Starts One Person Company Registration from ₹ 10999/
One Person Company Registration
After the emergence of Companies Act 2013 a lot changed in the business environment for its betterment. One such thing was the inception of One person companies. This gave birth to a completely new way of starting businesses that accorded pliability which a company form of entity can put forward, also providing the protection of limited liability that sole proprietorship or partnerships be short of.
Various other countries had identified the potential of individuals forming a company before the enactment of the new Companies Act in 2013. These included China, Singapore, UK, Australia, and the USA.
Definition of One Person Company
Section 2(62) of Companies Act, 2013 defines one-person company as a company which has only one person as a member. OPC is a type of Private Company as per Section 2(68) and Section 3(1)(c) of the Act.
The creation of such companies takes place usually when there is only one promoter/founder for business. In today’s date the start-ups prefer creatingOPCs instead of sole proprietorship because of the several advantages that OPCs offer.
Incorporation of OPC
Rule 3 of the Companies (Incorporation) Rules 2014 says, only a natural person who is an Indian citizen and whether resident in India or otherwise resident in India–
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company.
A person can incorporate a One Person Company, at any point of time and the said person shall not be a nominee of more than a One Person Company.
Difference between OPCs and Sole Proprietorships
Although a sole proprietorship and a one-person company might seem similar since each of them involves only one individual or person who owns the business. However, there are quite a few differences between them.
The nature of the liabilities they carry is the main difference between the two companies. An OPC has its own assets and liabilities since it is a separate legal entity distinguished from its promoter. The liability of promoter is limited in the event of a default or legal issues.
Sole proprietorships and their proprietors are the same persons. So, the liability is not restricted and extends to the individual and his or her entire assets would be liable to repay the debts due by the sole proprietorship.
Features of a One Person Company
Here are some features of a one-person company:
- Private company: Section 3(1)(c) of the Companies Act mentions that only one natural person shall form a company. It describes OPCs as private companies.
- Single-member: OPC’s are allowed to have only one member or shareholder.
- Nominee:A distinctive characteristic of OPCs that separates them from other kinds of companies is that the sole member of the company has to mention a nominee while registering the company.
- No perpetual succession:As there is only one member in an OPC, his death will result in the nominated nominee accepting or declining to become its sole member. Other companies do follow the concept of perpetual succession.
- Minimum one director:OPCs have only one person member in minimum as a director and the maximum they can have 15 directors.
- No minimum paid-up share capital:Companies Act, 2013 has not recommended any amount as minimum paid-up capital for OPCs.
- Special privileges:OPCs enjoy various privileges and exemptions under the Companies Act that at present that other kinds of companies do not hold.
Advantages to registered One Person Company (OPC)
- Identity proof of Directors (PAN Card)
- Address proof of Directors (Aadhar Card/ Passport/Driving Licence, Voter ID)
- Proof of Registered office (Electricity Bill with rent agreement and NOC from the owner)
- Three Month Bank Statements of Directors.
- Passport size photograph of Directors
Step 1 : Receiving Documents & Apply, DIN & DSC 1-2 Days
Step 2 : Drafting MOA and AOA electronically in Spice MOA (INC-33) and Spice AOA (INC-34) 3-5 Days
Step 3 :Submission of Spice Form INC-32 along with link Form Spice MOA (INC-33) and Spice AOA (INC-34)
6 to 9 Days
Step 4 : Certificate Of Incorporation, PAN & TAN 10 to 12 Days
OPC Formation can be done as an:
- OPC limited with Guarantee
- OPC limited with Share Capital
- OPC unlimited company
An individual who is an Indian citizen and Indian resident can choose to setup a One Person Company. There is no minimum educational requirement for such individual to become the director in company. Even he can be a shareholder of such type of company.
Only a natural person who is an Indian citizen and a resident in India can choose to become a nominee. Nominee must also be over 18 years of age. He cannot become a nominee for more than one OPC.
All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.
A single individual in command of a sizable firm raises concerns for the MCA. As a result, it mandates that all OPCs transform into private limited or public limited corporations whenever their revenue reaches a certain threshold. Currently, the OPC must be mandatorily converted into an OPC in the event of an average turnover of Rs. 2 crore or more over the course of three consecutive years or a paid-up capital of over Rs. 50 lakh.
Only considerably less money is spent on an OPC than on a private limited business. The cost to incorporate is approximately Rs. 12,000, and the annual compliance fees and the cost of an auditor to review your books are approximately Rs. 15000.