An OPC, wherein a single member incorporates a company, is registered under the Companies Act, 2013. The government fee and the professional fee charged for the registration of an OPC are dependent on various key factors.
What is a One-person Company?
A One Person Company (OPC) is essentially a Private Limited Company with a distinctive structure. It operates under the legal framework defined by the Companies Act, 2013, in India. The primary characteristic of an OPC is that it is owned by a single individual who assumes complete control over its capital and profits. The owner, who must be an Indian citizen and a non-minor, enjoys limited liability, restricting financial obligations to the subscribed capital.
Unlike Public Limited Companies, the shares of an OPC cannot be freely traded on stock exchanges. Transferability is confined to the designated shareholder or a nominee in case of the owner’s absence or departure. The legal structure of an OPC provides the single owner flexibility and protection while ensuring compliance with regulatory standards.
What Are the Minimum Requirements for OPC Registration?
To register a One Person Company (OPC), certain minimum requirements must be met:
- Unique and Valid Name: The company’s name is a crucial aspect of its identity, reflecting its purpose. The name must be unique and comply with regulatory guidelines.
- Registered Office Address: An OPC must have a registered office for official correspondence and business operations. The premises, whether owned or rented by the owner in the company’s name, must be lockable to secure essential documents.
- Adequate Capital: Sufficient capital is essential for the company’s smooth operation. The shareholder, as the sole investor, invests in shares and receives returns in profits. The capital should sustain business activities without hindrance.
- One Shareholder: An OPC can have a single shareholder who owns 100% of the company. The shareholder, an Indian citizen, can be a resident or non-resident. Ownership is transferred through share transfers.
- At Least One Director: While the shareholder controls ownership, the management requires at least one director. An OPC can have a maximum of 15 directors, with at least one being a resident in India for over 120 days during the previous financial year. Directors handle the day-to-day management of the company, ensuring its compliance and efficient operation.
What Are the Advantages of a Person Company?
- Legal Status
OPC enjoys a separate legal entity status, providing liability protection to the sole member. The member’s liability is limited to shares, shielding personal assets from company losses. Creditors can sue the company but not the member or director.
- Easy Fundraising
Being a private company, OPC has ease in fundraising from sources like venture capitals, angel investors, and incubators. Financial institutions and banks prefer granting loans to companies, enhancing fund accessibility.
- Reduced Compliances
The Companies Act, 2013 offers OPC exemptions, simplifying compliance. Cash flow statement preparation is not mandatory. Only the director, not the company secretary, signs books of accounts and annual returns.
- Simple Incorporation
OPC requires only one member and one nominee for incorporation. The member can also be the director. With no minimum paid-up capital and a ₹ 1 lakh minimum authorised capital, OPC’s incorporation is straightforward compared to other company forms.
- Efficient Management
Single-person management makes decision-making quick and conflict-free. Ordinary and special resolutions can be easily passed by the sole member, streamlining company operations.
- Perpetual Succession
OPC features perpetual succession even with a single member. During incorporation, the member appoints a nominee. In the member’s absence, the nominee takes over, ensuring continuity.
Registering an OPC:
An OPC, due to fewer compliances, can be registered relatively easily when compared to other corporate structures. The following steps are to be pursued to register an OPC.
Step 1: Obtaining the Digital Signature Certificate (DSC)
A DSC is mandatory to authenticate the forms and documents that are submitted in the MCA (Ministry of Corporate Affairs) portal. Various identity proofs such as Aadhar card, PAN (Permanent Account Number) card, passport size photo of the directors, and contact details such as email id and phone number are required to obtain the DSC.
Step 2: Obtaining the Director Identification Number (DIN)
The Director of the OPC should hold a Director Identification Number mandatorily. An application for the same is made by submitting the identity and address proof of the director concerned.
Step 3: Name of the Company
The name of the OPC must be unique and not bear any resemblance to the names of the existing companies or trademarks. The name is subject to the approval of the MCA.
