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One Person Company (OPC) Registration in India - Overview

A One Person Company (OPC) is a perfect business type for solo entrepreneurs in India who want the advantages of a registered company coupled with the ease of a single-owner business. A sole person can start and run a business with the benefit of limited liability protection, which protects personal assets from the liabilities of the business. This format is best for small companies and new ventures, offering the advantage of a sole proprietorship with the protection from liability of a private limited company.

Registering a One Person Company (OPC) in India is straightforward but involves several legal steps. First, you must choose a unique business name and get it approved through the Ministry of Corporate Affairs (MCA) portal using the SPICe (Simplified Proforma for Incorporating Company Electronically) form. Next, you need to prepare and file the required company documents namely, the Memorandum of Association (MoA) and Articles of Association (AoA) which define the company’s objectives and operational structure as per the Companies Act, 2013.

Then you'll have to produce evidence of your registered office address and corroborating identity documents. After submitting these documents and having them accepted by the Registrar of Companies (RoC), the company is issued a Certificate of Incorporation, which makes it a registered entity. OPCs have less compliance obligations than other business entities, like private or public limited companies, which means less hassle and less regulatory burdens.

This business type suits businesspersons who want sole authority over their business decisions but would like to enjoy the formal stature of a registered company. Our experienced OPC registration service provides you with guidance at each step to achieve a hassle-free, compliant, and efficient setup process so that you can concentrate on growing your business confidently.

One Person Company in Company Law

Section 2(62) of Companies Act, 2013 defines a one-person company as one that has only one person as its member. Furthermore, members of a company are nothing but shareholders to its memorandum of association. So, an OPC is effectively a company that has only one shareholder as its member.

Features of a One Person Company

An one-person company (OPC) allows a single entrepreneur to operate a corporate entity with limited liability protection, ensuring personal assets are protected. It simplifies compliance and administrative requirements, making it easier for solo entrepreneurs to manage their businesses. Here is a list of the features of a one-person company

• Single Ownership: An OPC is formed by a single person, who is both the shareholder and director.

• Limited Liability: The liability of the member is limited to their shares, protecting personal assets.

• Perpetual Succession: An OPC can continue its existence even after the death or incapacity of the owner, through the nomination of another person.

• Separate Legal Entity: An OPC is a distinct legal entity from its owner, allowing it to own property, sue, and be sued in its own name.

• Minimum Compliance: OPCs have fewer compliance requirements compared to other types of companies, making them easier to manage.

Privileges of One-Person Companies

Registering as a one person company provides many added advantages and functioning ease. Here are some privileges of an one person company

• Simplified Annual Returns Filings: OPCs are required to file fewer documents with the Registrar of Companies.

• Exemptions from Holding Annual General Meetings (AGMs): OPCs are not required to hold AGMs, simplifying their operational processes.

• Access to Loans: Banks and financial institutions are more likely to offer loans to OPCs due to their formal structure and limited liability.

Legal Status and Ownership Pattern

A One Person Company has a special legal status, different from that of sole proprietorships. The ownership pattern of an OPC provides for a single person to own the entire company but with the additional advantage of having a nominee in place. This provides continuity and stability to the business even under unforeseen conditions.

Benefits of a One Person Company

A One Person Company (OPC) provides protection for limited liability, with the personal assets of the owner not being at risk. It also gives a separate legal identity, which adds credibility and continuity to the business. Below are the merits of one person company

• Business Operation Benefits

  • Full Control: As a sole owner and director, the person has full control over the operation of the company and the decisions.

  • Ease of Administration: Since there are less regulatory requirements, OPCs are easier to administer than other forms of company structures.

  • Flexibility: OPCs are easily convertible to other forms of companies as the business expands, offering flexibility for future growth.

• Legal and Compliance Benefits

  • Limited Liability Safeguard: The assets of the owner are safeguarded since their liability is restricted to the amount of investment in the company.

  • Separate Legal Entity: OPCs possess a separate legal personality and a straightforward business structure which allows them to make contracts, own assets, and sue or be sued in their own name.

  • Less Compliance Requirements: OPCs are free from the different compliance requirements that are mandatory for other forms of companies like conducting annual general meetings, having minimum capital requirements and are best suited for small business.

• Funding and Succession Planning

  • Higher Credibility: Since an OPC is a registered company, it usually finds it easier to get bank and financial institution funding.

  • Succession Arrangements: The nominee director facilitates succession if the owner dies or becomes incapacitated, leaving a clear plan of succession.

One Person Company Registration Requirements

For One Person Company (OPC) registration a single person is sufficient as the sole director and shareholder, with a nominee being appointed in the event of the inability of the shareholder. Some One Person Company Registration Requirements are stated below:

Eligibility Criteria for OPC Registration in India

Eligibility conditions for OPC registration in India is noted below:

• Single Shareholder: An OPC can be incorporated by only a natural person, who should be an Indian citizen and resident.

• Nominee Director: The sole shareholder has to nominate a person who will assume charge in the event of their death or disability.

• Not a Minor: The person incorporating the OPC cannot be a minor.

