What is One Person Company?
Minimum Requirements for One Person Company?
- One Person Company is formed as a private company.
- One Person Company can have only one person as a member.
- It shall have a minimum of one director
- It shall have at least one person as a nominee. Such Nominee will become the owner of the OPC in case of ineligibility of death of the sole member.
- It shall be formed for any lawful purpose. That means object and activities of the company should not be illegal.
- Name of OPC shall include the words OPC written in bracket for e.g. ABC PRIVATE LIMITED (OPC).
WHAT YOU WILL GET?
- DIN for 1 Directors
- DSC for 1 Directors
- Company Name Approval
- MOA + AOA
- Incorporation Certificate
- Company PAN
- Company TAN
What We Need?
- PAN Card (Mandatory)
- Aadhar Card (Mandatory)
- Address Proof (Bank Statement, Mobile Bill, Telephone Bill)
- Identity Proof (Passport, Driving License, Voter ID)
- Passport size photo (scan copy)
For Registered Office
- Ownership Proof (Electricity Bill etc)
- Utility Bill (Gas Bill, Electricity Bill)
- NOC (Download format)
What is the Process?
Incorporation as per One Person Company (Second Amendment) Rules to be applicable from 2nd October, 2018:
Application for reservation of name
One can reserve the proposed name of the company through web-based application called RUN (Reserve Unique Name) for Company Registration.
It is to be noted that the name of OPC ends with the words OPC written in bracket for e.g.ABC PRIVATE LIMITED (OPC).
Application for Incorporation
Incorporation through new Form FiLLiP (Form for incorporation of Limited Liability Partnership) WITHOUT filling Reserve Unique Name application, combining therein 3 services viz
- Name reservation,
- Allotment of Designated Identification Number (DIN),
- Incorporation of New Company
- Allotment of PAN and Allotment of TAN) in one form
Incorporation through SPICe (With filling Reserve Unique Name application):
In this, one can reserve the name of proposed OPC through web based service called RUN (Reserve Unique Name application).
Incorporate OPC: After name approval through RUN, Form SPICe shall be filed for incorporation of the OPC within 20 days from the date of approval of RUN. This time one can apply for following services through SPICe:
- Allotment of Designated Partner Identification Number (DPIN/DIN),
- Incorporation of New Company
- Allotment of PAN and Allotment of TAN
- Memorandum of Association.
- Articles of Association.
- Proof of identity of the member and the nominee.
- Residential proof of the member and the nominee.
- Copy of PAN card of member and nominee.
- Consent of Nominee.
- Affidavit from the subscriber and first Director to the.
- List of all the companies (specifying their CIN) having the same registered office address, if any.
- Proof of Registered Office address (Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts).
- Proof that the Company is permitted to use the address as the registered office of the Company if the same is owned by any other entity/Person (not taken on lease by company)
- Consent from Director.
Once the Form is processed and found complete, a company is registered and Corporate Identity Number (CIN) is allocated to the company through Incorporation Certificate. This incorporation certificate is a proof that all the requirements for formation of the company have been fulfilled.
Why or Why not One Person Company?
Advantages of OPC
- Separate legal entry :One Person Company gets recognition as a separate legal entity and thereby it gives an entrepreneur all the advantages of the company. For e.g. limited liability, legal protection, easy credit, bank loans, access to market.
- Lesser Compliance :The compliances for a one person company are much lesser in terms of filing returns, balance sheets, meetings, audit etc. as compare to that for other form of companies.
- Fast decision :As there is only owner of the company, it is easier to make fast decisions and avail the advantage of visible opportunity in time.
- Concentrated business activity :Lesser compliances make it favorable to concentrate on core business of the company.
- Business secrecy :Owner of OPC doesn’t have to share or sacrifice the business formulae / business secrets e.g. Product mix, software coding.
- Ownership :OPC enjoys the benefit of complete ownership as there is a single member.
- Successor :One can chose his successor to carry his business on very first day.
- No disputes:Being single owner company there is no chance of any disputes between members.
- Expertise of directors :Though it is a single person company, it can have as many number of expert directors on its board without losing privacy of the business.
- No AGM :OPC doesn’t need to hold an Annual General Meeting.
- Number of member :Only one person as member is required.
