One Person Company (OPC) Registration

What is One Person Company?

Section 2 (62) of Companies Act says a company with only one person as its member falls under the criteria of One Person Company or OPC. OPC is owned and managed by one person only. Moreover, all the members of the OPC are followers to its memorandum of association or its shareholders.

One Person Company is a brand new concept which gives full authority over the company to the single promoter while limiting its liability or duties to contribute to the business.

However, there is no road to raise equity funding or offering the employee stock option in One Person Company in the early stage of the period. Into the bargain, if One Person Company anytime hits an average three- year turnover of over Rs 2 crore or has paid-up capital of over Rs 50 lakhs then it must be turned into the private limited company or public limited company within the six months.

One Person Company consists of a single person; it can be formed by subscribing to the memorandum of association and fulfilling other details provided in the Companies Act 2013. Information related to the nominee and who will hold the authority in case of demise of the original owner should be provided in the memorandum of association.

Once the memorandum of association is completely available on paper; submit it along with the nominee’s consent to his nomination to the Registrar of Companies. Though nominee can extract his/her name at any point in time by submitting the application to the Registrar.

Benefits of One Person Company Registration in India

• Limited Liability

  The directors' personal property is always safe in a private limited company, no matter the debts of the business.

• Continuous Existence

  Sole Proprietorships come to an end with the death of the proprietor. As an OPC company has a separate legal identity, it would pass on to the nominee director and, therefore, continue to exist.

• Greater Credibility

  As an OPC needs to have its books audited annually, it has greater credibility among vendors and lending institutions.

• Benefits For Small Scale Industries

  An OPC can avail all the benefits provided to small scale industries such as easy funding without depositing security to certain limits, loans at lower interest rates, benefits under foreign trade policy, etc. These benefits play a crucial role in the progress of the company in its initial days.

• Recognized As A Trustful Separate Legal Entity

  Any business that is registered under the Company Act, 2013 and has a separate legal entity and is considered as more trustworthy as compared to the non-registered ones

Eligibility for Registering an OPC in India

The following is the eligibility criteria for OPC Registration in India. Only a natural person who is a citizen of India and resident in India-

• is a person who is eligible to incorporate an OPC
• is eligible to be a nominee for the sole member of an OPC
• A resident of India is a person who has stayed in India for at least 182 days in the preceding one year
• If an OPC exceeds a turnover of over Rs 2 crores or has a paid-up capital above Rs 50 lakhs. It must be turned into a private or public within six months.

Process for One Person Company Registration in India

• Apply For DSC

  DSC is obtained by the director to sign all the online documents. It can be obtained from nearby agencies; the fees of obtaining DSC vary from agency to agency.

• Application To Obtain DIN

  Director’s Identification Number can be filed along with the SPICe+ form. All you need is the name and residential proof of the designated director. Before January 2018, Form DIR-3 was used to obtain the Director’s Identification Number. But now applicant can obtain DIN for three directors along with SPICe+ form.

• Company’s Name Approval

  Once you have obtained DSC and DIN, now it’s time to decide the name of the company and get it approved by the Ministry of Corporate Affairs. Name of the company should be in the format of “XYZ (OPC) Private Limited.”

• Re-Check All The Documents

  It’s quite obvious no one wants to resubmit their documents, so it’s better to recheck them and make sure all the documents are in the accurate format. Check whether the details of your PAN card matches with the details of your other proof such as address proof. In case of some spelling mistakes, get it corrected before the submission.

• Submission Of Forms

  After uploading the documents, Form 49A and Form 49B would be generated for the company’s PAN and TAN. You can use them to file PAN and TAN of the company which will further help you to open a bank account for the company.

• Issuance Of Certificate Of Incorporation By The Authorities

  All the documents and forms are verified by the authorities. Once the verification is done Registrar of Companies would issue you a certificate of Incorporation that will contain CIN number.

One Person Company Registration cannot be done without submitting above mentioned documents.

Documents Required for OPC Registration

The director of the OPC should submit the scanned transcripts/ copies of the following documents mandatory for OPC registration-

• PAN card or Passport
• Passport, for NRIs and Foreign Nationals
• Scanned transcript of Driver's License or Voter’s ID
• Updated gas or electricity invoice/Bank account Statement/Mobile or landline phone invoice
• Specimen signature or impression
• Passport-sized photo

Please Note: The first 3 documents should be self-attested by the OPC director. All the documents for a foreign national or an NRI must be notarized (if residing in India or a non-Commonwealth country at present) or apostilled (if living in a Commonwealth country at present).

Documents Necessary For The Registered Office

• Scanned transcript of Current Bank Account Statement/Phone or Mobile Invoice/Gas or Electricity Invoice)
• Scanned transcript of Rental Agreement written in the English language
• Scanned transcript of N-O or No-objection Certificate from the concerned property landowner
• Scanned transcript of Property or Sale Deed printed in English (if the property is owned)

Note: Your office space which is registered needs to be a commercial area; however, it can be your house of residence as well

Difference Between OPC and Sole Proprietorship

A sole proprietor business may seem similar to a One Person Company in many ways but there are actually some differences between the two.

The major difference is in the nature of the liabilities they carry. One Person Company has its own assets and liabilities. It is a separate legal entity distinguished from its promoter. The promoter of OPC is not personally liable to repay the debts of the company.

In case of sole proprietorship the proprietor and the promoter are the same persons. So, the law allows the attachment and sale of promoter’s own assets in case of non-fulfillment of the business’ liabilities.

Tax Rule for OPC

Filling for Income Tax Returns is a mandatory thing for One Person Company.

TDS should be filed quarterly mentioning the TAN. If company has employees then deducting tax at source become necessary.

If OPC has more than ten employees then getting an ESI registration by law becomes necessary

As per the Income-tax law, an OPC is liable to pay 30% of its income to the taxation authority in the fiscal year.

Comparison of Company Structures