What is One Person Company (OPC)?
A One Person Company is a company with a single member. It was introduced by the Companies Act, 2013. OPC extends the concept of limited liability to a company run by a single person. It is similar in respects to a private limited company with certain differences like fewer compliances and relaxation of certain restrictions. Thus, an OPC is subject to all the provisions of the Act like a private limited company unless expressly excluded.
Who can start a OPC Company in India?
This is one of the most important question that is asked by every person who is willing to start a OPC in India.Through there is no restriction on anybody to form a company in India, but still, we would like to discuss some special cases:
Existing directors: Yes, they can open the OPC but if they already own one, then any further OPC is not allowed.
Employees: Employees are generally not allowed by their employers to form a company and be a director. They may hold shares but cannot take position as director. If you want to open a company, then check your employment agreement and you may also seek permission from the respective employer.
- Companies, Firms: As per Companies, act, 2013 only individual can form a OPC.
Minimum Requirements for One Person Company Registration
1. Minimum 1 Shareholder
2. Minimum 1 Directors
3. The directors and shareholders can be same person
4. Minimum 1 Nominee
5. Only Indian residents can be Shareholder & Nominee
6. Minimum 1 Director must be Indian Resident
7. Minimum Authorised Share Capital to be Rs. 1 Lac
8. DIN (Director Identification Number) for all Directors
9. DSC (Digital Signature Certificate) for 1 Promoters & 1 witness
Reasons to Register a One Person Company
One Person Company is the only type of corporate entity that can be started and operated by a single promoter with limited liability protection in India. A corporate form of legal entity in One Person Company ensures that the business has perpertual existence and easy ownership transferability.
A company has 'perpetual succession', meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.
Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns. However, a one person company cannot issue different types of equity security, as it can only be owned by one person at all times.
Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a one person company, the ownership can be transferred by altering the shareholding, directorship and nominee director information.
A company being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., Further, the nominee director cannot claim any ownership of the company while serving as a nominee director.
ADVANTAGES & BENEFITS of OPC
- Limited Liability Protection to Directors personal assets
- Helps for Testing of Business Model and Enables Funding
- Better image and credibility in Market
- Complete Control of the Company with a Single Owner
- Easy to Manage and Freedom from Compliances
- Easy to Sell OPC: OPC Company is easy to sell, very less documentation and cost is involved in selling a One Person company.
Disadvantage of One Person Company
- One Director must be a Indian Resident.
- Statutory Compliance are high.
- Costing is high as compare to LLP/Firms.
Steps to Incorporate One Person Company (OPC)
1. Obtain Digital Signature Certificate [DSC] for the proposed Director(s).
2. Obtain Director Identification Number [DIN] for the proposed director(s).
3. Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name.
4. Draft Memorandum of Association and Articles of Association [MOA & AOA].
5. Sign and file various documents including MOA & AOA with the Registrar of Companies electronically.
6. Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty.
7. Scrutiny of documents at Registrar of Companies [ROC].
8. Receipt of Certificate of Registration/Incorporation from ROC.
EXEMPTIONS FOR AN OPC
- Sign on annual returns.
- Hold Annual General Meetings and Board Meetings.
- Statement to be annexed to notice.
- Quorum for meetings.
- Chairman of meetings.
- Restriction on voting rights.
- Voting by show of hands.
- Sign on Financial Statements.
- Option to dispense with the requirement of holding an AGM.
- Power of Tribunal to call meetings of members.
- Calling of extraordinary general meeting.
- Notice of meeting.-
- Voting through electronic means.
- Demand for poll.
- Postal ballot.
- Circulation of members' resolution.
Documents Required for OPC Registration
For Single Director & Nominee
1. Copy of PAN Card
2. Aadhar Card
3. Address Proof (Bank Statement, Mobile bill, Telephone bill)
4. Passport Size Photo
For Registered Office
1. Ownership Proof (Electricity Bill etc)
2. Utility Bill (Gas Bill, Electricity Bill)