A One Person Company in India was introduced through Companies Act, 2013 The main purpose of an OPC Company registration was to support the entrepreneurs having the capability to start a venture and to form a business with a single person. In an OPC Company, there is only one owner who has limited liabilities and can act as both the director and shareholder. This is the most popular form for small organizations in India. The liability of the owner is limited to the amount of invested capital in the firm.
If an OPC Company exceeds the turnover of over Rs 2 crore or has a paid-up capital above the amount of Rs. 50 lakhs, it must be turned into a private or public limited company within a time span of six months.
Features of OPC Company Registration
Some of the features of One Person Company are as follows:
- Single Member Company: An OPC Company can have only one shareholder or member, unlike to other private companies.
- Private Company: As per S. 3(1)(c) of the Companies Act, 2013 a single person can form a company for lawful purpose. It also explains OPCs as private companies.
- Nominee: One of the unique features of an OPC is that separates it from other kinds of companies is that it has to mention a nominee at the time of registration of the company.
- Minimum One Director: An OPC Company needs to have a minimum of one person. That person can be both members as well as the director. A maximum of 15 directors is permitted in an OPC Company.
- No Perpetual Succession: As there is only one member in an OPC, his death will result in the nominee to choose or reject to become the sole member of the company. In other types of companies, a concept of perpetual succession prevails.
- Special Privileges: An OPC Company can enjoy several privileges and exemptions according to the Companies Act, 2013 that other types of companies don't have.
Benefits of One Person Company Registration
The key Benefits of OPC Registration are as follows:
Limited Liability Protection to Personal Assets of Directors
A startup needs to take things in the credit or borrow money many times. In a simple partnership firm if there is any failure in the repayment of loan the partners personal savings would be at risk. In One Person Company, the personal assets of the directors are safe, only the investment in the business is lost.
Convenience in Raising Funds and Loans
It is very easy to manage an OPC. There are very few ROC filing to be done with the Registrar of Companies (ROC). You don't need to conduct an AGM or Annual General Meeting and other compliances.
Better Image and Credibility in Market
The OPC is a well-known business structure in India. Many vendors, corporate customers and government agencies prefer to deal with this type of company instead of other proprietorship firms.
Transferability of Shares
Since OPC has only one shareholder one does not need to transfer the shares. It is not practical to transfer all the shares as it will entirely change the structure of the company.
Flexibility in Tax and More Savings
A valid contract is made by an OPC amongst its shareholder or directors. The Director's rent, remuneration and interest are a deductible expense that reduces the profitability of the company. Hence, the taxable income of the business decreases.
Single Control Company
An OPC is completely managed and controlled by a single owner. Hence, decision making and its execution is a quick process.
Legal Status
OPC Company is the most desired business structure. Many big companies wish to deal with private limited companies instead of proprietorship firms.
What are the Documents Required for OPC Registration?
The Documents of OPC Registration are as follows:
- PAN Card.
- Adhar Card.
- Passport-Size Colour Photograph.
- Documents of Registered Office.
- Proof of Registered Office Address (Utility Bill in Company's Name) NOC from the Property / Land Owner.
- Constitution Documents.
OPC Company Registration Process
The OPC Company registration process is as follows:
- The minimum paid-up capital must be Rs. 1,00,000.
- Only one person can be its member.
- Apply for Digital Signature Certificate or DSC *
- Apply for Director Identification Number*
- Application for approval of the name
- Required documents to be provided.
- Filing of Forms with the MCA
- Issue Certificate of Incorporation
*For availability of Name under the RUN Web service you don't need to obtain DSC and DIN before. This can be done with the MCA portal.
FAQs
- What do you mean by One Person Company (OPC)?
A One Person Company is a type of company formed with only a single person as to its member unlike the traditional manner of having at least two members.
- Can I appoint more than one director in an OPC?
Yes, there can be more than one director in an OPC. The minimum number of directors in an OPC is one and the maximum is fifteen.
- Is it possible for an NRI to register a One Person Company in India?
No, only an Indian citizen or residents of India can register as a one-person company.
- Is FDI permitted for OPC in India?
No, FDI into an OPC is restricted in India.
- Who all are eliminated from incorporating an OPC?
A Foreign Citizen, a minor, Indian Non-Resident, a person incapacitate has been restricted from forming a One Person Company.
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