One Person Company Incorporation
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One Person Company Registration in India
What is an OPC company?
A One Person Company (OPC) is a type of business structure that allows a single individual to form and run a company. It gives an opportunity to entrepreneurs who want to start a company on their own without involving any partners. Section 2(62) of the Companies Act, 2013 defines OPC as a company which has only one person as a member.
What is OPC registration?
OPC registration refers to the process of legally establishing a One Person Company (OPC). The OPC Registration process is done through online mode in India and it is done through the V-3 Portal of Ministry of Corporate Affairs (MCA) which gives ease in the formation and registration of One Person Company.
Steps to Incorporate a One Person Company in India.
Step 1: Reservation of Unique Name (RUN Name Approval):
The first step is to select two preferred names for the company and apply for name reservation through the Ministry of Corporate Affairs (MCA) portal. This can be done online after creating login credentials with the MCA portal. Make sure that the proposed name is not already registered and does not infringe upon existing trademarks or violate any legal restrictions.
If the proposed name meets the requirements and is available, it will be approved, and you will receive a Name Approval Letter or Certificate. This confirms that the desired name is reserved for your company for a specific period, usually ranging from 20 to 60 days, depending on the jurisdiction.
Also make sure to add the words “(OPC) Private Limited” after the name of the company.
Step 2: Obtaining Digital Signatures:
Obtain a Class -II or above category signing Digital Signature Certificates (DSC) for the sole member and nominee of the OPC from Certifying Authorities and register the same with the V-3 portal of MCA.
How to Register DSC with V-3 portal?
1. Register as Business user ID (if not registered already) by visiting on MCA V3 portal and clicking on Register tab.
2. After registering, Login to MCA V3 Portal using the credentials mentioned while registering as Business user.
3. Click on the service of “Associate DSC” available on MCA portal under the MCA Services > FO LLP Service > Associate DSC.
4. Click on Associate DSC tab and a pop up will appear, select the DSC token in first field. The name will be auto-fill in the second field ‘Certificate Details’
5. Please enter the PIN of the DSC Token in the third field ‘Password
6. After entering all the details, click on ‘Register’ for successfully registering the DSC.
Step 3: Incorporation Application Submission (Spice+ Form):
Prepare and submit the Spice+ forms, including Spice Part-B, MOA, AOA, Agile form, and INC-9, along with necessary attachments. The MCA will verify the submitted documents, and upon approval, issue the Certificate of Incorporation (COI) as proof of company registration.
What are the Features of OPC Company?
Sole Directorship and Shareholder: An OPC can have only one shareholder and one director, who is the sole owner of the company. This shareholder can be an individual, and not another company or corporation.
Separate Legal Entity: An OPC is recognized as a separate legal entity distinct from its owner. It has its own legal identity, separate from the individual who incorporates it. This means that the company can own assets, enter into contracts, and sue or be sued in its own name.
No Minimum Capital Requirement: There is no minimum capital requirement for the formation of an OPC. The sole shareholder can start the company with any amount of capital deem fit.
Name Structure: The name of an OPC must end with "(OPC) Private Limited" to indicate its limited liability status. It cannot use terms like "Public Limited" or be abbreviated as "PL" or "Ltd."
What are the benefits of OPC company?
Limited Liability: The owner's liability is limited to the extent of their investment in the company. In case of any legal or financial liabilities, the personal assets of the owner are generally protected.
Easy Succession: An OPC has perpetual existence, which means it is not affected by the death or retirement of the owner. This provides stability and ensures that the business can continue its operations seamlessly. In case of any such circumstances the nominee becomes the owner of the Company.
Minimal Compliance Requirements: OPCs have certain exemptions and relaxed compliance requirements compared to other types of companies. For example, an OPC is not required to hold annual general meetings and only 2 board meetings are sufficient in a financial year.
What are the limitations of OPC company?
Not Apt for Scalability: OPCs face limitations on their borrowing capacity due to restrictions on accepting deposits from the public. They cannot issue securities to raise funds from the general public or engage in public fundraising activities. Thus, it is not preferable for large scale businesses.
Higher Restrictions on Business Activities: OPCs are prohibited from engaging in certain business activities, such as non-banking financial investment activities, investment in securities of other corporations, or carrying out NBFC activities. OPCs also cannot be incorporated or converted into a Section 8 company (non-profit organizations).
No Clear Distinction Between Ownership and Management: OPCs are designed for single ownership, meaning only one individual can be the shareholder and director. Thus, there is no clear separation between the ownership and management of the company.
