The Companies Act of 2013 allows a single individual to incorporate a One Person Company (OPC). An OPC can be of certain types.
One Person Company (OPC) has the blended features of a sole proprietorship and a private company. OPC is also known as a one-man company. Like a sole proprietorship allows you to own the firm completely, an OPC also has just one shareholder. But unlike a sole proprietorship, in an OPC the owner has limited liability and the burden of outstanding debts does not fall on the owner, as an OPC is treated as a separate entity. Now, let’s see the features and the types of company owned by one person.
Important Features of OPC
The following are some important features:
- As the name suggests, One Person Company has only one person as the member or shareholder.
- Registration of OPC can only be done as a private company
- The company can have only one shareholder but can have up to 15 directors, and the number can be increased with a resolution.
- An OP can be either a company limited by grants or a company limited by guarantee or an unlimited company
- An OPC to be registered as a limited by shares company shall have to comply with the following requirements:
- Paid-up capital of a minimum of ₹1 Lakh
- The OPC should have in place restrictions for the transfer of shares
- The OPC has to prohibit any invitations to the public for subscribing to the securities of the company.
- The company must provide for itself a legal identity by specifying a name under which the business could carry out its activities.
Types of OPC You Can Incorporate Under the Act
A company can be
- A company limited by shares, or
- A company limited by guarantee, or
- An unlimited company
Therefore as per the Companies Act of 2013, there are five types of OPC you can establish. They are:
- OPC Limited by Shares
- OPC Limited by Guarantee with Share Capital
- OPC Limited by Guarantee without Share Capital
- Unlimited OPC with Share Capital
- Unlimited OPC without Share Capital
Eligibility Criteria for the Shareholder and Nominee Member of OPC
- The person who wishes to be the shareholder or nominee for the OPC should be a natural or real person. This means, unlike other companies in which a corporation can become a shareholder of a company, in an OPC the shareholder and the nominee have to be a real person.
- The person should not be a minor
- The person has to be an Indian citizen and a resident of India. As per the Act, a resident of India is a person who has stayed in India for not less than 120 days in yeh preceding financial year.
- A person can be a member or nominee to only one OPC at a time. In case a person acquires membership or nomination to more than one OPC by virtue, he or she has to give up either of them within 180 days.
Is It Necessary to Appoint a Nominee Member?
During the incorporation of OPC, the sole owner has to appoint a person as a nominee member. The nominee so appointed will become a member of the company in one of the following cases:
- The sole owner of the OPC passes away
- If the sole owner becomes incapacitated to the contract
The person to be appointed as a nominee has to provide his written consent for the nomination. Also, the name of the nominee has to be mentioned in the Memorandum of Association(MoA) of the OPC.
Documents Required for the Incorporation
- A declaration in Form INC-8
- A declaration by the member and the nominee in Form INC-9
- The consent to perform as a director in DIR-2
- Self-attested copies of PAN and Driving License/Passport/Voter ID of the member, nominee, and all the directors
- Self-attested copy of utility bill or bank statement of not less than two months old
- Ownership proof such as municipality tax paid receipt, or sale deed.
- Filled and signed Form INC-3.
The Process of Incorporation
- Check for the eligibility and all the documents
- Obtain Digital Signature Certificate (DSC)
- Acquire Director Identification Number (DIN) for each director
- Check for the availability of the company name reservation.
- For incorporation of the company, fileSpice+ form
- Apply for TAN and PAN for your OPC
If satisfied with the documents, and the application the RoC will provide the Certificate of Incorporation along with PAN and TAN details. After which you can open a current bank account for your OPC and commence your business operations.
The formation of OPC involves lesser formalities when compared to other kinds of companies. However, you must make sure you submit all the documents properly and fill up all the forms completely, failing which can render the application to be rejected. Vakilsearch guides you throughout the entire process to help you incorporate your OPC easily, and speedily.