By - Jagdish Lade
The concept of One Person Company is a form of new business, which is introduced in India by the Companies Act, 2013. OPC supports young entrepreneurs of India who are interested to start their own venture by creating a single person economic entity.
If you want to be only founder or promoter then this One Person Company is the perfect start for you to start your own business. OPC has the biggest advantage over other forms of the company that is only one member in an OPC is required, whereas a minimum of two or more members are required for a Private Limited Company and a Limited Liability Partnership (LLP).
One Person Company behaves has a separate legal entity from its promoter similar to a company. It offers limited liability protection to its sole shareholders and is easy to incorporate.
Though a One Person Company operates as a separate legal entity with a limited liability protection it has some limitations. Like every One Person Company must nominate a Director who will become the owner of the OPC in case the sole Director is disabled.
Secondly, One Person Company must be converted into a Private Limited Company if it has an annual turnover of Rs.50 lakhs and above. If its annual turnover is more than Rs.50 lakhs then it must file audited financial statements like all types of Companies do at the end of each Financial Year.
Features of One Person Company:
- One Person Company has only one person as a member/shareholder.
- Minimum paid up share capital of One Person Company is one lakh rupees (Rs. 1,00,000).
- One Person Company shall indicate the name of the nominee/other person in the memorandum, with his prior written consent.
- The written consent shall be filed with the Registrar at the time of incorporation of the One Person Company along with its M&A (Memorandum and Articles).
- The nominee/ other person can withdraw his consent at any time.
- The member/Shareholder of One Person Company may change the nominee/other person at any time, by giving notice to the other person and intimate the same to Company. Then the Company should intimate the same to the Registrar.
- In case of the death of member/shareholder or his incapacity to contract, then nominee/other person become the member of the Company.
- Member/Shareholder of the One Person Company acts as first director, until the Company appoints director(s).
- One Person Company can appoint maximum 15 directors, but minimum should be one director.
- One Person Company need not to hold any AGM (Annual General Meeting) in each year.
- Cash Flow Statement may not include in the financial statements of One Person Company.
- One Director is sufficient to sign the Financial Statements/Director's Report.
- Within 180 days from the closure of the Financial Year, One Person Company should file the copy of the Financial Statements with Registrar.
Advantages and Benefits of One Person Company :
- Single Promoter
In India, One Person Company is the only one corporate entity that can be started and operated by a single promoter with limited liability protection. These corporate form of legal business entity ensures that OPC has perpetual existence and easy ownership transferability.
- Separate Legal Entity
One Person Company operates as a separate legal entity with a limited liability protection but it has some limitations. Like every One Person Company must nominate a Director who will become the owner of the OPC in case the sole Director is disabled.
- Limited Liability Protection
Many startups in India need to borrow money or they take things on credits. Because of limited liability of one person company, only the investment made in business will be a loss but all the personal assets will be safe.
That means the personal assets of the directors are safe if anything goes wrong with a company or the company goes bankrupt. Whereas in proprietorships and partnerships, your property and personal savings would be at risk in case if you feel to pay the banks debts or loans. If you want to start your own single person company then this is the right choice for you.
- Enable Funding’s
In India, OPC helps startups entrepreneur, to test their business model and upon the successful building of market products they are capable to approach angel investors. On their successful products in the market, they can get required funds from angel investors.
- Owning Property
An OPC operates as a separate legal entity with a limited liability protection, so no Person or Partner can make any claim upon the property of the OPC so long as the OPC is a going concern.
Secondly, you have complete control over the company being only a single owner, this leads to fast decision making and execution.
- Uninterrupted Existence
One Person Company must nominate a Director who will become the owner of the OPC in case the sole Director is disabled. That means OPC has ‘perpetual succession’, which is a continued existence of the OPC in case of owners death. It continues to exits.
- Easy Transferability
The ownership of an OPC can be easily transferred to another person. The business can be transferred to another person by simply transferring shares. In an OPC the ownership of the business can be transferred by altering the shareholding, directorship and nominee director information.
- Easy to Sell OPC
Yes, OPC is the only Company which is easy to sell, very less cost and documentation are involved in selling a One Person company.
- Audit Not Required
OPCs are ideal for startups and small businesses. Entrepreneurs earning a turnover of fewer than 40 Lakhs requires no audit. This is a plus point for startup in India to have a there owned business.
- Cost Required
To set up your own business, the cost required is less as compared to a private limited company and LLP. It requires a minimal cost of forming a company then private limited and LLP.
Minimum Requirement for Registration of OPC Company :
- Minimum 1 shareholder, Nominee, Director.
- Director and Shareholder can be the same person.
- Minimum Authorized Share capital to be Rs.1 Lakh.
- No Capital Requirement.
- At least one Designated Director be an Indian Resident.
- DPIN for all Partners.
- Digital Signature Certificate (DSC) for 1 Promoters & 1 witness.
What is Included in our Package for OPC Registration:
- 1 Digital Signature Certificate
- 1 DPIN
- Company Name Reservation
- Articles of Association (AOA) and Memorandum of Association (MOA)
- Incorporation Certificate
One Person Company Registration Procedure:
Step 1: Digital Signature Certificate (DSC)
To start a registration process, you must apply for the digital signature of the proposed director for the proposed OPC. This is because all the documents for OPC are filed online and are required to be digitally signed.
Step 2: Director Identification Number (DIN)
To proposed an OPC the person or the designated director, who is intended to be designated director must apply for the DPIN (Director Identification Number)
Earlier it so happened that persons who had to apply for DPIN (Designated Partner Identification). Now has to apply for DIN instead of DPIN, every person who will be appointed as a designated director has to apply for DIN.
Step 3: Reservation of Name
Form 1 is filed for the reservation of name of proposed OPC. List of company names closely resembling names of existing companies/OPCs based on the search criteria filled up is provided to you. This will help you in choosing names which is not similar to already existing names. You need to provide six names in the order of preference in Form 1. Company name will be approved as per government norms.
Step 4: Incorporation of OPC
Form 2 is the application form for the incorporation of the OPC. You must keep in mind following points while filing Form 2.
- All the details to be filled correctly by yourself.
- The form must be digitally signed by a person named in the incorporation document as a designated partner having DIN.
- On the submission of the form, if the registrar gets satisfied, then they will register the proposed OPC.
- It takes 15-20 days for the registration of OPC subject to government processing time and submission of necessary documents.
Step 5: File OPC Agreement
With all the documents attached to Spice Form along with Spice MOA and Spice AOA will be uploaded to MCA site for approval. Upon successful approval of form, Form 49A and 49B will be generated for the PAN and TAN generation of the Company which has to be uploaded to MCA after affixing the DSC of the proposed Director.
On successful verification, the ROC will issue a Certificate of Incorporation and we can have our own business.
Documents Required to Register OPC Company :
Here is a list of documents required for registration
- PAN Card of the Director or Nominee.
- Address Proof of the Director or Nominee.
- Utility bill of the proposed registered office of the OPC.
- Proof for Register Office in India.
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