Lack of Expertise and resources: Being a one-person venture, OPCs may face limitations in terms of expertise and resources. The owner may need to handle various roles and responsibilities, such as finance, marketing, operations, and compliance, which can be overwhelming. Additionally, the absence of a co-founder or partner can limit access to diverse skills and experiences.
Why OPC is better than private limited?
Deciding whether an OPC (One Person Company) is better than a Private Limited Company depends on the specific needs and circumstances of the business. While OPCs offer certain advantages, they may not always be the best choice for every situation.
Ease of Formation: OPCs are relatively easier and quicker to set up compared to Private Limited Companies. They require only one shareholder and have fewer compliance requirements during the incorporation process.
Quick Decision making and Flexibility: OPCs offer sole ownership and control to a single individual. This allows for quick decision-making, flexibility, and efficient management without the need for consensus among multiple shareholders or directors.
Lower Cost of Compliance: OPCs typically have lower compliance costs compared to Private Limited Companies. As a result of reduced compliance requirements, such as audit exemptions and limited annual compliances, OPCs can potentially save on professional fees and other compliance-related expenses.
OPC Registration in India FAQ’s
Only a natural person who is an Indian citizen, not a minor and resident in India shall be eligible to incorporate and act as a member and nominee of an OPC.
The term “resident in India” for the purposes of incorporating One Person Company (OPC) as per the Companies Act 2013, means a person who has stayed in India for a period of not less than one hundred and twenty days during the immediately preceding one financial year. Please note that for any other Company (Private Limited/ Public Limited) the resident is a person having stayed in India for a period of not less than one hundred and eighty two days.
Further, A natural person shall not be member of more than a One Person Company at any point of time and the said person shall not be a nominee of more than a One Person Company
The incorporation of a One Person Company (OPC) involves the process of registering and legally establishing a company with a single person as its sole member and director.
The key steps involved in the incorporation of a One Person Company are as follows:
(i) obtaining DSC;
(ii) Reserve Unique Name (RUN);
(iii) Preparation of MOA and AOA of the company;
(iv) Filing of Incorporation documents;
(v) Consent and declarations from Nominee;
(vi) Payment of statutory government fee and
(vii) Receiving Certificate of Incorporation on registered email address.
Yes, One Person Company (OPC) is a legal business structure in India. The concept of OPC was introduced in the Companies Act, 2013, to provide a framework for single entrepreneurs to operate as a company while enjoying the benefits of limited liability.
There is no prescribed minimum capital requirement for incorporating a One Person Company (OPC) in India. Therefore, an OPC can be incorporated with any amount of capital that suits specific business needs. The sole owner is free to determine the authorized share capital based on the business requirements.
No, as per the provisions of the Companies Act, 2013, a One Person Company (OPC) can have only one director. The OPC structure is specifically designed for single entrepreneurs who wish to operate as a company with limited liability. The concept allows a single individual to be the sole shareholder as well as the sole director of the OPC.
However, in addition to the sole director, an OPC is required to have a nominee director mentioned in the Memorandum of Association (MOA). The nominee director is appointed to take over the management of the OPC in case the sole director becomes incapacitated or unable to perform their duties.
So, while an OPC can have two individuals involved in the company—the sole director and the nominee director—only the sole director has the authority to manage the company’s operations and make decisions on behalf of the OPC.
Yes, it is mandatory to appoint a nominee for a One Person Company (OPC) in India. The requirement for appointing a nominee is a key feature of the OPC structure as per the Companies Act, 2013 and the details of the person nominated are also filed in the Memorandum of Association of the Company.
However, the nominee director’s role becomes active only upon the death or incapacity of the sole member. In normal circumstances, the sole member retains full control and management authority over the OPC.
No, a minor cannot become a member or nominee of an OPC. Also, a minor cannot hold shares in beneficial interest in OPC.
The choice between an OPC (One Person Company) and a Pvt Ltd (Private Limited Company) depends on several factors and the specific needs and circumstances of the business owner. Here are some considerations to help you evaluate which structure might be better suited for your situation:
Sole Ownership: If you prefer to have complete control and ownership of your business without the need for additional shareholders or directors, an OPC might be more suitable as it allows you to operate as a separate legal entity while being the sole member and director.
Scale and Future Growth: If you have plans for significant expansion, raising external funding, or attracting multiple shareholders, a Private Limited company may be more appropriate. Private Ltd companies can have multiple shareholders, making them more flexible for future capital infusion and ownership changes.
Compliance and Regulations: OPCs generally have fewer compliance requirements compared to Pvt Ltd companies, making them easier to manage from a regulatory standpoint. OPCs have relaxed reporting obligations and are exempted from certain requirements applicable to Pvt Ltd companies.