Step 4: Prerequisites for Registration
- MoA (Memorandum of Association) and
- AoA (Articles of Association)
- A nominee appointed by the shareholder of the OPC, who would take the role of the latter if the person dies or becomes incapacitated to enter into contractual obligations
- Consent of the nominee and the director
- Address proof of registered office the proposed OPC
Step 5: Filing of Forms
The MoA and AoA and other proofs stated above have to be attached to the SPICe (Simplified Proforma for Incorporating a Company Electronically) Form, SPICe-MoA, SPICe-AoA, along with the DSC of the director and should be submitted in the MCA portal for approval. The PAN (Permanent Account Number) and TAN (Tax Deduction Account Number) will be generated thereafter.
Step 6: Certificate of Incorporation
Once the documents and forms are verified by the Registrar of Companies (ROC), the certificate of incorporation is issued.
Cost to Register an OPC
The registration charges of an OPC are dependent on a number of factors. The major deciding factor is the nominal share capital invested by the company. The government has fixed a slab of ₹ 2,000 for a nominal share capital not exceeding Rs 10 lakhs. For every additional ₹10,000 of the nominal share capital within Rs 50 lakhs, an additional fee of ₹200 is charged. The government, in a move to encourage entrepreneurship, had waived off the incorporation fee.
The fee pertaining to the registration of an OPC is also inclusive of obtaining the DIN and DSC of the directors of the company, stamp duties to be paid during the registration which is dependent on the state in which the OPC is getting registered, filing of various forms, etc.
Also, it is always recommended to seek the help of experts to register a company, whether an OPC or any other type of company. Therefore, a professional fee is a way of investing, to get the first step of establishing the company, clean and perfect, which is the registration of the OPC. Once again, the professional fee to be paid depends upon the complexity of the task at hand and various other factors.
For instance, An OPC would merely want help to register the company alone, while another, with a futuristic approach, may delegate the tasks of filing the GST and accounts along with the registration of the company. In such circumstances, the professional fee would vary. In general, the registration fee would range from ₹7,000 to ₹30,000. The time duration for registering an OPC would be close to 10 working days.
With so many procedures in line, the registration of an OPC may seem overwhelming. We, here at Vakilsearch, can help you prioritise the tasks and can facilitate the seamless registration of your OPC. We can help you move step by step with various processes from obtaining the DIN and DSC for the directors to getting the bank account operational for the company. When it comes to business, we leave no stone unturned and do everything possible to make not just your life but also your business easier!
FAQs
How Can I register an OPC by myself?
To register a One Person Company (OPC) independently, you must follow these steps: Obtain Digital Signature Certificate (DSC), apply for Director Identification Number (DIN), select a unique company name, draft the Memorandum of Association (MOA) and Articles of Association (AOA), and file the incorporation application with the Ministry of Corporate Affairs (MCA).
What is the tax rate for OPC in India?
The tax rate for an OPC in India is aligned with the income tax slab rates applicable to individuals. OPCs are taxed at progressive rates based on their annual income. As of the latest tax structure, the rates can vary from 5% to 30%, depending on the income slabs.
What is the disadvantage of OPC in India?
One disadvantage of OPC in India is the restriction on the number of members, as it allows only one individual to be the shareholder. This limitation may affect the company's growth potential, especially when compared to private limited companies that can have multiple shareholders.
What is the minimum capital for OPC?
There is no specific minimum capital requirement for OPC in India. The Companies Act 2013 does not prescribe a minimum capital limit, allowing entrepreneurs to start an OPC with a nominal capital. The focus is on the structure and compliance requirements rather than the amount of capital.
What is the tax benefit of OPC in India?
OPCs in India do not have unique tax benefits. However, they enjoy the general benefits available to small businesses, such as availing deductions, exemptions, and incentives provided by the government. The specific tax advantages depend on factors like business nature, industry, and compliance with tax regulations.
Is GST registration mandatory for OPC?
Yes, GST registration is mandatory for an OPC in India if its aggregate turnover exceeds the prescribed threshold limit. As of the current regulations, businesses with an annual turnover of over ₹40 lakhs (₹20 lakhs for special category states) must register for GST. Failure to comply may lead to penalties.
