About One Person Company
A One Person Company (OPC) is a type of company structure that allows a single individual to own and operate a corporate entity. This concept, introduced in many countries to encourage entrepreneurship, enables individuals to enjoy the benefits of limited liability without needing a partner. An OPC is a hybrid structure, combining features of a sole proprietorship with those of a private limited company, offering the flexibility of business operations and the protection of personal assets.
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Definition and Legal Framework:
1. Definition:
- An OPC is described as a business entity with just one individual as a member according to the Companies Act.
- The sole individuals belonging to the organization are the shareholders and subscribers of the Company's Memorandum of Association.
2. Nature:
- A company with a single shareholder as a member is known as an OPC.
- Registration of One Person Companies (OPCs) allows integrating microbusinesses and realizing entrepreneurial dreams by overcoming constraints on time, money, and media.
3. Comparison:
- OPC is sometimes referred to as a company combined with a sole proprietorship.
- Because Section 2(62) of the Companies Act 2013 and its implementing regulations permit OPC to be registered as a one-person company.
4. Reason for OPC:
- The business idea can be readily transformed by an individual into a corporate structure.
- Restricted responsibility and minimal complications compared to having multiple partners.
- Limited liability strengthens the incorporation of OPCs.
Advantages and Requirements:
1. Advantages:
- A member is liable only for the company's debts up to the amount of their ownership stake, protecting personal assets beyond their investment.
- A person company is a distinct legal entity with its own autonomous existence, separate from its owners.
- Rent, interest, and directors' compensation are deductible expenses that reduce taxable income, resulting in a lower tax burden.
- Decisions can be made quickly since the business is solely owned and operated by one individual.
2. Requirements:
- The OPC's Nominee and the Person Incorporating It shall be a Natural Individual, a National of India, and a Citizen of India.
- Individuals are not permitted to incorporate more than one OPC.
- No Individual may be nominated in more than one OPC.
- If an individual is called a member of one OPC and joins another as a nominee, they must comply within 180 days.
3. Capital Requirements:
- A minimum Authorized Capital of Rs. 1 lakh can be used to establish OPC
- There is no minimum paid-up capital required, and a capital contribution as low as Rs. 2 is sufficient to start.
4. Conversion Conditions:
- OPC must become a Private Limited Company if its paid-up capital surpasses Rs. 50 lakh or its average turnover for three straight years reaches Rs. 2 crores or more.
- Section 8 of the Act prohibits the incorporation or conversion of OPCs into companies engaging in non-banking financial investment activities.
- OPC must convert into a Private or Public Company within six months if paid-up capital rises above Rs. 50 lakh or the average annual turnover of the company exceeds Rs. 2 crores.
Incorporation Process:
1. Documents Needed:
- PAN cards self-attested by members and directors.
- Generally, you need some Self-attested identification documents (valid driver’s license, passport, voter ID, or Aadhar card).
- Additionally, you need Self-attested address proof (bank statement, electricity bill, phone bill, or mobile bill not older than two months)
- Passport-size photos (2x2) of directors and members.
- Proof of business address (NOC from property owner, property documents, utility bill not older than two months).
2. Information Needed:
- The proposed company’s authorized and paid-up share capital.
- Birthplace and length of stay of the director nominee and sole member at their current residential address.
- Role and educational requirements of the director nominee and sole member.
- Email addresses and phone numbers of the director nominee and sole member.
Jaipur OPC Registration Process:
1. Obtaining Digital Signatures:
- Obtain digital signatures for the OPC and proposed members.
2. Name Reservation Application:
- You should apply for name reservation using web services (SPICe+) at www.mca.gov.in and pay applicable fees.
- Confirm name availability on MCA and ensure it is not already registered as a trademark or another name under the class of work.
3. Completing SPICe+ Part B:
- Complete Part B of SPICe+ for registering the company.
- Attach required documents including director's agreement, PAN, voter ID, bank statement, utility bill, and NOC from property owner.
4. Converting SPICe+ Form to PDF:
- Convert the SPICe+ form to PDF format to attach the DSC.
5. Filling AGILE-PRO:
- Fill AGILE-PRO form which includes a general ESIC and EPFO registration along with mandatory bank account opening, and accessibility to GSTIN.
6. Uploading Forms on MCA:
- Upload forms to the Ministry of Corporate Affairs once the DSC has been attached.
FAQ's
In simple words A single-member business company as defined by the Companies Act of 2013.
The minimum authorized capital is Rs. 1 lakh and the individual must be a resident of India and a single natural person.
Faster decision-making reduced tax burden independent legal existence and limited liability.
It has to be true that an OPC that has paid-up capital exceeding Rs. 50 lakh or average turnover exceeding Rs. 2 crore is required to convert to a Private or Public Limited Company.
Self-attested PAN card proof of identity and address passport-size photos and evidence of business address.