For One Person Company Registration, Documents of one shareholder who will also act as the Director and one Nominee of such shareholder are required. It usually takes 7 working days to register one person company. As the Name suggest, in One Person Company, the Company is owned and managed by One Person only, though documents of 2 people will be needed i.e One for the owner i.e Shareholder who will also act as a Director and another for her nominee. One Person Company is suitable for Individual Entrepreneurs who are looking to run their business as a Corporate entity. The name of One Person Company ends with the suffix (OPC) Private Limited.
Documents Required for One Person Company (OPC) Registration
The following documents are required of One Shareholder who will also act as a Director and His/her Nominee
- PAN Card and Aadhar Card
- Past 2 Months Savings Bank Statement or any Utility Bill in their name
- Photo
- Mobile Number and Email ID
Apart from this, a Utility Bill (not older than 2 months) will be required towards the registered place of Business along with the No Objection Certificate (NOC) from the owner of such property.
One Person Company Registration Process
Step 1: Apply for Digital Signature Certificate (DSC)
Since the process is completely online, hence the sole director or authorized signatory who needs to sign the online incorporation documents must apply for Digital Signature Certificate.
Step 2: Apply for Director Identification Number (DIN)
DIN can be applied along with the company registration application form i.e. SPICe+.
In case the subscriber is already holding a valid active DIN, the proof of identity and residence need not be attached.
Step 3: Apply for Name Approval through SPICe Plus Form – Part A
For the name approval step, now you need to apply it through SPICe Plus form only with the Ministry of Corporate Affairs. Please note that a minimum of 2 names at the time of incorporation are proposed.
Note: As regards the name of a One Person Company, Companies Act, 2013 provides that the words “One Person Company” or “OPC” shall be mentioned in brackets below the name of such company.
Step 4: Submitting Final Incorporation Documents
The Part B of SPICe Plus needs to be filled up and all the required information has to be given. Apart from that Memorandum of Association (MOA) and Articles of association (AOA) of the Company in prescribed format needs to be submitted. Moreover, declaration of all the subscribers and first directors in Form INC-9 needs to be provided.
In addition to the SPICe+ form, a person can now also apply for GSTIN, EPFO, ESIC, Professional Tax etc. through a web form called AGILE-PRO (INC-35) Once you are done with all this, convert the form into pdf format and upload on the MCA website.
Step 5: Receiving Certificate of Incorporation and opening of Bank Account
After approval of incorporation documents, you will receive your Certificate of Incorporation, Company Identification Number (CIN) along with PAN and TAN of your company.
Advantages of Setting Up an OPC
- Limited Liability and Perpetual Succession: An individual can establish a corporate entity with minimal compliance requirements. The status of an OPC ensures that the personal liability of the owner remains limited, and the business continues despite any changes in ownership.
- Simplified Compliance: Unlike private companies, an OPC is exempt from holding general meetings. However, under Section 173(5), at least one Board meeting must be conducted every six months, with a minimum gap of 90 days between meetings.
- Exemptions and Concessions: Provisions of Secretarial Standards 1 and 2, which govern board and general meetings, do not apply to OPCs. Additionally, many exemptions available to private companies are extended to OPCs.
- Ease of Conversion: If an OPC exceeds a paid-up capital of ₹50 lakhs or an annual turnover of ₹2 crores, it must convert into a private company. This transition facilitates scaling up without unnecessary legal hurdles.
Key Rules Governing OPCs
The Companies (Incorporation) Rules, 2014 outline the regulations for OPCs, specifically within Rules 3 to 7A:
- Eligibility Criteria: Only a natural Indian citizen and resident (i.e., one who has stayed in India for at least 182 days in the preceding financial year) can incorporate an OPC.
- Single Membership Rule: An individual can incorporate only one OPC at a time. If a person is a nominee in an existing OPC, they cannot become a member of another OPC.
- Nomination Requirement: The Memorandum of Association must include a nominee’s name who will take over in the event of the member’s death or incapacity. This nomination requires prior written consent and must be filed with the Registrar of Companies (ROC).
- Prohibited Activities: OPCs cannot function as Non-Banking Financial Companies (NBFCs) or invest in the securities of other corporate entities. Additionally, they cannot be formed as Not-for-Profit entities under Section 8.
- Lock-in Period for Conversion: An OPC cannot convert into another form of company for two years unless it exceeds the prescribed financial thresholds.
- Compliance Requirements: OPCs must notify the ROC within six months of exceeding financial limits and initiate the transition to a private or public company.
Nomination and Change in Membership
To ensure business continuity, Rule 4 of the Incorporation Rules mandates the appointment of a nominee. If the nominee withdraws, the sole member must appoint a replacement within 15 days and inform the ROC within 30 days. This mechanism prevents operational disruptions due to unforeseen circumstances.
Characteristics of OPC
- Only a natural person who is an Indian citizen and a resident of India is qualified to incorporate a one-person business and to be nominated as the business’s sole member.
- OPCs are distinct from other business entities in that the sole member of the firm must designate a nominee when the entity is registered. No one is allowed to incorporate more than one One Person Company or join more than one of these companies as a candidate.
- No minor may possess shares with beneficial interests or become a member or nominee of the company.
- The company cannot be incorporated or changed into a company per Section 8 of the Act.
- The company is prohibited from engaging in non-banking financial investment operations, such as purchasing corporate securities.
- The company is prohibited from unilaterally altering its corporate structure till two years have passed since incorporation. Except when the company’s paid-up capital increases by more than 50 lakh rupees or its average annual turnover over the relevant period surpasses two crore rupees.
- When a natural person who is already a member of one OPC joins another by virtue of being a nominee in the said company within one hundred and eighty days, he is required to resign from either of the OPCs.
- Anywhere a firm’s name is printed, attached, or engraved, the words “One Person Company” must be placed in brackets beneath the company name.
The introduction of OPCs has been a significant step towards formalizing solo entrepreneurship in India. It provides individuals with the benefits of a corporate entity while minimizing compliance burdens. However, OPCs are best suited for small-scale businesses due to their financial limitations and conversion requirements. As the Indian business ecosystem evolves, OPCs continue to be a valuable structure for entrepreneurs looking to establish a legally recognized business entity with limited liability and ease of operation.
FAQs on One Person Company
Who is eligible to be a member of an OPC?
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one financial year.
Can a One Person Company Raise funds in the form Equity
Yes, the One Person Company can raise funds in the form of Equity but only from the One Shareholder who Incorporated such Company. That is to say, One Person Company can have only one Shareholder.
