One Person Company (OPC) Registration in India

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One Person Company Registration

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Documents Required for OPC Registration

Identity and Address Proof

Scanned copy of PAN card or passport (foreign nationals & NRIs)

Scanned copy of voter ID/passport/driving

Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill

Scanned passport-sized photograph specimen signature (blank document with signature [directors only)

Registered Office Proof

Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill

Scanned copy of notarised rental agreement in English

Scanned copy of no-objection certificate from the property owner

Scanned copy of sale deed/property deed in English (in case of owned property)

One person company Registration Process

What we will do

Day 1-2

Expert assistance for DSC application filing and name reservation

Day 3-5

Drafting MOA & AOA documents with ROC

Day 5-7

Certificate of Incorporation (COI) issued

One Person Company (OPC) Registration - Overview

A one-person company is a type of business entity that allows a single individual to establish and run a company with limited liability protection. It encourages small businesses and startups by simplifying the legal and operational requirements associated with the company's formation. A minimum of a single individual is required for one-person company registration OPC. An OPC combines the advantages of a sole proprietorship and a private limited company, providing full control over business activity.

The company registration process involves multiple steps. The first step is to finalise a business name and get it approved from the MCA portal by filing Form SPICe. The Companies Act of 2013 mandates the submission of a memorandum of association and an article of association outlining the company's objectives. The next step is to provide proof of a registered office and other relevant documents. After approval by the ROC, a registration certificate is provided. Unlike a private limited company or a public limited company, a one-person company has very few compliances.

One Person Company in Company Law

Section 2(62) of Companies Act defines a one-person company as a company that has only one person as its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

Features of a One Person Company

A one-person company (OPC) allows a single entrepreneur to operate a corporate entity with limited liability protection, ensuring personal assets are safeguarded. It simplifies compliance and administrative requirements, making it easier for solo entrepreneurs to manage their businesses. Here is a list of the features of a one-person company

Single Ownership: An OPC is formed by a single person, who is both the shareholder and director.
Limited Liability: The liability of the member is limited to their shares, protecting personal assets.
Perpetual Succession: An OPC can continue its existence even after the death or incapacity of the owner, through the nomination of another person.
Separate Legal Entity: An OPC is a distinct legal entity from its owner, allowing it to own property, sue, and be sued in its own name.
Minimum Compliance: OPCs have fewer compliance requirements compared to other types of companies, making them easier to manage.

Privileges of One-Person Companies

Registering as a one person company provides many added advantages and functioning ease. Here are some privileges of an one person company

Simplified Annual Returns Filings: OPCs are required to file fewer documents with the Registrar of Companies.
Exemptions from Holding Annual General Meetings (AGMs): OPCs are not required to hold AGMs, simplifying their operational processes.
Access to Loans: Banks and financial institutions are more likely to offer loans to OPCs due to their formal structure and limited liability.

Legal Status and Ownership Structure

A One Person Company enjoys a unique legal status, distinguishing it from sole proprietorships. The ownership structure of an OPC allows for a single individual to control the entire company but with the added benefit of having a nominated successor. This ensures continuity and stability for the business, even in unforeseen circumstances.

Advantages of a One Person Company

A One Person Company (OPC) offers limited liability protection, ensuring the owner's personal assets are not at risk. It also provides a separate legal identity, enhancing the credibility and continuity of the business. Here are the advantages of one person company

Business Operation Benefits

Full Control: As the sole owner and director, the individual has complete control over the company's operations and decisions.
Ease of Management: With fewer regulatory requirements, OPCs are simpler to manage compared to other company structures.
Flexibility: OPCs can easily convert to other types of companies as the business grows, providing flexibility for future expansion.

Legal and Compliance Advantages

Limited Liability Protection: The owner's personal assets are protected, as their liability is limited to the capital invested in the company.
Separate Legal Entity: OPCs have a distinct legal identity and a simple business structure enabling them to enter into contracts, own property, and initiate legal proceedings in their own name.
Fewer Compliance Requirements: OPCs are exempt from several compliance obligations that apply to other company forms, such as holding annual general meetings, having fixed minimum capital requirements and is best suitable for small business.

