Want to start a business individually but with a corporate framework? Companies Act, 2013 has introduced a new form of business known as One Person Company (OPC).
- 0.1 What is One Person Company?
- 0.2 Advantages/Features of One Person Company (OPC)
- 0.3 Documents Required for One Person Company Registration
- 0.4 Complete Procedure to register an OPC:
- 1 Need Help? Please fill below form to Get in touch
What is One Person Company?
One Person Company widely known as One Man Company also, is a hybrid form of Proprietorship firm and a Company. Only one person is the member, who is the sole shareholder of the Company and may act as the director of the Company. The provisions pursuant to Companies Act, 2013 are applicable to OPC, unless otherwise stated. OPC has a limited liability. If you have a business idea, you need not to worry about finding the right partner to give wings to your idea; you can just start your own OPC.
Any person who is an Indian citizen and a resident of India is eligible to incorporate an OPC and can be a nominee of the member of an OPC. If paid up share capital of an OPC exceeds Rs.50 lakhs or its last 3 years average annual turnover exceeds Rs.2 crores it shall be liable to convert into either public or private limited company. Unless 2 years have expired from the date of incorporation of the company, OPC cannot voluntarily convert into any other form of company.
Advantages/Features of One Person Company (OPC)
OPC is a new concept introduced by the Companies Act, 2013 and some of its salient features are:
- It has only one person as a shareholder/member.
- It allows an entrepreneur to run a company as a separate legal entity.
- Only a resident in India can incorporate a Single Person Company.
- Memorandum of Association will prescribe the name of nominee who will take over the business in case of death of sole member.
- The words “One Person Company” should be mandatorily mentioned in the name of the Company.
- Single Owner Company or OPC has a limited liability i.e., the liability of the shareholder of the Company is limited. The personal assets of the shareholder are not at risk in case of liquidation of the Company. For example, if the shareholder acquire shares of Rs. 1,00,000/- the shareholder will be liable only up to Rs. 1,00,000/- and not beyond the same.
- It has all the benefits of private limited company, but is also exempted from some clauses.
- It is not mandatory to hold an Annual General Meeting nor is it compulsory to appoint a Company Secretary.
Documents Required for One Person Company Registration
Complete Procedure to register an OPC:
1. Obtain Digital Signature (DSC) of all directors
The directors have to obtain digital signatures at first. This is important as forms for incorporation are to be digitally signed by the directors.
2. Obtain a unique Director Identification Number
Directors are allotted a unique identification number, known as the Director Identification Number (DIN). DIN is allotted against PAN of the specific director.
3. Select a unique name and get it approved by MCA
The next and most important step is the name of the Company. The name is approved by the Ministry of Corporate affairs, and the Company is to be incorporated within 20 days from receipt of Name Approval Certificate from the ministry.
4. Company Incorporation process with MOA and AOA
As soon as name approval is received, memorandum of association and articles of association of the company are to be finalized and the forms of incorporation are to be uploaded on MCA portal, within 20 days.
5. After Incorporation, obtain PAN and TAN
A certificate of incorporation is received by the Company from MCA and the CIN, PAN and TAN of the Company are mentioned in the certificate of incorporation.
OPC is a company which has one member and has its separate legal existence. All the entrepreneurs who have ideas but have insufficient funds can now start a business by registering as OPC. Some of the advantages of registering an OPC are availing funds, creation of brand value, recognition, taxation benefits, fewer norms etc. In due course of time, OPC has to convert itself in to Private Limited after surpassing certain limits. Hence, If there is only one member, go for OPC instead of Proprietorship. If there are more than one member, a Private Limited Company is always preferable.