What is One Person Company
Starting a business is the toughest decision one can take but it gives you the maximum fulfilment of your dreams and desires. Your decision to begin your entrepreneurial journey starts with the decision of selecting the right business structure to follow. One Person private Limited Company can be chosen to build a scalable business. It’s the one of the most famous legal structure for the business preferred after private limited company, like any other company it also have multiple benefits such as limited liability, separate legal entity, ease in share transfer etc.
What is One Person Company (OPC)?
Earlier, there was no provision for a single person to start a company on its own without the involvement of any other person. In order to encourage and support entrepreneurs who do not want to involve any other person as an economic entity, the concept of OPC was set in motion through the Companies Act, 2013 under Section 2(62). Under OPC one can avail the benefits of a sole proprietorship and company.
The biggest advantage of OPC is – that there can be only one member as sole owner who will be responsible for all the economic and organisation decisions. It is mostly preferred for the micro-businesses.
Similar to private limited company, an OPC also have a capital requirement. This capital is introduced by the shareholder. The capital amount can be introduced in two forms –
• Authorized share capital
• Paid up capital.
The minimum amount of authorized share capital, with which a company can initiate the registration process, is 1 lac INR. However, there is no minimum cap on limit of paid up capital.
An OPC private limited company also has a certain set of rules and guidelines which are confined in MOA and AOA. Memorandum of Association (MOA) and Articles of Association (AOA) are the master documents of the private limited company determining the guidelines, mutual rights and duties between directors and shareholders. MOA comprises of 6 clauses –
• Name clause – under this the name of the company is specified. The name is selected as per the Rule 8 of Companies Act, 2013. It should not be identical to any existing company’s name or with any trademark.
• Registered Office clause – This clause helps to determine the state jurisdiction of Registrar of Companies.
• Object clause – In this clauses, one defines the object of the company. The object comprises of all the activities or work to be carried in the organization. The company involve in any activities outside their company’s object.
• Liability clause – under this clause, the liability of the shareholders is defined. In case of the company limited by shared, the liability of the members or the shareholders is restricted by the amount each member has agreed to contribute.
• Capital clause – This clauses defines the maximum number of share the company can issue
AOA (articles of association) defines the set of rules and regulations for the management. It lays down the internal guidelines to be followed in the organization.
Is a One-Person Company right for you to start?
If you want to have full control over your business with limited liabilities, then OPC is the best choice to start with. But ensure that you convert your business structure (within six months) to the private limited company after crossing an average turnover of 2 crores over three consecutive years or has a paid-up capital of over 5o lakhs.
Key highlights | Requirements | Documents Required to Register One Person Company
Why to choose OPC –
• Single owner can start their business
• Not affected by the death of a member or shift in ownership.
• Less compliance
• Limited liabilities of its members
• eligible for Banking loans, credits
• No interference from any third person can be involved
Key highlights of OPC private limited company –
• Limited Liability – The limited liability shields the share holders from personal liability and protects from other risks and losses.
• Attracts more vendors as well as employees
• Procures good investment from reliable investors.
• Increases the potential to grow and expand
Requirements for OPC registration –
• Only an Indian Citizen and resident in India can incorporate OPC.
• Entities such a Company or LLP cannot be a director in an OPC.
• The minimum authorised capital required to incorporate is Rs 1,00,000.
• A nominee must be appointed at the time of incorporation.
• Financial activities can’t be carried out in OPC
The Documents Required for Incorporation –
• Identity proof of all Directors (Aadhar card, Driving License, PAN card, Passport)
• Address Proof all directors (Voter ID card, Passport)
• Address proof of company registered office (Rent agreement, Possession letter etc.)
• Electricity Bill of the registered office building
• Bank statement/ passbook of the directors
• Trademark registration Certificate (if any)
Steps to Incorporate OPC (One Person Company)
Step 1: Obtain DSC (Digital Signature Certificate)
• It’s necessary to apply for a Digital signature of the designated partners before starting the company registration.
• The DSC is important as all the documents before submission are required to be digitally signed.
Step 2: Apply for DIN (Director Identification Number)
• The application for DIN is mandatory for each director.
• The DIN application has to make in Form DIR-3.
Step 3: Name Approval and its Reservation
• The name approval is an important step to establish a company.
• RUN (Reserve Unique Name) form is filled for the reservation of the name given by the company.
• The name provided must be as per the rule 8 of Company Registration Act, 2013
Step 4: Preparation of form INC 33 and INC 34
• This step involves the drafting of MOA and AOA. These are drafted under INC 33 and INC 34 respectively.
• If required we can file for ESI, EPF, GST at the same time under the form names AGILE
Step 5: Incorporation of private limited
For the Incorporation of OPC private limited company, the incorporation forms (INC 33, INC 32, AGILE) are uploaded with SPICe form INC 32. These are to be filled with Registrar of companies of the respective state in which the registered office of the company is located.
Step 6: Approval of the documents
Once the SPICe form INC– 32 is approved, the registrar provides the company identification number (CIN) along with PAN and TAN of the company.
Kaushikii Three Easy Steps for OPC Registration
• Fill-up our requirement form
• We’ll collect all your documents and file them directly with the authority
• You’ll receive your completed One-Person Company registration package by E-mail
If above benefits & Liabilities satisfy your business requirement, then OPC might best suit your business needs. Now in order to run One Person Company, a little more preparation will definitely go a long way.
• Our expert CA / CS will help you to identify the various types of licenses /Registration/Permits required to start your One Person Company.
• For example, to start your food business as an OPC, you might need to register with FSSAI or get FSSAI License.
Liabilities of a Private Limited Company
• OPC must nominate a nominee director in the MoA and AoA of the company, the nominee director will become the owner of the OPC in case the sole Director gets disabled.
• NRI’s or Foreign nationals cannot own a One Person Company
• File annual returns with MCA (Ministry of Corporate Affairs)
• Annual account audit by a CA is mandatory
• One Person Company requires filing the annual return with the Income Tax Department