One Person Company Registration

An Overview of One Person Company Registration

As per Section 2(62) of Companies Act, 2013 “One Person Company” (OPC) is a company where it has only one person as its member. It was a step ahead to encourage the individual to incorporate their own companies, and execute their business ideas. OPC enables a sole proprietor to convert his firm into a Limited Liability Company and avail the benefits of a Company.

An OPC is a business structure that enjoys the benefits of both forms of business, i.e., a sole proprietorship and a company. Thus, it eliminates the hassles of finding the right kind of co-partner/s for starting a business as a registered entity.

One Person Company is bringing the unstructured Proprietorship Business into the structured version of a private company. OPC is opening the path for sole proprietors and start-ups to bring out their un-conventional and unique ideas into execution

According to Section 3(1) (c) of the Companies Act, 2013, the OPC can be formed for any lawful purpose by an individual. 

Section 2(62) states that the "One Person Company is a company which has only one person as a member".

One Person Company is conceded as a private company. It is a company with one director and one shareholder only. An individual can now avail the benefit of limited liability doing sole proprietorship. The One Person Company is an example of vital growth in the corporate sector of our country.

Benefits of Registering One Person Company

OPC is a company that can be formed with one Director and a member. It provides better opportunities with minimal compliance.

Easy Incorporation 
Under One Person Company, a single person can start a business with minimal compliance. For the purpose of incorporation, there is merely one member and only one nominee needed.  Neither any paid-up capital is required for the same.

Complete Control by the Individual
Being a single-person organisation, the entire controls lies in the hands of the individual, resulting in better decision making and quick responses to the upcoming scenarios as their won’t be any conflict of interest.

Easy Compliance and Tax Flexibility
The Companies Act, 2013 proposes a limited adherence of compliance in case of OPC. Lesser compliances lead to easy management and limited involvement of time and professionals. However, the OPC needs to show their annual cash flow and directors are required to maintain accounts and file annual returns.

Benefits for Small Scale Industries
One Person Company avails the benefits provided to small-scale industries like easy funding, less compliance, loans at a lower interest rate, etc.

Ease in Funding 
The OPC can take its funds through financial institutions, capital ventures, and other investors. To bring up its funds from outside, the OPC can upgrade itself into a private company.

Least Requirements for Registration
The process of incorporation of one person Company is fairly easy as compared to incorporation of other forms of Business Organisations.

Greater Credibility 
As OPC is owned by a single person so its accounts are audited annually, and thus it has greater credibility.

Significant Growth
The One Person Company is completely based on the sole ownership of the Company and a Centralised Management System that pushes the Company towards achieving significant growth and a bigger contribution to our country's economy.

Income Tax Benefits 
If the company registered proposes the potential to create larger employment opportunities, in such a case, the same can be registered under the Start-up India scheme of the Government and can avail the Income Tax benefit for at least next five years.

Sole Business Ownership 
Sole ownership provides stability in business since there will be no possibility of conflict of interest among the group of shareholder, as the business is being run by a single individual.

Increased Transparency
Another benefit of One Person Company is increased transparency while dealing with government authorities. The transparency can be seen on both ends, i.e., from the Government and the applicant.

Beneficial to Sectors like MSME and SME
OPC is beneficial to some specific sectors such as MSME and MSE. Businesses in rural areas are prevailing because of MSMEs and SMEs, so by OPC, these services can be enhanced. As one person company needs financial help from public sector undertakings and institutions, the limited liability can save the OPC from any debt. OPC incorporation can positively impact the reputation and growth of MSMEs and SMEs.

Exemptions available to OPCs under the Companies Act, 2013 

• Section 96. Option to dispense with the requirement of holding an AGM. 
• Section 98. Power of Tribunal to call meetings of members. 
• Section 100. Calling of extraordinary general meeting. 
• Section 101. Notice of meeting. 
• Section 102. Statement to be annexed to notice. 
• Section 103.  Quorum for meetings. 
• Section 104. Chairman of meetings. 
• Section 105. Proxies. 
• Section 106. Restriction on voting rights.
• Section 107. Voting by show of hands. 
• Section 108. Voting through electronic means.
• Section 109. Demand for poll. 
• Section 110. Postal ballot. 
• Section 111. Circulation of members’ resolution.

Features of One Person Company

Perpetual Succession
Even if there is only one member still, the OPC has a feature of perpetual succession. After the death of the only member of the Company, the nominee has the authority to run the Company.

