One Person Company

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    One Person Company

    A One Person Company (OPC) is a type of business that works well for someone who wants to run their company alone. It’s like having the best parts of being the only owner and also being a company. This means you don’t need to look for partners to start your own official business. OPC makes it easier for people who run their businesses alone to become more organized like a private company.

    It’s a new way for people who work by themselves and new businesses to get started. The law says in Section 3(1)(c) the Companies Act, 2013, that one person can start an OPC for any legal business. Section 2(62) explains that an OPC is a company with just one person in it. An OPC is seen as a private company. It has only one person who is both the director and the shareholder. Now, a person can run their business alone but with less risk. The OPC shows how the business world in our country is growing and changing.

    Advantages of Setting Up a One Person Company

    A One Person Company (OPC) is a business that can be started by just one Director and one member. It’s a good choice for those looking for more opportunities with fewer rules to follow. 

    Straightforward Setup: With an OPC, a single individual can launch a business with minimal rules to follow. To set up an OPC, you only need one member and a nominee. There’s no need for initial capital.

    Simple Ownership Control: Being the only person in the company means you have all the control. Making decisions is faster and easier without anyone else’s input. This makes running and managing the company straightforward.

    Lesser Rules and Tax Benefits: The law gives OPCs fewer rules to follow, which means less paperwork and time spent on formalities. OPCs don’t have to report their cash flow and they get tax benefits too. The Director just needs to keep track of the finances and file yearly reports. 

    Help for Small Businesses: OPCs get the same help as small businesses, like easy access to money, fewer rules, and lower interest loans. 

    Access to Funds: OPCs can get money from banks, investors, and venture capital. If needed, an OPC can become a private company to get more funding. 

    Easy Registration: Registering an OPC is simpler than other companies, with fewer requirements. 

    Better Trust: Since an OPC has one owner who audits the accounts every year, people trust it more. 

    Growth Potential: An OPC focuses on one owner’s vision, leading to significant growth and a positive impact on the economy.

    Support for Specific Sectors: OPCs help sectors like MSME and SME grow, especially in rural areas.

    With financial support from the government and limited liability, OPCs can thrive without the worry of debt. This helps improve the reputation and growth of these sectors.

    Characteristics of a One Person Company

    Continuity of Existence

    A One Person Company (OPC) continues even if the sole member passes away. In such an event, a pre-selected nominee will take over the company’s operations. 

    Limited Liability and Distinct Identity

    The member of an OPC enjoys limited liability, meaning their personal assets are protected. The OPC is its own legal entity, separate from the member, which means only the company can be held accountable for its debts.

    Nomination Process

    A nominee is chosen with their consent and listed in the company’s founding documents. This nominee steps in if the original member can no longer manage the company. 

    Single Director and Shareholder

    The sole member of an OPC also serves as its director, streamlining decision-making and management without the need for additional directors or shareholders. 

    Property Ownership

    The OPC, as a legal ‘person,’ owns all business-related assets, including land, buildings, and machinery. These assets are solely in the company’s name, ensuring no personal claims can be made against them. The OPC has the right to buy, sell, and hold property on its behalf.

    Eligibility Criteria for Registering One Person Company

    To register a One Person Company (OPC), you need to meet these criteria:

    • Residency: You must be a natural person and a resident of India in the last calendar year.
    • Membership: Only one person can establish an OPC.
    • Unique Name: The OPC’s name must be distinct and not resemble any existing company or trademark.
    • Limit on OPCs: You can’t set up more than one OPC or be a nominee for more than one.
    • Director Requirement: At least one director is necessary for the OPC.
    • Financial Thresholds: Previously, the OPC needed a paid-up capital of Rs 50 lakh and an average annual turnover of Rs 2 crore. But the latest budget has removed these restrictions.
    • Naming Convention: The name of the OPC must include “(OPC) Private Limited”.
    • Nominee Details: You must designate a nominee in the OPC’s founding documents, who will take over if the original member passes away or is unable to contract.

    Necessary Documents Required for One Person Company Registration

    • Identification: PAN card or passport (passport for NRIs and foreign nationals).
    • Address Proof: Scanned copy of voter ID, driver’s license, recent utility bills, or bank statements.
    • Signature: Specimen signature for verification.
    • Photographs: Recent passport-size photos.
    • All documents should be self-attested. For NRIs, documents need to be notarized or apostilled.

    For the Registered Office:

    • Proof of Address: Scanned copy of recent utility bills or bank statements.
    • Rental Agreement: If the office space is rented, a scanned copy of the agreement.
    • Owner’s Consent: NOC from the property owner; if owned, a scanned copy of the sale deed.

    Step by Step Process for Registration

    Here are the steps to register a One Person Company, broken down into simple points:

    1. Digital Signature Certificate (DSC): Get a DSC from a certified authority for registration.
    2. Director Identification Number (DIN): The proposed Director needs to obtain a DIN. This is done using the SPICe+ Form, which includes the Director’s details.
    3. Name Approval: Use the ‘RUN’ (Reserve Unique Name) service to check if the company name is available. Apply for the OPC name in the form of ‘XYZ (OPC) Private Limited’ through SPICe+ (INC 32).
    4. Filing for Incorporation: File the SPICe+ form for incorporation within 20 days of name approval. Attach all required documents and submit them on the MCA portal. PAN and TAN are generated automatically upon incorporation.
    5. Certificate of Incorporation (COI): If the Registrar of Companies verifies the information and documents as correct, they will issue the COI.

    How Corporate Raasta Consulting Makes Process Smoother

    1. Hire an Expert: It’s recommended to hire a lawyer who knows about company registration to avoid common mistakes and understand the details.
    2. Choose a Service Plan: Select a plan that offers the expert help you need.
    3. Ask Questions: If you have any doubts about OPC registration, ask your questions.
    4. Submit Documents: Give all the required documents to the Corporate Raasta Consulting professional.
    5. Fill Out Application: The expert will help you prepare your OPC registration application.
    6. Meet Criteria: Make sure you meet all the criteria before the application is checked.
    7. Complete Steps: Follow all the steps provided by the experts
    8. Receive Registration: Get your OPC registration completed without leaving your home.

    • Only a natural person who is an Indian citizen and resident in India can incorporate an OPC.

    • The nominee is someone you choose when you start your OPC. If something happens to you, the nominee can take over the business. You need to get their consent and include their details in your company’s documents.

    • Yes, it is mandatory for an OPC to have a registered office.

    • Yes, an OPC can be converted into a private company after two years of its incorporation or when it exceeds certain thresholds in revenue or paid-up capital.

    • No, there is no minimum capital requirement for starting an OPC as per the latest provisions.

    • An OPC is taxed at the same rates as other private companies. However, certain tax benefits may apply under the Start-up India scheme if the OPC qualifies as a start-up.

    • Absolutely, you can be the sole director and still hire employees to work for your OPC. The employees won’t have any directorial or ownership rights unless you grant them shares.

    • If your OPC’s turnover crosses the prescribed limits, it must be converted into a private or public company, according to the Companies Act.

    • Yes, an OPC must file annual returns and financial statements with the Registrar of Companies, just like other companies, but the compliance requirements are fewer.

    One Person Company