- Number of director :Minimum one and maximum can be 15 directors.
- No Independent director :OPC doesn’t need to appoint Independent directors on its Board.
- Retirement by rotation :Retirement of directors by rotation is not applicable.
Disadvantages of OPC
- Lock in Period :In case a LLP fails to file its Annual Return or Statement of Accounts and Solvency, penalty of Rs.100 per day per form is applicable.
- Turnover and Capital Restriction:If the paid up share capital of such OPC is increased beyond INR 50 Lakh AND its average annual turnover during the relevant period exceeds INR 2 crore, such OPC has to be COMPULSORILY converted in Private or Public Company. So we can say it has a limited life.
- Business Restriction:OPC cannot be incorporated or converted into a non-profit making company under section 8 of the Companies Act. OPC cannot carry out non-banking financial investment activities including investment insecurities of any other body corporate.
- Life of OPC :At any point of time the given criteria is triggered, the OPC loses its status and has to compulsorily get converted into private or public company.
- Single handed decisions :As major decisions are concentrated with single person, the business decisions may get delayed due to unavailability of that person.All decisions will be taken from the perception of single person and thereby may lose the advantage of other’s expertise.
- Mandatory Nomination :Though OPC is a single person entity, every OPC is obligated to nominate a person as a nominee at the time of incorporation only.
Compare with other options?
|Headings||OPC||Sole Proprietorship||Private Company||LLP|
|Governing Law||Companies Act||Shop & Establishment Act||Companies Act||Limited Liability Partnership Act|
|Separate Legal Existence||Have Separate Legal Existence||Doesn’t have Separate Legal Existence||Have Separate Legal Existence||Have Separate Legal Existence|
|Liability of Owner||Limited, if OPC limited by shares or guarantee||Always unlimited||Limited, if company is limited by shares or guarantee||Always limited|
|Classification||Limited by shares or limited by guarantee or unlimited||No such classification||Limited by shares or limited by guarantee or unlimited||No such classification|
|Threshold Limit||Paid up share capital upto INR 50 Lakh and average annual turnover upto INR 2 crore.||No such limit||No such limit||No such limit|
|Compulsory Conversion||Compulsory Conversion beyond threshold limit||No such restriction||No such restriction||No such restriction|
|Lock in period||Cannot voluntarily be converted for 2 years of incorporation||No such restriction||No such restriction||No such restriction|
|Nominee Requirement||Yes. Compulsory||Not required||Not required||Not required|
|Taxation||25% as private limited company (subject to conditions)||Income of the proprietorship is treated as the income of the and taxed accordingly.||25% for some companies (subject to conditions)||30%|
|Succession||Nominee||Legal heir or by will||Shareholders are the real owners||According to LLP agreement|
|Number of Members||Only one||Only one||Minimum 2, Maximum 200||Minimum 2 partners|
|Directors||Minimum 1, Maximum 15||—||Minimum 1, Maximum 15||Minimum 2 designated partners|
|Name||Suffix (OPC)||No restriction||Suffix Private limited or Private company||Suffix LLP|
|Transferability of shares||Part Transfer not possible, only 100% allowed||Can sell the business in totality||Can transfer partly or fully||Can transfer partly or fully|
|Agreement||AOA, MOA||AOA, MOA||AOA, MOA||LLP Deed|
|Capital||Share Capital||In form of cash and infrastructure only||Share capital||Contribution by Partners|
|Annual Filings||Income tax and ROC filing||Income tax filing of the owner of proprietorship||Income tax and ROC filing||Income tax and LLP annual filing|
|Board Meeting||Not required if only one member else at least 2.||No such Requirement||Minimum 4 meetings.||No such requirement.|
After incorporation of One Person Company?
- Opening OPC Bank Account within 30 days of Incorporation.
- Depositing of share capital money into bank account within 60 days of Incorporation.
- Issue of share certificate within 2 month of Incorporation
- Disclosure of interest by director/s in first board meeting after incorporation.
- OPC is required to file a copy of the financial statements duly adopted by its member, along with all the required documents, within 180 days from the closure of the financial year.
- One Person Company must file Annual Accounts and Annual Return with the Registrar of Companies each year. OPC should file its annual return within 60 days of the event of AGM.