Limited Liability and Separate Legal Entity from its Member
In the case of One Person Company, the member has limited liability. Being a company, OPC has a separate legal existence from its member. The separate legal entity gives protection to its member as the liability is limited to his shares, and he is not liable for the loss of the Company. The creditors can sue only the Company and not the Director or member for Company's debt.

Nominee
The name of another person, i.e., the nominee, will be added to the Memorandum of Association with his prior consent. This nominee would take the place of the proprietor after the sole proprietor's death or his incapacity to form a contract. The written consent of this nominee will also be filed with the registrar of companies during incorporation of the OPC along with the Company's AOA and MOA.

Sole Director and shareholder 
In case of OPC, the Member, the Director and the shareholder is the one and the same individual. And since entire management is being controlled by an individual it eliminates the need to have an independent or executive director in the company.

Owner of the property
Since the OPC hold an artificial person status, it holds all the property related to business such as machinery, land, factories, residential property, building, and other assets of the Company in his own name, and no person can claim over any of such property. OPC can acquire, alienate and own the property in its own name.

Eligibility Criteria for Registering One Person Company

One should fulfill the following eligibility criteria before registering as One Person Company : - 

• A natural person who is a resident of India can form OPC in the preceding calendar year.
• Only one member can form an OPC.
• The name should be unique and should not be similar to any other existing company and trademark.
• An individual cannot incorporate more than 1 OPC, or an individual cannot be the nominee of more than 1 OPC.
• There must be a least one director.
• In the case of OPC, the threshold limit of paid-up capital is Rs 50 lakh, and the Average Annual turnover is Rs 2crore in the immediately preceding financial year. However, as per the latest budget now, there is no restriction on paid up and turnover limit.
• One Person Company must include in its name (OPC) Private Limited.
• Prior condition to indicate the name of the other individual as a nominee. As in the event of the death of the subscriber, a nominee becomes a member of the One Person Company.

One Person Company (Rule 3 of Companies (Incorporation) Rules, 2014) 

1. Only a natural person who is an Indian citizen and resident in India, i.e., a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year shall be eligible to incorporate a One Person Company and a nominee for the sole member of a One Person Company. 
2. A person shall not be eligible to incorporate more than one OPC or become nominee in more than one such company. 
3. A minor shall not become member or nominee of the One Person Company or can hold share with beneficial interest. 
4. Such a Company cannot be incorporated or converted into a company under section 8 of the Act. 
5. Such a Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body-corporate. 

No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except when the threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.

Documents Required for One Person Company Registration

The followings are the documents required for registration of One Person Company:

• PAN card or passport
• Passport, in case of NRIs and foreign nationals 
• Scanned transcript of voter's ID and driver's license 
• Latest gas or electricity invoice/ bank account statement/ mobile phone or landline invoice 
• Specimen signature
• Passport-size photographs

The documents must be self-attested. The paper works of NRIs must be notarized or apostilled. 

Other Documents required by Registered Office:

• Scanned transcript of gas or electricity invoice/ bank account statement/ mobile phone or landline invoice
• Scanned transcript of rent agreement
• Scanned transcript of No-objection Certificate (NOC) from the owner of the land, in case the member owns the property, then scanned transcript of sale deed.

Procedure for Registering One Person Company

The applicant should follow the requisite steps for registration of One Person Company:

Step-1- To Get DSC
For registration, it is required for the applicant to get a Digital Signature Certificate (DSC) issued by the Certifying Authority.

Step-2- To Get DIN 
Director Identification Number (DIN) is for the proposed Director. The DIN is applied in the SPICe Form along with the details of the Director.    

Step-3- Approval of Name
The name of the Company will be in the form of XYZ (OPC) Private Limited.

RUN service will be used to check the availability of names, and one name for the OPC can be applied through SPICe (INC 32).

Step-4- Incorporation of One Person Company
Within twenty days from the date of approval of RUN, i.e., approval of name form SPICe shall be filed for incorporation of OPC. All the requisite documents shall be attached with the form SPICe and will be uploaded on the MCA portal. The PAN and TAN will automatically generate at the time of incorporation. 

Step-5- Obtaining a Certificate of Incorporation
The Registrar of Companies will issue a COI, i.e Certificate of Incorporation if he finds the information along with the documents appropriate.

Restrictions on One Person Company

• No minor shall become a member or nominee of the One Person Company.
• No minor can hold a share with beneficial interest.
• OPC cannot perform voluntary conversion before the completion of 2 years from the date of incorporation of OPC.
• It cannot be incorporated or converted into a company under section 8 of the Act.
• It cannot perform Non-Banking Financial Investment activities.

