One Person Company (OPC)

With the inception of Companies Act, 2013, concept of One Person Company (OPC) in India was originated to advocate entrepreneurs capable of starting a single person venture and operating in a corporate setup with protection of limited liability. OPC allows negligible interference from third party, making it a more beneficial as well as lucid structure as compared to other entities.

OPC is owned, managed and controlled by a single member who is also the director of OPC. OPCs are one of the major sources of tremendously increasing overall economy of India. Numbers are still rising as more entrepreneurs are coming up and setting their own businesses. It provides opportunities to all the creative minds as well as infuses fresh blood and ideas in the market.

Requirements of incorporating OPC in India

• Member of OPC should be a natural person being Indian citizen and resident of India (Through Companies (Incorporation) Second Amendment Rules, 2021, the residency limit for an Indian citizen to set up an OPC has been reduced from 182 days to 120 days and Non Resident Indians (NRIs) have also been allowed to incorporate OPCs in India)
• OPC allows only one person to be a shareholder
• Digital signature certificate (DSC) of the director
• Consent of nominee in writing
• No minimum capital requirement is prescribed under the law

Our services include

• Name search and approval
• Acquiring DSC
• Obtaining DIN
• Obtaining certificate of incorporation (COI)
• Application for Permanent Account Number (PAN) and Tax Deduction And Collection Account Number (TAN) of the Company
• Appointment of Auditor
• Assistance in opening bank account
• Filing of declaration for commencement of business- INC20A
• 24*7 mail support
  

Documents required for registering OPC

• Following are required for director / member and nominee:

• Copy of PAN
• Copy of Passport/ Driving License/ Voter Identity Card
• Three passport size photographs
• Copy of address proof i.e. any utility bill
• Consent of nominee

• Various Documents to be signed by Director, Shareholder, Nominee Shareholder:

• Declaration in DIR-2 by the Directors.
• Declaration by subscriber and director in INC-9
• Details of Nominee Shareholder.
• Consent of nominee in INC-3

• Following is required for registered office:

• In case of owned premises, house tax receipt or registry proof
• In case of rented premises, latest utility bill or rent agreement and no-objection certificate (NOC) from the owner of rented property

Advantages of registering OPC

• Limited liability: Liability of the single shareholder is limited to the extent of amount of securities subscribed by him but unpaid. Liability of OPC will however, be unlimited in case of any default in repayment of debts or liabilities.
• Separate legal entity: OPC is distinct from its owner i.e. in case of default personal assets of the member will stay protected. The company is unaffected by the death or other departures of its member until it is legally dissolved. It continues to be in existence irrespective of change in ownership.
• Facilitates management: As a result of single person management, decision making is swift and transparent. Conflict of opinion is completely mitigated in such a system. Accountability and answerability is fixed, thus leading to smooth functioning of business operations.
• Lesser compliances: Incorporating OPC in India is hassle-free as no public money is involved and rules are less stringent. Filings with registrar of companies (ROC) are lesser as compared to other forms of doing business. Annual general meetings (AGM) are not mandatory as well as only two board meetings are required in a calendar year.
• Capacity to borrow: Rather than investing in sole proprietorship and partnership, banks and financial institutions rather lend money to OPCs being a company structure regulated by Companies Act. However, it cannot issue securities to different people as it can only be owned by one person at all times.
• Complete control: Entrepreneurs willing to have complete control over their business operations choose this type of organization for conducting business activities in India. OPC can only be owned and operated by a single promoter.
  

Disadvantages of registering OPC in India

• Taxation liability: Income tax rates that apply to private companies are applicable to OPCs as well. In proprietorship, taxes are paid based on slab rates, whereas in OPC 25% flat tax rate is charged on income earned.
• Curbs growth opportunities: As only a single person is involved, growth and success of business operations are dependent upon decisions of a single person. This not only curbs growth opportunities but also scope of creativity is hindered.
• Suitability: This business structure is suitable for small businesses only. OPC cannot raise funds by selling its shares. In OPC, paid-up capital of maximum INR 50 lakhs is allowed and turnover not exceeding INR 2 crores, otherwise needs to be converted into private limited company. (However, these limits have been revised by Companies (Incorporation) Second Amendment Rules, 2021
• Costly structure: As OPC is registered with ROC, it is required to pay fees related to compliances and other government charges. Yearly costs rise as OPC fulfills audit and other regulatory compliances.

The concept of OPC is gaining importance steadily and it is a relief to many businessmen as it aids in evolution of small businesses. It generates employment and boosts economic development leading to overall country’s growth.

For detailed procedure on incorporating one person company in India, click here.