One Person Company (OPC) Registration
One Person Company - An Overview
One Person Company (OPC) registration in India was introduced under the Companies Act of 2013. This allows a single individual to establish a company, combining the benefits of both a sole proprietorship and a traditional company structure. This concept was implemented with the Companies Act in 2013.
The main goal of creating one-person companies was to promote entrepreneurship and encourage the formalization of Micro, Small, and Medium Enterprises (MSMEs). According to Section 2(62) of the Companies Act 2013, a company can be formed with just one director and one member, and these roles can be held by the same individual. In simple terms, OPC registration allows a single person to set up a limited liability company in India. Below are the eligibility criteria and the procedure to register a one-person company.
Eligibility Criteria for an OPC
Before starting the OPC registration process, it is important to understand the specific eligibility criteria and limitations governing its formation. The Companies Act sets out clear requirements that must be met to ensure the individual promoting the OPC is eligible.
- Natural Person and Indian Citizen:
Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs cannot create an OPC. - Resident in India:
The promoter must be a resident of India, meaning they should have lived in India for at least 182 days during the previous calendar year. - Minimum Authorized Capital:
The OPC must have a minimum authorized capital of Rs 1,00,000, as stated in the company’s capital clause during registration. - Nominee Appointment:
The promoter must appoint a nominee during the OPC’s incorporation. This nominee would become a member of the OPC if the promoter dies or becomes incapacitated. - Restrictions on Certain Businesses:
Businesses involved in financial activities such as banking, insurance, or investments are not eligible for OPC registration. - Conversion to Private Limited Company:
If the OPC’s paid-up share capital exceeds 50 lakhs or its average annual turnover surpasses 2 crores, it must be converted into a private limited company to comply with the regulatory requirements for larger companies.
It is also important to note that an individual can establish only one OPC, and an OPC cannot have a minor as its member.
Advantage of One Person Company (OPC)
Here are some benefits of registering an OPC:
- Legal Status:
An OPC obtains a separate legal entity status, protecting the individual who founded it from personal liability for company losses. - Easy Fundraising:
Being a private company, OPCs find it easier to raise funds through venture capitalists, angel investors, and banks compared to proprietorship firms. - Reduced Compliance:
OPCs enjoy certain exemptions from compliance requirements under the Companies Act, 2013, simplifying administrative obligations. - Simple Incorporation:
OPCs can be established with just one member and one nominee, with the member also serving as the director. No minimum paid-up capital requirement simplifies the incorporation process. - Efficient Management:
With a single person managing the OPC, decision-making is swift, leading to efficient company management without conflicts or delays. - Perpetual Succession:
OPCs maintain perpetual succession, ensuring the company’s continuity even with only one member.
Disadvantages of an One Person Company (OPC)
While OPCs have advantages, they also have limitations:
- Suitable for Small Businesses:
OPCs are mainly suitable for small-scale businesses as they can only have one member. This limits their ability to raise additional capital as the business grows. - Restriction on Business Activities:
OPCs cannot engage in certain activities, such as non-banking financial investments and charitable objectives, making them ineligible for OPC registration in these sectors. - Ownership and Management:
There is a lack of clear distinction between ownership and management in OPCs since the sole member can also be the director. This can lead to ethical concerns or conflicts of interest.
Documents Required for an OPC Registration
To register an OPC, the following documents must be prepared and submitted to the Registrar of Companies (ROC):
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Nominee’s Consent: The nominee’s consent, along with their PAN card and Aadhaar card, must be submitted via Form INC-3.
- Proof of Registered Office:
- Director’s Declaration: The proposed director should furnish a declaration in Form INC-9 and their consent in Form DIR-2.
- Compliance Declaration: A declaration by a qualified professional certifying that all necessary legal compliances have been adhered to
Procedure for Registration of OPC in India
In India, OPC registration is done through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which has replaced previous application forms for company incorporation.
The OPC Registration process consists of two parts:
Part A:
This initial section of the SPICe+ form is dedicated to securing approval for the desired company name and applying for the Director Identification Number (DIN) or Permanent Account Number (PAN) for the proposed director.
Part B:
This subsequent section involves furnishing incorporation-related details, such as the registered office address of the OPC, details about share capital, particulars of the director, and information about the shareholder.
Here are the steps for OPC registration online:
Step 1: Obtain a Digital Signature Certificate (DSC):
Secure a Digital Signature Certificate (DSC) for the intended director of the OPC. The DSC is used for electronically signing important documents.
Step 2: Obtain Director Identification Number (DIN):
Acquire a Director Identification Number (DIN) for the proposed director from the Ministry of Corporate Affairs (MCA).
Step 3: Name Reservation:
Apply for name reservation through the MCA portal using Form SPICe+ (Part A). Ensure the chosen name for your company is distinct and does not resemble any existing company or trademark.
Step 4: Prepare MOA and AOA:
Draft the Memorandum of Association (MOA) and Articles of Association (AOA) for your company. These documents define the company’s objectives and internal rules.
Step 5: File the Forms:
File the necessary forms with the MCA to register the OPC. Attach the relevant documents to the SPICe+ form, including MOA, AOA, declarations, proof of the registered office, nominee appointment, and other required documents.
Step 6: Certificate of Incorporation:
Upon approval by the ROC and verification of compliance requirements, the ROC will issue a Certificate of Incorporation, signifying the successful registration of your OPC. Notably, the PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are generated automatically during the incorporation process, eliminating the need for separate applications.
With this Certificate of Incorporation, your OPC is officially recognized and ready to start its operations in India.
How CRSB can help you in Registration of OPC ?
CRSB is the ideal partner for OPC registration online for several compelling reasons. With years of expertise in company registration and a deep understanding of the regulatory landscape, CRSB simplifies the often complex OPC registration process. Our OPC registration fees are designed to be affordable while providing exceptional value, ensuring a seamless experience from start to finish.
We offer expert guidance, from name reservation to document preparation and submission, for an effortless OPC registration process. Our commitment to accuracy and compliance guarantees that your OPC registration adheres to all legal requirements, while our dedicated support team is readily available to address any questions or concerns. With our transparent OPC registration fees, you can trust CRSB to deliver reliable and professional service tailored to your needs.
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