Funding and Succession Planning

Increased Credibility: Being a registered company, OPCs often find it easier to secure funding from banks and financial institutions.
Succession Planning: The nominee director ensures business continuity in case of the owner's death or incapacity, providing a clear succession plan.

One Person Company Registration Requirements

For One Person Company (OPC) registration a single individual is required as the sole shareholder and director, with a nominee appointed in case of the shareholder's incapacity. Here are some One Person Company Registration Requirements.

Eligibility Criteria for OPC Registration in India

Eligibility criteria for OPC registration in India is pointed out below:

Single Shareholder: Only a natural person, who must be an Indian citizen and resident, can incorporate an OPC.
Nominee Director: The sole shareholder must nominate a person who will take over in case of their death or incapacity.
Not a Minor: The individual incorporating the OPC cannot be a minor.
Capital Requirement: The minimum authorised capital for incorporating OPC is ₹1 lakh but there is no minimum paid-up capital requirement.

Roles of Directors and Shareholders

Sole Director: a sole member can also act as the sole director of the company.
Nominee Director: The nominee director steps in if the sole shareholder is unable to continue due to death or incapacity.
Director’s Duties: Directors must comply with statutory duties and obligations as outlined in the Companies Act of 2013.

OPC Registration Documents Required

Here is the list of documents required for OPC registration in India:

Director’s PAN Card: Copy of the PAN card of the sole shareholder and nominee director.
Identity Proof: Aadhar card, Driving License, voter ID, or passport of the sole shareholder and nominee director.
Address Proof: Latest utility bills, such as water or electricity bill, Mobile Bill or bank statements of the sole shareholder and nominee director.
Registered Office Address Proof: Rent agreement and a no-objection certificate (NOC) from the property owner, or utility bills if the property is owned.
Passport-Size Photographs: Recent passport-sized photographs of the sole shareholder and nominee director.
Memorandum of Association (MOA): A document outlining the company's objectives and business activities.
Articles of Association (AOA): A document detailing the rules and regulations governing the company's internal management.

Vakilsearch's OPC Registration Process

Vakilsearch provides a streamlined process for registering a One Person Company (OPC) in India.

Step 1: Consultation

Initial consultation to understand the business requirements, government fees and eligibility criteria for OPC registration

Step 2: Documentation

Assistance in gathering and preparing all necessary documents, including identity proof, Aadhaar Card, address proof, No Objection Certificate and registered office proof like utility bill

Step 3: DIN and DSC Application

Filing for Director Identification Number (DIN) and Digital Signature Certificate (DSC) for the sole shareholder.

Step 4: Name Approval

Our team will help you register a unique name for your company. We will check for name availability and submit the proposed company name for name reservation through the Ministry of Corporate Affairs MCA portal.

Step 5: MOA and AOA Drafting

Drafting the Memorandum of Association (MOA) and Articles of Association (AOA) in compliance with legal standards.

Step 6: Filing Forms

Filing the required forms (INC-32, INC-33, and INC-34) with the Registrar of Companies (ROC).

Step 7: Incorporation Certificate

Receiving the Certificate of Incorporation from the ROC, signifying OPC company incorporation .

Step 8: PAN and TAN Application

Assistance in applying for the company's PAN and TAN.

Step 9: Post-Incorporation Support

Guidance on post-incorporation compliance, trademark registration, professional tax, income tax returns, Company secretary appointment and other legal requirements
Vakilsearch offers a fantastic opportunity for entrepreneurs to connect with angel investors adventure capital investments. Connect with us today!

One Person Company (OPC) Compliance

A One Person Company (OPC) must comply with annual filing requirements. Here is a list of One Person Company compliance :

Government Regulations Affecting OPCs: OPCs must adhere to several government regulations to maintain their legal status and operate smoothly. These regulations include annual filings, tax compliance, and adherence to corporate governance norms as outlined by the Companies Act of 2013.