Important Instructions - filing of eform for Incorporation 

• User is required to file eForm INC-2 for incorporation of One Person Company. 
• It is suggested that eForm DIR-12 should be filed together at the time of filing of eForm INC-2 if the member is not the sole director of the company.
• In case the address for correspondence is not the address of the registered office of the Company, user is required to file INC-22 within 30 days of its incorporation.
• Stamp duty on eForm INC-2, Memorandum of Association (MoA) and Articles of Association (AoA) can be paid electronically through the MCA portal. 
• Payment of stamp duty electronically through MCA portal is mandatory in respect of the States which have authorized the Central Government to collect stamp duty on their behalf. Now eStamp duty payment is to be done online through the MCA portal for all the states. 
• Refund of stamp duty, if any, will be processed by the respective state or union territory government in accordance with the rules and procedures as per the state or union territory stamp Act. 
• The user is required to scan the photograph of every subscriber with MOA and AOA. 
• The company can have its registered office from the date of incorporation or on and from the 15th day of its incorporation.  Till the same is established and intimated to the RoC, the company can have its correspondence address capable of receiving and acknowledging all communications and notices as may be addressed to it. 
• Enter the details of the registered office address of the company if the company is having its registered office from the date of its incorporation. 
• Enter the valid email id of the company. Ensure that this email ID is valid as intimation regarding processing of the eForms, important communication from RoC office shall also be communicated electronically at the email ID being mentioned here. 
• Enter the details of the address of the police station under whose jurisdiction the registered office of the company is to be situated. 
• Enter the details of authorized and subscribed share capital break up in case of a company having share capital. 
• No minimum paid-up capital requirement 
• The minimum and maximum number of members for One Person Company is one only. 
• The subscriber to the Memorandum shall ensure that the payment for the total amount of shares subscribed by him is made to the company upon incorporation. 
• Enter the number of shares, total amount of shares and nominal amount per share for each type of share. At least one type of share capital (Equity/ Preference) should be greater than zero. 
• In case the company has shares of multiple nominal amounts per share, then enter multiple nominal values per share separated by a comma in the field Nominal amount per share. 
• The main division of industrial activity of the company. — Enter the details of the promoter. 
• The user is required to file eForm DIR-12 in case the promoter and director are not the same persons. 
• Enter either DIN or Income-tax PAN. In case a DIN is entered it should be an approved DIN. 
• For cases of PAN, Name, and address of the promoter is required to be entered. The system shall verify the name of the promoter based on the PAN entered. 
• Enter surname or family name in the field Family Name. 
• Enter all other relevant particulars of the promoter including the duration of stay at the present address. If the duration of stay is less than a year at the present address, enter the details of the previous residence of the promoter. Ensure that the Promoter of One Person Company is always an Indian citizen and resident in India and the promoter shall be eligible to incorporate only one OPC. 
• Every One Person Company is required to indicate the name of other person as a nominee to the sole member in the memorandum and the nominee for the subscriber should be an individual who is an Indian citizen and resident in India. 
• Enter the name of such a nominee. 
• Enter the details of the nominee by entering approved DIN or valid Income-tax PAN. In case DIN is entered, the system shall automatically display the name, middle name, surname, father’s name, and gender of such person. 
• Provide details of stamp duty already paid. 
• Ensure the eForm is digitally signed by the same person whose designation is reflected in the declaration section of the e-Form.
• In case the person digitally signing the eForm is a Director - Enter the approved DIN. 
• In case the person digitally signing the eForm is Company Secretary - Enter a valid membership number. 
• In case the person digitally signing the eForm is Manager - Enter approved DIN or valid income-tax PAN.
• It is mandatory to attach the 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 in Form INC-3 along with enclosures, affidavit from the subscriber and first director to the memorandum in Form No. INC-9. 
• It is mandatory to attach Specimen Signature in Form INC-10 in case the company is 'Not have share capital '. 
• It is mandatory to attach entrenched Articles of Association if any of the articles are entrenched. 
• Proof of registered office address and copies of the utility bills not older than two months are required to be attached in case of the address of correspondence is the address of the registered office of the company. 
• It is mandatory to attach proof that the company is permitted to use the address of the registered office of the company if the same is owned by the director/any other entity/ Person (not taken on lease by the company). 
• It is mandatory to attach consent to act as a director in case the subscriber and director are the same persons. 
• List of all the companies (specifying their CIN) having the same registered office address, if any.