One Person Company (OPC) Registration
Are you an aspiring individual and want to start your own business? One Person Company (OPC) registration might be your ideal solution. let’s embark on this informative journey and uncover all you need about OPC registration. OPC offers a viable option for individuals. It combines the benefits of a sole proprietorship and a private limited company. One Person Company comes with fewer compliance requirements. And at the same time, OPC registration is a very quick, easy and inexpensive registration. OPC registration is a significant step towards turning your business dreams into reality.
How Legal Compliance India will help you with One Person Company (OPC) registration.
Registering a One Person Company (OPC) in India can be a rewarding venture, offering limited liability and ease of compliance. However, the registration process involves navigating through various legal formalities and ensuring compliance with the Companies Act, 2013, and other relevant regulations. This is where professional assistance from a reliable service provider like Legal Compliance India can make all the difference.
Eligibility and documents check
Assisting in finding a unique name
Applying the DIN and DSC of the directors
Preparation of necessary forms
Deliver your COI with all the necessary documents
One Person Company
OPC registration is a legal structure that allows a single individual to establish and run a company. After the Companies Act, of 2013, entrepreneurship became easy. They have introduced the OPC (One Person Company) concept to facilitate small-scale businesses. Earlier, before the implementation of the Companies Act, of 2013, only two persons could form a company. However, now even a single individual can run a company without adding other directors or members. OPC requires only a single director and a member to execute the whole company.
Nonetheless, One Person Company received a separate legal entity status after the Companies Act, of 2013, section 262. In addition in One Person Company Registration, the director or member can be the same.
Eligibility Criteria for OPC Registration in India
- The foremost eligibility criterion for OPC registration is that the individual must be a resident of India.
- As the name suggests, an OPC can have only one director and one shareholder.
- To safeguard the interests of stakeholders and in case of the sole proprietor’s incapacitation or death, every OPC is required to nominate a person as a nominee in its Memorandum of Association (MOA).
- The nominee must be an Indian resident and provide his/her consent to act as the nominee. It is crucial to select a nominee carefully, as the person will play a vital role in any unforeseen circumstances.
- OPC cannot be incorporated for charitable or non-profit purposes.
- An individual can be a member of only one OPC at any given time.
- Businesses involved in financial activities cannot opt for OPC registration.
Documents Required for One-Person Company (OPC) Registration in India
Registering a One-Person Company (OPC) in India requires the submission of various documents to the government authorities.
1. Identity and Address Proof of the Director/Shareholder
Aadhar Card:
The director/shareholder of the OPC must provide a self-attested copy of their Aadhar card. The Aadhar card serves as a primary identity proof and is essential for the government’s Know Your Customer (KYC) process.
Passport/Driving License/Voter ID:
Additional identity proofs such as a passport, driving license, or voter ID may also be required for verification purposes. These documents help establish the director/shareholder’s identity and residential address.
2. Passport-sized Photograph
The OPC registration process requires a recent passport-sized photograph of the director/shareholder. The OPC registration process requires a recent passport-sized photograph of the director/shareholder. The photographs cannot be blurry, it has to be of good quality.
3. Proof of Registered Office
Utility Bill
A recent utility bill (not older than two months) such as an electricity bill, water bill, or property tax receipt should be provided as proof of the registered office address. The bill must display the address and should be in the name of the OPC’s director/shareholder.
No Objection Certificate (NOC)
If the registered office is rented or leased, a No Objection Certificate (NOC) from the landlord is required, permitting the use of the premises as the registered office of the OPC.
Rent Agreement
In case the registered office is rented or leased, a copy of the rent agreement should be submitted as proof of the office’s address. The agreement should be valid and in force.
4. Memorandum and Articles of Association (MOA and AOA)
The MOA and AOA are essential documents that outline the company’s objectives, rules, and regulations. These documents need to be drafted carefully, as they form the foundation of the OPC’s operations and activities.
