One Person Company

The One Person Company (OPC) is a novel concept introduced by the Companies Act of 2013. As the name implies, an OPC is a business founded by a single individual. It assists business owners who operate under a corporate structure as sole proprietors. An OPC provides its stockholders with limited liability protection and is a distinct legal entity from its members. 

Lawgical Adda attempts to give a thorough overview of the entire process of incorporating an OPC, including information on the required paperwork, stages, and compliance requirements.

What is a One-Person Company? 

Under the Companies Act of 2013, Section 2(62) permits the formation of an OPC with a single member and director, who may be the same person. This cutting-edge business structure simplifies compliance requirements while retaining classic company features, making it a desirable choice for sole proprietors, whether locals or non-resident Indians.

Steps to Register a One Person Company in India

Apply for DSC

Obtaining the proposed director's Digital Signature Certificate (DSC) is the initial stage, and it needs the following paperwork:

• Proof of address, 
• Adhaar card, 
• PAN card, 
• photo, 
• email address, 
• and phone number

Request a DIN

The next step is to apply for the proposed director's Director Identification Number (DIN) in the SPICe+ form with the director's name and proof of address after creating the Digital Signature Certificate (DSC). The opportunity to use Form DIR-3 is limited to already operating businesses. This indicates that starting January 2018, the applicant will not have to submit Form DIR-3 individually. DIN can now be applied to up to three directors using the SPICe+ form.

Application for Name Approval

The next step in the incorporation process of an OPC is choosing a name. The company will be known as “ABC” (OPC) Private Limited.

The Form SPICe+ application allows for the approval of the name. Only one preferred name and the rationale for retaining that name may be provided. If the name is refused, another Form SPICe+ application can be made with a different name.

We proceed to the following stage after the MCA approves the name.  

Submission of Documents

Memorandum of Association (MOA)

The OPC's Memorandum of Association outlines the firm's goals, the amount of permitted share capital, and the kinds of operations it plans to conduct.

Articles of Association (AOA)

The guidelines that control the OPC's internal operations and management are included in the AOA.

Consent of the Designated Director

The nominee director designated by the OPC must give permission to serve as a director in the company. Should he become unable to carry out his responsibilities or pass away, the nominee will act as the director's replacement. His PAN and Aadhar cards will be collected along with his agreement in Form INC—3.

Proof of Registered Office 

Lease agreements or ownership deeds and utility bills serving as proof of address prove the OPC's registered office.

Declaration and Affidavit

An affidavit and a declaration indicating their consent to function in their respective capacities must be submitted by the nominee director and the director.

Proof of Identity and Address

The director and nominated director must provide identification (passport, Aadhar card, or PAN card) and evidence of address (bank statements, utility bills, voter ID, or utility bills).

Photos the size of a passport

Passport-sized pictures of the nominee director and the director that were recently taken.

Board Resolution

If the memorandum's subscriber is a corporate entity, a board resolution approving the OPC's incorporation and the appointment of the director and the nominated director is necessary

Additional Records

Any further documentation that the Companies Act of 2013 or the RoC specify.

Submitting forms to the MCA

Along with the Director's and the professional's DSC, these documents will be linked to the SPICe+ Form, SPICe-MOA, and SPICe-AOA and sent to the MCA website for approval. The PAN number and TAN are automatically produced when the company is incorporated, so submitting separate applications to get a TAN and PAN number is unnecessary.

The Certificate of Incorporation

You can start functioning as a company after receiving a Certificate of Incorporation from the Registrar of Companies (ROC) following verification..

One-Person Company Benefits in India

Better Organization

The unorganized sector of a proprietorship through OPC will be integrated into a private limited company's organized form. Numerous small and medium-sized businesses operating as sole proprietors may venture into the corporate sphere. The restructured OPC will create opportunities for better banking arrangements.

Limited Liability

Limited liability is undoubtedly the primary motivator for shareholders to form a "single-person company." Since an entrepreneur cannot always control bad things that happen to their business, it is crucial to protect their assets if a crisis arises.

Safeguarded through a Nominated Director

A substitute nominated director should be appointed in case of the director's death or incapacity. The nominated director will oversee the company's operations following the death of the original director until the shares are transferred to the deceased member's rightful heirs.

Quick Loans

Financial and banking institutions favor lending money to businesses over proprietary ones. Before approving funding, banks typically demand that business owners change their company structure to a private limited company. Therefore, registering your startup as a One-Person Private Limited is preferable to registering it as a proprietary firm.

Compliances of a One-Person Company

The following are the One-Person Company (OPC) required annual compliances:

Holding Annual General Meeting (AGM): OPCs must hold an AGM within six months of the conclusion of their fiscal year. Even if the OPC has just one director, an AGM is still required.

Financial Statements: Within 30 days of the Annual General Meeting (AGM), OPCs must compile and submit balance sheets, profit and loss statements, and cash flow statements to the Registrar of Companies (ROC).

Income Tax Return Filing: OPCs are required to file income tax returns by July 31st of every year.

Annual Return Submission: OPCs must submit an annual return to the MCA within sixty days of the AGM.

Statutory Audit: Qualified chartered accountants must do a statutory audit of OPCs' financial accounts.

Upkeep of Statutory Registers and Records: OPCs must keep several statutory registers and records, including the minutes of board meetings, the register of directors, and the register of members.

Pro tip: OPCs who fail to comply with these annual compliance requirements may be deregistered and face severe penalties and fines. As a result, we suggest that they adhere to these requirements.

One-person companies (OPCs) are a versatile and alluring choice for entrepreneurs and small enterprises. Compared to other business organization types, it has several benefits, such as limited liability, a distinct legal entity, single ownership, ease of setup, minimal compliance needs, tax advantages, and easier access to capital. Thus, an OPC can be the best option for you if you want to launch a business.