Importance of Annual Compliances of One Person Company

Legal Standing: Ensuring compliance maintains the legal standing of the OPC and avoids penalties.
Business Credibility: Regular compliance enhances the company's credibility with stakeholders, including customers, investors, and financial institutions.
Operational Efficiency: Staying compliant helps in smooth business operations and avoids disruptions due to legal issues.

Benefits of One-Person Company Compliances

Avoid Penalties: Timely compliance prevents fines and penalties imposed by regulatory authorities.
Enhanced Reputation: A compliant company is perceived as reliable and trustworthy by clients and partners.
Access to Funding: Compliance increases the chances of securing loans and investments from financial institutions and investors.

Mandatory Annual Compliances of One-Person Company

Annual Return (Form MGT-7): Filing the annual return within 60 days from the date of the Annual General Meeting (AGM).
Financial Statements (Form AOC-4): Filing the financial statements, including the balance sheet and profit and loss account, within 180 days from the end of the financial year.
Income Tax Return: Filing the company's income tax return by 30th September of the assessment year.
Statutory Audit: Conducting an audit of financial statements by a Chartered Accountant.
Board Meetings: Conducting at least one board meeting every six months.

Legal Implications of Non-Compliance

Penalties and Fines: Non-compliance can result in hefty fines and penalties imposed by the MCA and other regulatory authorities.
Legal Actions: Persistent non-compliance may lead to legal actions, including the possible dissolution of the company.
Director Disqualification: The directors of the company may face disqualification from holding directorships in other companies.

Documents Required for the Annual Compliance of One Person Company

Financial Statements: Balance sheet, profit and loss account, and cash flow statement.
Audit Report: Report prepared by the statutory auditor.
Board Meeting Minutes: Records of the minutes of board meetings held during the year.
Annual Return: Form MGT-7, detailing the company's annual performance.
Income Tax Return Acknowledgment: Proof of filing the income tax return.

OPC Compliance Due Date

By following these guidelines and maintaining compliance, one-person companies can ensure smooth operations and avoid legal complications.

Annual Return (Form MGT-7): Within 60 days from the date of the AGM.
Financial Statements (Form AOC-4): Within 180 days from the end of the financial year.
Income Tax Return: By 30th September of the assessment year.

Taxability of OPCs in India

One-person companies (OPCs) in India are subject to various tax obligations similar to other corporate entities. However, they also enjoy certain benefits

Corporate Tax: OPCs are required to pay corporate tax on their profits. The tax rate for OPCs is in line with the rates applicable to other private limited companies.
Tax Deductions: OPCs can avail of various deductions under the Income Tax Act, such as depreciation on assets, business expenditures, and specific allowances.
Dividend Distribution Tax (DDT): OPCs must pay DDT on any dividends distributed to shareholders.
Goods and Services Tax (GST): If the annual turnover exceeds ₹20 lakhs, OPCs must register for GST and comply with GST filing requirements

Specific Tax Provisions Applicable to OPCs

Income Tax Rates: OPCs are taxed at a flat rate of 22% plus applicable surcharge and cess for domestic companies not claiming any exemptions or incentives. For those claiming exemptions, the rate is 30%.
MAT (Minimum Alternate Tax): OPCs are subject to MAT, which is levied at 15% of the book profits (as per the Income Tax Act), plus surcharge and cess.
Tax Audit: OPCs must undergo a tax audit if their turnover exceeds ₹1 crore (for businesses) or ₹50 lakhs (for professionals).

How Vakilsearch Helps in Simplifying the One-Person Company Registration Process?