5. Director Identification Number (DIN)
The director/shareholder must obtain a Director Identification Number (DIN) before incorporating the OPC. The DIN is a unique identification number required for all directors of companies in India.
6. Digital Signature Certificate (DSC)
A Class-II Digital Signature Certificate (DSC) is mandatory for the director/shareholder to sign the electronic documents during the OPC registration process.
7. Consent to Act as Director
The director/shareholder must provide a consent letter stating their willingness to act as the director of the OPC. This letter should be on plain paper and signed by the individual.
8. Declaration of Compliance
A declaration of compliance stating that all the Companies Act, 2013 requirements have been complied with should be submitted by the director/shareholder.
Components of One Person Company (OPC) Registration Fees
Incorporation Fees
The incorporation fees constitute the primary cost for registering an OPC in India. These fees must be paid to the government during the registration process. The amount of incorporation fees is based on the authorized capital of the OPC. The official capital is the maximum value of shares that an OPC can issue to its shareholders.
Stamp Duty on MOA and AOA
The Memorandum of Association (MOA) and Articles of Association (AOA) are two critical documents that define the company’s objectives, rules, and regulations. These documents need to be printed on non-judicial stamp paper. The stamp duty varies from state to state and is usually based on the authorized capital or the total share value.
Professional Fees
While not mandated by the government, engaging the services of professionals such as chartered accountants, company secretaries, or legal advisors can be beneficial during the OPC registration process. These professionals can ensure that all the necessary documents are correctly prepared and submitted, reducing the chances of errors or rejections.
Note: Starting an OPC in India is an exciting venture, but it requires careful planning, including budgeting for the OPC registration cost. Understanding the components of these fees, such as incorporation fees, stamp duty, and professional fees, will help you plan your finances better and ensure a smooth registration process.
One Person Company(OPC) Registration Process in India: Step-by-Step
Starting a One-Person Company (OPC) in India involves a well-defined registration process that aspiring entrepreneurs need to follow. Here’s a step-by-step guide to help you navigate the OPC registration process smoothly:
Step 1: Obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN)
The initial step is to acquire a Digital Signature Certificate (DSC) for the proposed director. The DSC is necessary for filing electronic forms online, while the DIN is a unique identification number required for all company directors. The application for DSC and DIN can be made through government-approved agencies.
Step 2: Name Reservation
Once the DSC and DIN are acquired, the next crucial step is to reserve a suitable name for your OPC. The name should be unique, not infringe upon any existing trademarks, and must comply with the naming guidelines issued by the Ministry of Corporate Affairs (MCA). It is essential to choose a name that reflects the nature of your business and ends with “Private Limited.”
Step 3: Drafting the Memorandum and Articles of Association
The Memorandum of Association (MOA) and Articles of Association (AOA) are vital documents that outline the company’s objectives, rules, and regulations. These documents should be drafted with the utmost care, as they define the scope and activities of your OPC. The MOA and AOA must be stamped and filed with the Registrar of Companies (ROC).
Step 4: Filing Incorporation Documents
With the MOA and AOA in place, the next step is to file the incorporation documents with the ROC. These documents include the Memorandum and Articles of Association, the subscriber’s sheet, and the declaration by the proposed director confirming compliance with all requirements. Along with these documents, Form SPICe (Single Person Company – Incorporation) should also be submitted.
Step 5: Payment of Registration Fees
To complete the registration process, the prescribed registration fees need to be paid online through the MCA portal. The fees are based on the authorized capital of the OPC.
Step 6: Certificate of Incorporation
Once all the required documents are filed, and the registration fees are paid, the ROC will thoroughly examine the application. If everything is found to be in order, the ROC will issue the Certificate of Incorporation. This certificate signifies the official formation of your OPC, and you can proceed with your business operations.
Step 7: PAN and TAN Application
After obtaining the Certificate of Incorporation, the next step is to apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN). These are essential for conducting financial transactions and complying with taxation requirements.
