board meeting every six months.
  • Maintain proper books of accounts.
  • Annual financial statement audit.
  • File income tax returns by September 30 each year.

6. Who cannot form an OPC?

  • Minors, foreign citizens, non-residents, and individuals legally incapacitated by contract.

7. How to convert an OPC into a private limited company?

  • Pass a special resolution, increase the number of directors and members to two, and obtain a No Objection Certificate (NOC) from creditors.

Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. Procedures, benefits, and outcomes may vary depending on the applicable laws of each state, and responses to frequently asked questions may differ based on individual circumstances.

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