One Person Company

One Person Company Registration in India is a relatively new concept which was introduced with the Companies Act, 2013. One Person Company in India can be incorporated with a single shareholder unlike a Private Limited Company where minimum two shareholders are required. Before introduction of One Person Company Registration in India, a single person had no other option but to establish a Sole Proprietorship to start business.

As discussed above the OPC Registration in India was introduced with Companies Act, 2013. As per Section 2(62) of the Companies Act, 2013, a one person company can be established with just one shareholder and one director. One Person Company gives a single entrepreneur a status of separate legal entity and at the same time the compliances of a One Person Company are lesser than those of a Private Limited Company.

Accordingly One Person Company registration in India can be obtained by a single person who is member and director of the company. In short, the member and director of a One Person Company can be the same person.

The first step towards registration of One Person Company in India is to get name approval of the OPC from the Ministry of Corporate Affairs (MCA). It takes one to two days to get the name approval from the MCA. The name should include Keyword, activity undertaken and should end with words OPC Private Limited. For example, if Ofin was a one person company, the name would be Ofin Legal (OPC) Private Limited.

It may also be noted that the company name should not be similar to existing company name or a registered trademark.

Here is the checklist for Incorporation of One Person Company in India

• One and Director required. Shareholder and Director can be same person.
• One nominee director is required.
• 2 Class III Digital Signatures wherein one is for the nominee director.
• DIN for both the Director – if you already have the DIN, make sure that the DIN is not disqualified and the eKYC is done.
• Name of One Person Company should be such that it does not resemble with the existing Company Name or a Registered Trademark
• Company must file intimation for commencement of business in form INC 20 A within 180 days from the date of incorporation and cannot start business activities before filing it.

The document requirement for One Person Company Registration can be divided into two sets, Documents for Registered Office Address proof and Documents for Partners.

Document for the Director / Shareholder / Nominee Director

• PAN Card and Adhaar Card (Mandatory)
• Passport Size photo
• One of , mobile bill, landline phone bill, latest bank statement / passbook, electricity bill of Director / Shareholder / Nomitee Director as Address Proof
• One of, Passport, Driving License or Vote’s I’d Card as Identity Proof (PAN Card is not accepted as Identity Proof)

Documents for Registered Office address proof:

• Consent from the owner of the proposed Registered Office premises is must
• Not more than two months old Gas, Electricity or Telephone bill depicting the address of the premises in the name of owner.
• If the proposed registered office is owned by a third person (other than Director / Shareholder), a rent agreement may also be required.

You can easily register your One Person Company with help of Ofin. The process is summed up in four easy steps as below:

• On receiving your request to start One Person Company, we get in touch with you and collect necessary details and documents
• We file a request for name reservation with the MCA and simultaneously get your Class III Digital Signature Certificates
• On receiving confirmation of name reservation, we apply for incorporation of One Person Company within 3 to 5 working days. MCA takes between 2 to 5 working days to approve the incorporation application if there is no further document requirement.
• On receiving Certificate of Incorporation and after opening Bank Account form INC 20 A is filed intimating the ROC for commencement of business.

Separate Legal Entity:

A One Person Company when incorporated is considered as artificial judicial person. It is a separate judicial entity.  A One Person Company can purchase its assets and borrow funds as a separate judicial entity.

Perpetual Succession:

The Companies Act provides for nomination of a Director to carry on business of the company in the event of death or inability of the stakeholder. This allows one person company to continue the business beyond the age of founding director.

Borrowing Power:

The legal status of One Person Company and its perpetual succession makes One Person Company preferable in the eyes of bank as compared to the Sole Proprietorship.

Transferability:

Transfer of shares of Private Limited Company can be done easily by signing share transfer forms and handing over the Share Certificates.

Easy compliance:

Although it is mandatory to file the accounts with requisite annual returns with the Ministry of Corporate Affairs in case of a One Person Company, the procedure is kept quite simple in comparison with a Private Limited or a Limited Company.

Ownership of Property:

Being an artificial judicial person an OPC can buy property in its name. The OPC becomes the owner of the property.

Limited Liability:

This is probably the most important advantage of an OPC over a sole proprietorship. Shareholder of an OPC is liable only to the extent of the unpaid amounts of shares held by him. Personal assets of share holders cannot be liquidated if company defaults.

Suitable for small business:

OPC is suitable for small businesses. An OPC can have maximum paid up share capital of Rs. 50 lacs and maximum turnover of Rs. 2 crores. Otherwise the OPC needs to convert itself to a Private Limited Company.

Restriction on business activities:

An OPC cannot be registered for non-banking financial services or investment in securities business.

Perpetual Succession:

The purpose of having separate legal entity for perpetual succession is doubtful as the nominee director whose name is mentioned in the MoA will become member of the OPC in the event of death of member. However the nominee is not taking active part in the business and may not be able to succeed after death of the member.

Restriction on number of OPCs:

A member is restricted from being a member in more than one OPC and he cannot be the nominee too if he is a member of one OPC.

Requirement to appoint nominee:

Sometimes the requirement of appointing nominee too makes the member not much interested in incorporating OPC.

Dividend:

An OPC is required to pay Dividend Distribution Tax on the profits post tax if it wants to declare dividend. Eventually the Income Tax rate for an OPC will be higher than a Proprietorship.