Step 8: Opening a Bank Account
With the PAN and TAN in hand, you can now open a bank account in the name of your OPC. This bank account will be the operational account for all business transactions, and it is crucial to keep business finances separate from personal finances.
Step 9: Statutory Compliances
As an OPC owner, you must be aware of various statutory compliances required to operate your business smoothly. These include filing annual returns, maintaining financial statements, and adhering to income tax regulations. Compliance violations may result in penalties and legal repercussions.
Step 10: Conversion to Private Limited Company
If your OPC’s paid-up capital surpasses the prescribed threshold or the annual turnover exceeds the specified limit, you must convert it into a private limited company. This conversion is mandatory as per the Companies Act, 2013.
Following these steps diligently will ensure a seamless registration process for your one-person company in India. It is advisable to seek professional guidance from company registration experts or legal advisors to avoid any potential pitfalls and ensure complete compliance with the legal requirements.
Restrictions on One-Person Company
Only One Director and Shareholder
Sole Membership: As the name suggests, an OPC can have only one member, who acts as the sole director and shareholder of the company. This unique feature is what sets OPC apart from other types of companies in India. The limitation of a single member is intended to ensure that the company remains truly a one-person venture.
Restriction on Creating Subsidiaries: An OPC cannot incorporate or become a subsidiary of another company. This means that an OPC cannot hold shares in any other entity or be owned by another company. This restriction is designed to maintain the standalone nature of the OPC and prevent complexities in ownership structures.
Threshold Limit for OPCs
Paid-Up Capital Limit: To encourage small and micro-businesses, the government has imposed a threshold limit on the paid-up capital of OPCs. As per the Companies Act, 2013, an OPC cannot have a paid-up capital exceeding Rs. 50 lakhs or such higher amount as prescribed by the government. If the company’s capital crosses this limit, it must convert into a private limited company within six months.
Turnover Restriction: Another significant restriction on OPCs is related to turnover. An OPC cannot have an average annual turnover of more than Rs. 2 crores in the preceding three financial years. If the OPC’s turnover exceeds this threshold, it must convert into a private limited company within six months.
Prohibition on Certain Businesses
Non-Banking Financial Activities: OPCs are not allowed to engage in non-banking financial activities, such as investments in securities, loans, or deposits. These activities are strictly regulated, and OPCs must adhere to the prescribed guidelines.
Foreign Direct Investment (FDI): OPCs are not eligible for receiving foreign direct investment (FDI). Foreign investment is allowed only in specific types of entities, and OPCs do not fall under this category.
Benefits of One-Person Company (OPC) Registration
OPC registration offers several advantages for entrepreneurs:
Limited Liability Protection
One of the key benefits of OPC registration is limited liability protection. As a sole owner, your personal assets remain separate from your business liabilities. In the event of any legal disputes or debts, the owner’s personal assets are protected.
Separate Legal Entity
OPC enjoys a separate legal entity status, which means it can enter into contracts, acquire assets, and engage in legal proceedings in its own name. This provides credibility and enhances the business’s reputation.
Continuity of Existence
The existence of an OPC is not affected by the death or retirement of its owner. The nominee director takes charge, ensuring the continuity of the company’s operations and business activities.
Easy Transferability
Shares and ownership in an OPC can be easily transferred to another person, providing flexibility in case the owner wishes to sell or transfer the business.
Minimum registration requirements
When registering an OPC, the requirements are significantly lower than when registering other types of companies.
More reliable
Because OPC is owned by one individual, the accounts are audited annually, adding to the credibility of the company.
Ease in Income Tax
If your business is unique and has the potential to create greater employment opportunities, you can register your OPC with the Government’s India Startup Program and enjoy income tax benefits for at least five years.
Getable Funding
OPC may raise funds through financial institutions, corporations and other investors. To raise funds externally, OPC can be extended to private companies.
Easy Succession
The company’s day-to-day operations are all headed by one person, but OPC offers the option of a permanent succession. After the death of the member, the candidate can continue to run the company.