Vakilsearch offers comprehensive services to simplify the OPC registration process, ensuring a hassle-free experience for entrepreneurs:

Expert Consultation: We provide professional consultation to help understand the specific requirements and benefits of registering an OPC.
Documentation Assistance: We assist in the preparation and collection of all necessary documents, ensuring compliance with legal standards.
DIN and DSC Application: We help in obtaining the Director Identification Number (DIN) and Digital Signature Certificate (DSC) required for the registration process.
Name Approval: They manage the entire process of name approval with the Ministry of Corporate Affairs (MCA), ensuring that the proposed name meets all legal criteria.
MOA and AOA Drafting: Vakilsearch drafts the Memorandum of Association (MOA) and Articles of Association (AOA), tailoring them to the specific needs of the business.
Filing with ROC: We handle the filing of required forms (INC-32, INC-33, and INC-34) with the Registrar of Companies (ROC), ensuring all legal requirements are met.
Incorporation Certificate: Vakilsearch assists in obtaining the Certificate of Incorporation, signifying the official formation of the OPC.
PAN and TAN Application: We facilitate the application for the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Post-Incorporation Support: Vakilsearch offers ongoing support for post-incorporation compliance, helping businesses maintain their legal standing and operational efficiency.

One Person Company FAQs

What is the primary objective of OPC registration?

The primary objective of OPC registration is to allow individual entrepreneurs to form a business entity with limited liability protection and full control, combining the benefits of sole proprietorship and corporate structure.

How to inform RoC about change in membership of OPC?

In the event that an OPC member is terminated due to death, incapacity to enter into contracts, or ownership changes, the company is required to submit form INC-4. The user must fill up the same form with the new OPC member's details.

Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?

Yes, an OPC must convert into a private or public company if its paid-up share capital exceeds ₹50 lakhs or its average annual turnover exceeds ₹2 crores over three consecutive financial years.

How to intimate RoC that the OPC has exceeded the threshold limits and require conversion into private or public company?

File Form INC-5 within 60 days of exceeding the threshold limits to intimate the RoC about the need for conversion.

What is the time limit for filing form INC-5?

The time limit for filing Form INC-5 is within 60 days of exceeding the threshold limits.

Is there any form that is to be filed for conversion of an OPC into a private or public company?

Yes, Form INC-6 is to be filed for the conversion of an OPC into a private or public company.

Is there any other purpose for filing this form?

Yes, Form INC-6 is also used for voluntarily converting an OPC into a private or public company before reaching the threshold limits.

What is the time limit for filing form INC-6?

Form INC-6 must be filed within 30 days of passing the special resolution for conversion.

Who is eligible to act as a member of an OPC?

Only a natural person who is an Indian citizen and resident in India is eligible to act as a member of an OPC.

A person can be a member of how many OPCs?

A person can only be a member of one OPC at a time.

What if a member of an OPC becomes a member of another OPC by virtue of being a nominee in that other OPC?

The member must withdraw membership from one of the OPCs within 180 days.

Which form is to be filed in case of withdrawal of consent by the nominee of an OPC or in case of intimation of change in nominee by the member?

Form INC-4 must be filed for withdrawal of consent by the nominee or for intimation of a change in nominee by the member.

What happens if the OPC’s paid-up share capital exceeds ₹50 lakhs or its annual turnover exceeds ₹2 crores?

The OPC must convert into a private or public company and file Form INC-5 to inform the RoC.

What is the role of a nominee in an OPC?

The nominee steps in as the member in case the original member becomes incapacitated or dies, ensuring continuity of the company.

Why should I choose Vakilsearch for OPC registration?

Vakilsearch offers expert guidance, efficient processing, and comprehensive support throughout the OPC registration process, ensuring compliance with legal requirements and saving time and effort.

Authors

Written by Nithya, Reviewed by Mithra Menon. Last updated on OCT 14 2024, 11:22 AM

Mithra Menon excels in Corporate Law Matters and Debt and Money Recovery. She offers assistance in company incorporation both domestically and internationally, along with partnership firm registration. Additionally, she provides advisory services on compliance and LLP registration in India.

Nithya Ramani Iyer, a criminologist and writer, serves as the SME and manages communications at Vakilsearch. Drawing from her experience at Seasearch Intelligence and Legal domains, she enriches our content with insightful perspectives.

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