What is One Person Company (OPC)?
The concept of One Person Company [OPC] is a new vehicle/form of business, introduced by The Companies Act, 2013, thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework.
One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with concessional/relaxed requirements under the Act.
Digital Signature & DIN
Article of Association and memorandum of association
NPAN & TAN for your company
Compliance with applicable laws
Documents of Directors for DPIN
- Self attested copy of PAN Card or Passport/Voter ID/ Driving License
- Self attested copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Scanned passport-sized photograph
- Specimen signature
FOR THE REGISTERED OFFICE
- Notarised Rental Agreement in English (in case of rented property)
- No-objection Certificate from property owner (in case of rented property)
- Sale Deed/Property Deed in English (in case of owned property)
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Advantage of OPC:
A. Compliance burden:
The One person Company includes in the definition of “Private Limited Company” given under section 2(68) of the Companies Act, 2013. Thus, an OPC will be required to comply with provisions applicable to private companies. However, OPCs have been provided with a number of exemptions and therefore have lesser compliance related burden.
B. Organized Sector of Proprietorship COMPANY:
OPC will bring the unorganized sector of proprietorship into the organized version of a private limited company. Various small and medium enterprises, doing business as sole proprietors, might enter into the corporate domain. The organized version of OPC will open the avenues for more favorable banking facilities. Proprietors always have unlimited liability. If such a proprietor does business through an OPC, then liability of the member is limited.
C. Limited Liability Protection To Directors and Shareholder
The most significant reason for shareholders to incorporate the ‘single-person company’ is certainly the desire for the limited liability.
All unfortunate events in business are not always under an entrepreneur’s control; hence it is important to secure the personal assets of the owner, if the business lands up in crises.
While doing business as a proprietorship firm, the personal assets of the proprietor can be at risk in the event of failure, but this is not the case for a One Person Private Limited Company, as the shareholder liability is limited to his shareholding. This means any loss or debts which is purely of business nature will not impact, personal savings or wealth of an entrepreneur.
D. Minimum Requirements:
- Minimum 1 Shareholder
- Minimum 1 Director
- The director and shareholder can be same person
- Minimum 1 Nominee
- Minimum Share Capital shall be Rs. 1 Lac (INR One Lac)
E. Legal Status And Social Recognition For Your Business
One Person Company is a Private Limited Structure; this is the most popular business structure in the world. Gives suppliers and customers a sense of confidence in business. Large organizations prefer to deal with private limited companies instead of proprietorship firms. This structure enjoys corporate status in society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations, like directorship. These designations cannot be used by proprietorship firms.
F. Easy to Get Loan from Banks
Banking and financial institutions prefer to lend money to the company rather than proprietary firms. In most of the situations Banks insist the entrepreneurs to convert their firm into a Private Limited company before sanctioning funds. So it is better to register your startup as a One Person private limited rather than proprietary firm.
G. Complete Control Of The Company With The Single Owner
This leads to fast decision making and execution. Yet he/she can appoint as many as 15 directors in the OPC for administrative functions, without giving any share to them.
H. Filling with ROC:
- Very few ROC filing is to be filed with the Registrar of Companies (ROC).
- Mandatory rotation of auditor after expiry of maximum term is not applicable.
Frequently asked Questions
1. Who is eligible to act as a member of OPC?
A. 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. 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.
2. A person can be a member in how many OPCs?
A person can be member in only one OPC.
3. How many Directors can we have in One Person Company?
A minimum of 1 Director is required while starting a One Person Company, but an OPC can have up to 15 Directors.
4. What is the concept of Nominee?
The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder. Only a natural person, who is an Indian citizen and resident in India shall be a nominee for the sole member of a One Person Company.
5. What if a member of an OPC becomes a member in another OPC by virtue of being a nominee in that other OPC?
PeWhere a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.
6. Can a minor become the nominee in an OPC
No, A minor cannot become member or nominee of the One Person Company
7. Can an OPC be incorporated /converted in Section 8 Company?
An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].
8. Can an OPC conduct Non-Banking Financial Investment Activities?
An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
9. Is there any threshold limits for an OPC to mandatory get converted into either private or public company?
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.
10. Is there any Form that is to be filed for conversion of an OPC into private or public company?
Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.