One Person Company registration in India is a concept introduced under the Companies Act 2013. It allows a single individual to incorporate a company and enjoy the benefits of both a sole proprietorship and a company. This concept was available after the enforcement of the Companies Act 2013.The Companies Act, 2013 introduced the new concept of One Person Company (OPC). As the name suggests, an OPC is a company established by a single person. A single individual establishes and manages the company. An OPC has all the features of a company, such as perpetual succession, limited liability and a separate legal entity.
Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company.
In a Private Company, a minimum of 2 Directors and 2 Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 Members. A single person could not incorporate a Company previously.
As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. The director and member can be the same person. It is a form of a company where the compliance requirements are lesser than that of a private company. Thus, one person company means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.
Advantages of One Person Company (OPC)
- OPC is not required to hold Annual General Meeting
- Individual flexibility that permits the Professional, owner to adopt the kind of business he wants to launch.
- The craving of the innovative individual to face an additional challenge and ability to assume extra liability.
- OPC has various industry specific advantages like that of a Private Limited Company
- It is controlled by people yet OPCs are a different legitimate business like that of any normal corporate business different from its members.
- A One Person Company is incorporated as a private limited company.
- In contrast to a private or public limited company, OPCs are not burdened with a lot of compliances
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.
Documents Required for One Person Company Registration
- Identity and Address Proof of Director and Nominee
- Scanned copy of PAN Card (Passport in case of Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License (Any one)
- A Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill of the individual (Any one, not older than two months)
- Form INC-3 duly filled and signed by the Nominee (Format is available on MCA website)
- Registered Office Proof
For online company registration in India, the company must have a registered office in India. Following documents needs to be mandatorily provided while giving Registered Office details:- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill in case you own property
- Scanned copy of Notarized rental agreement
- A Scanned copy of No-objection certificate from the property owner
Registration Process of One Person Company Registration
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.
FAQs
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.
Is there any tax advantage on forming an OPC?
There is no specific tax advantage to an OPC over any other form of company. The tax rate is flat 30%, other tax provisions like MAT & Dividend Distribution Tax (DDT) apply as they apply to any other form of company.