Knovalt
  • Contact Us
    +91 9871555311
  • Our Address
    310, 3rd floor, Bhanot Corner, Pamposh Enclave, Greater Kailash 1, New Delhi - 110048

New to site?


Login

Lost password? (X)

Already have an account?


Signup

(X)
Farooq

One Person Company (OPC)

HomeCompanyOne Person Company (OPC)
  • One Person Company registration
24
Feb
One Person Company (OPC)
  • Author
    Rajat Khaneja
  • Comments
    1 Comment
  • Category

 694 total views

One Person Company (OPC) is a new type of business entity that allows a single person to operate a corporate entity with limited liability protection. The concept of One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting and operating a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in a OPC, while a minimum of two members are required for registering and operating a Private Limited Company or a Limited Liability Partnership (LLP).

Similar to a Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate. Though a One Person Company allows a lone Entrepreneur to operate a corporate entity with limited liability protection, a OPC does have a few limitations. For instance, every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the company – who will become the owner of the OPC in the event of death of the Promoter. Also, a One Person Company must be converted into a Private Limited Company if it crosses an average annual turnover of Rs. 2 Crores during the relevant period or paid up share capital of Rs. 50 Lakhs and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. Therefore, it is important for the Entrepreneur to carefully consider the features of a One Person Company prior to incorporation.




FEATURES OF ONE PERSON COMPANY

1. Only One Shareholder:

Only a natural person, who is an Indian citizen and resident in India, shall be eligible to incorporate a One Person Company.

Note: The term “Resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year

2. Nominee for the Shareholder:

The Shareholder shall nominate another person who shall become the shareholder 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.

3. Director:

Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.

TERMS AND RESTRICTIONS OF OPC

  1. A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
  2. Minor can neither become a member or nominee of the One Person Company nor hold share with beneficial interest.
  3. A OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].
  4. A OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate. Thus, one cannot neither do business of Loan nor invest money in securities under OPC.
  5. A OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit i.e. paid up share capital is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e.,

If the Paid-up share capital of the Company crosses Rs. 50 Lakhs or the average annual turnover during the relevant period exceeds Rs. 2 Crores, then the OPC has to be compulsorily converted in to a Private or Public Company, with in a period of Six Months from the date of breaching the above threshold limits.




REASONS TO REGISTER A ONE PERSON COMPANY

  • Single promoter

One Person Company is the only type of corporate entity that can be started and operated by a single promoter with limited liability protection in India. A corporate form of legal entity in One Person Company ensures that the business has perpetual existence and easy ownership transferability.

  • Uninterrupted Existence

A company has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.

  • Borrowing Capacity

Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns. However, a One Person Company cannot issue shares to persons other than the member of OPC, as it can only be owned by one person at all times.

  • Easy Transferability

Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates are sufficient to transfer ownership of a company. In a one person company, the ownership can be transferred by altering the shareholding, directorship and nominee director information.

  • Owning Property

A company being an artificial person, can acquire, own, enjoy and alienate property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc. Further, the nominee director cannot claim any ownership of the company while serving as a nominee director.




REGISTRATION PROCESS

  1. Apply for DSC: The first Step is to obtain the Digital Signature Certificate (DSC) of the proposed Promoter/Director. Copies of following documents are required for obtaining DSC.
  • Address Proof
  • Aadhaar card
  • PAN card
  • Photo
  • Email Id
  • Mobile Phone Number
  1. Name Approval Application: The next step while incorporating a OPC is to decide on the name of the Company. The name of the Company shall be in the form of “ABC (OPC) Private Limited”. One has to apply for name reservation through RUN (Reserve Unique Name) service of Ministry of Corporate Affairs (MCA), which has been introduced by MCA on 26th January, 2018. RUN service can only be used by creating an account on MCA website. At present, only two (2) names can be applied at a time through RUN service. One chance for resubmission of the form under RUN service is also available.Therefore, total four (4) name can be applied. This is a chargeable service and fee has to be paid. If for any reason, applied names are rejected by MCA, new application shall be filed along with fee.
  2. Documents Required: Once the name get approved by MCA, following documents shall be prepared for the purpose of filing them with Registrar of Companies.
  3. Memorandum of Association (MOA) and Articles of Association (AOA): These are the charter documents of the company. MoA is prepared in eSpice form INC 33 (can be downloaded from MCA website www.mca.gov.in). Location of office, main objects, capital, liability, subscriber details are set forth in MOA. AoA is prepared in eSpice form INC 34 (can be downloaded from MCA website www.mca.gov.in). AoA lays down the bylaws on which the company will operate. Note: Include the definition of Private Limited Company as per Section 2(68) and definition of OPC as per Section 2(62) of the Company Act, 2013 in the Definition section of AOA. For MOA objects, click here
  4. Nominee Consent: Since there is only one member and director in OPC, a nominee on behalf of such person has to be appointed. Consent of the Nominee is required to be taken in Form INC – 3 (form available for download on MCA website www.mca.gov.in).
  5. Affidavits and Consent: Affidavits, as required under the Companies Act, 2013 and rules made thereunder, are required to be prepared and executed. Affidavits should be properly stamped and notarised. Note: date of execution of Affidavits and date of Notary should match. Consent of first director is required to be taken in form DIR – 2 (available online).
  6. Registered office: Proof of the registered office of the proposed Company along with the proof of ownership is required. Latest Utility Bill (Government bill) or Lease Agreement or Conveyance deed etc. shall be treated as proof of ownership of registered office. Latest Utility bill (Government or private) shall be required as proof of registered office. No objection certificate from the owner, whose name appears on the proof of ownership, is required. Note: Latest means date of document should not be older than 2 months.
  7. Filing/Approval of forms with MCA: All the aforementioned documents except MOA and AOA shall be attached to eSpice Form (INC 32). Self-attested copy of Proof of identity, PAN and Address proof of the Promoter and Nominee shall also be attached to the form. Director Identification Number, if not available, shall be allotted with the approval of eSpice form (INC 32). Note: Aadhaar Card is considered as identity proof not as address proof. PAN is mandatory. Latest (not older than 2 months) Bank statement/ Mobile phone bill/ Telephone bill are considered as Address proof. Address in Aadhaar Card and Address in Bank statement/ Mobile phone bill/ Telephone bill can be different.
  8. Certificate of Incorporation: After verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation. Thus, OPC registration process is completed and business can be commenced.
  9. PAN and TAN of the company are allocated at the time of approval of aforesaid forms by ROC. PAN is mentioned in the Certificate of Incorporation of the Company.

Note:

  • Once approved, the name shall be available for 20 days. Company registration forms should be filed within 20 days from the date of name approval; otherwise, the reserved name shall get lapsed and application for name reservation shall be filed again.
  • Permanent Account Number (PAN) & Tax Deduction and Collection Account Number (TAN) application forms part of the company registration process now. PAN and TAN forms are filed along with company registration forms. Once the company is registered, Certificate of Incorporation is issued after allotment of PAN & TAN by Income Tax Department. Certificate of Incorporation bears PAN.
  • The forms are required to be certified by a practising professional such as Company Secretary, Chartered Accountant, Cost Accountant or Advocate.
  • It is advisable to submit the forms after checking it thoroughly since 2 chances are available if the forms get rejected due to any deficiency after first submission. In case of failure to submit the complete form in all the submissions, the forms get rejected and the fee paid to MCA also gets forfeited.

Want to register a OPC. Send us your details.





Related Posts
Leave A Comment
One Comment

Leave A Comment