• Capital Requirement: Minimum authorised capital to incorporate OPC is ₹1 lakh but no minimum paid-up capital is required.

• Sole Director: a sole member may also serve as the sole director of the company.

• Nominee Director: The nominee director replaces the sole shareholder in case of his death or incapacity.

• Director's Duties: Directors have to abide by statutory duties and obligations as provided in the Companies Act, 2013.

OPC Registration Documents Required

Below is the list of documents to be submitted for OPC registration in India:

• Director's PAN Card: Copy of the sole shareholder and nominee director's PAN card

• Identity Proof: Aadhar card, Driving License, voter ID, or passport of the sole shareholder and nominee director

• Address Proof: Recent utility bills, including water or electricity bill, Mobile Bill or bank statements of the sole shareholder and nominee director

• Registered Office Address Proof: Rent agreement and a no-objection certificate (NOC) of the property owner, or utility bills in case of ownership of the property

• Passport-Size Photographs: Up-to-date passport-sized photographs of the sole shareholder and nominee director

• Memorandum of Association (MOA): A document that states the purposes and business activities of the company

• Articles of Association (AOA): A document stating the regulations and rules for running the company's internal affairs.

Charter24's OPC Registration Process

Charter24 offers a hassle-free process of registering a One Person Company (OPC) in India.

• Step 1: Consultation

  Pre-monsoon consultation to comprehend the business needs, government charges and eligibility criteria of OPC registration

• Step 2: Documentation

  Help in collating and preparing all documents required, such as identity proof, Aadhaar Card, address proof, No Objection Certificate and registered office proof such as utility bill

• Step 3: DIN and DSC Application

  Submission of Director Identification Number (DIN) and Digital Signature Certificate (DSC) for the sole director.

• Step 4: Name Approval

  We will assist you in registering an exclusive name for your company. We will search for the availability of the name and apply for a proposed company name for name reservation under the Ministry of Corporate Affairs MCA portal.

• Step 5: MOA and AOA Drafting

  Preparing the Memorandum of Association (MOA) and Articles of Association (AOA) according to legal requirements.

• Step 6: Filing Forms

  Submission of the necessary forms (INC-32, INC-33, and INC-34) to the Registrar of Companies (ROC).

• Step 7: Incorporation Certificate

  Obtaining the Certificate of Incorporation from the ROC, marking OPC company incorporation .

• Step 8: PAN and TAN Application

  Help in obtaining the company's PAN and TAN.

• Step 9: Post-Incorporation Support

  Direction on post-incorporation compliance, trademark registration, professional tax, income tax returns, appointment of Company secretary and other legal formalities.

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One Person Company (OPC) Compliance

One Person Company (OPC) has to follow annual filing requirements. Below mentioned is the list of One Person Company compliance :

• Government Laws Impacting OPCs: OPCs need to comply with some government laws to keep their legal status and run seamlessly. Such laws are annual filings, tax requirements, and compliance with corporate governance standards as prescribed in the Companies Act of 2013.

• Significance of One Person Company Annual Compliances

  • Legal Status: Compliance keeps the legal status of the OPC intact and prevents penalties.

  • Business Credibility: Regular compliance enhances the company's credibility with stakeholders, including customers, investors, and financial institutions.

  • Operational Efficiency: Staying compliant helps in smooth business operations and avoids disruptions due to legal issues.

• Benefits of One-Person Company Compliances

  • Avoid Penalties: Timely compliance prevents fines and penalties imposed by regulatory authorities.

  • Enhanced Reputation: A compliant company is perceived as reliable and trustworthy by clients and partners.

  • Access to Finance: Compliance raises the prospect of obtaining loans and investments from investors and financial institutions.

• One-Person Company Mandatory Annual Compliances

  • Annual Return (Form MGT-7): Submission of annual return within 60 days from the Annual General Meeting (AGM) date.

  • Financial Statements (Form AOC-4): Submission of financial statements, including balance sheet and profit and loss account, within 180 days of closure of the financial year.

  • Income Tax Return: Filing the company's income tax return on 30 September of the assessment year.

  • Statutory Audit: Preparing an audit of financial statements by a Chartered Accountant.

  • Board Meetings: Holding at least one board meeting within six months.

• Legal Consequences of Non-Compliance

  • Fines and Penalties: Non-compliance leads to heavy fines and penalties levied by the MCA and other regulatory bodies.

  • Legal Measures: Repeated non-compliance can result in legal measures, including the dissolution of the company.

  • Director Disqualification: Directors of the company could be disqualified from occupying directorships in other companies.

Documents Required for One Person Company's Annual Compliance

To ensure legal compliance and maintain active status, a One Person Company (OPC) must fulfill its annual filing obligations. This involves submitting specific documents to the Ministry of Corporate Affairs (MCA) each financial year. Here is a detailed outline of the same:

• Financial Statements: Balance sheet, profit and loss account, and cash flow statement.

• Audit Report: Report submitted by the statutory auditor.

• Board Meeting Minutes: Documents of board meeting minutes conducted throughout the year.

• Annual Return: MGT-7 form, representing the annual performance of the company.

• Income Tax Return Acknowledgment: Documentation of submission of the income tax return.