In summary, OPCs are suitable for small businesses with a single promoter who wants to enjoy the benefits of limited liability, while complying with lesser regulatory requirements. On the other hand, Pvt Ltd companies are better suited for larger businesses with multiple shareholders who require greater potential for growth and access to funds. Ultimately, the choice between OPC and Pvt Ltd company depends on the specific needs and goals of the business.
Yes, audit is compulsory for OPC. The financial statements of an OPC are required to be audited by a qualified Chartered Accountant regardless of its turnover or business activities.
The time taken for incorporating a One Person Company (OPC) can vary depending on several factors, including the preparedness of the required documents, government processing time, and any potential delays in the approval process.
Generally, the OPC incorporation process can be completed within 10-12 working days, provided that all the necessary documents and information submitted is accurate.
There is no specific turnover limit specified for One Person Companies (OPCs) in the Companies Act, 2013. The Act does not impose any restrictions on the turnover of OPCs. However, if the turnover exceeds INR 2 Crores in any financial year, then the OPC mandatorily needs to be converted into Private Limited Company or Public Limited Company.
A Digital Signature Certificate (DSC) is a digital form of an individual’s physical signature used for authenticating electronic documents and transactions in a secure and tamper-proof manner. It serves as a digital equivalent of a handwritten signature, providing authenticity, integrity, and non-repudiation to digital communications.
No, the OPC’s are exempted from conducting an annual general meeting.
One Person Company (OPC) and Sole Proprietorship are two different business structures with distinct characteristics. Here’s a comparison between OPC and sole proprietorship:
Legal Entity: In an OPC, the company is distinct from the individual who owns it, whereas in a sole proprietorship, the business and the owner are considered one and the same.
Liability: In an OPC, the liability of the owner is limited to the extent of their investment in the company. The personal assets of the owner are generally protected from the company’s legal and financial obligations. On the other hand, in a sole proprietorship, the owner has unlimited personal liability. They are personally responsible for all the debts and liabilities of the business, and their personal assets can be at risk in case of any legal or financial issues.
Ownership and Control: In an OPC, there is a separation between ownership and management. The company is owned by a single individual who is the shareholder, while the day-to-day management is handled by the director. In a sole proprietorship, the owner has complete control and ownership of the business. They make all the decisions and manage the operations themselves.
Nominee director’s role becomes active only upon the death or incapacity of the sole member. In normal circumstances, the sole member retains full control and management authority over the OPC.
Yes, a nominee in an OPC can be changed by filing declaration in form INC-4.
Yes, GST registration is mandatory if the turnover of an OPC is more than the prescribed limits.
There are no tax benefits available as such to an OPC, however while preparation of financials OPC is not required to prepare cash flow statements and it does not require filing of an Audit Report on internal financial controls with reference to financial statements and the operating effectiveness of such controls. Companies (Auditor’s Report) Order, 2016 is also not applicable on OPC.
One Person Company has following features:
- Sole owner and Sole Director : An OPC is a type of company that can have a single shareholder who will also act as the sole director of the company. This allows individuals to start a company on their own without the need for partners or co-founders.
- Separate Legal Entity: An OPC has distinct identity from its shareholder or sole owner, which signifies that it is capable of owning assets, entering into contracts, and incurring liabilities in its own name.
- Limited Liability: The Liability of the sole owner is limited to the amount of their subscribed capital which denotes that personal assets are protected in case of business related liabilities.
- No minimum capital requirement: OPC has no minimum capital requirement, which means that it can be registered with any amount of capital that suits the business requirements.
- Perpetual Succession:The existence of OPC is not affected by the death or incapacity of its member as it can continue to operate and fulfill its obligations even after the demise of the member, with the nominee director taking charge.
- Name of the Company: The name of the One Person Company shall mandatorily have the word (OPC) Private Limited as its suffix.
Thus, OPCs provide benefits to entrepreneurs who wish to operate as a separate legal entity with limited liability, while having the flexibility of a single-member structure.
Yes, it is mandatory to appoint a nominee for a One Person Company (OPC) in India. The requirement for appointing a nominee is a key feature of the OPC structure as per the Companies Act, 2013 and the details of the person nominated are also filed in the Memorandum of Association of the Company.
However, The nominee director’s role becomes active only upon the death or incapacity of the sole member. In normal circumstances, the sole member retains full control and management authority over the OPC.
No, a minor cannot become a member or nominee of an OPC. Also, a minor cannot hold shares in beneficial interest in OPC.
Registering an OPC is similar to incorporation of an OPC. The registration process involves following steps:
(i) obtaining DSC;
(ii) Reserve Unique Name (RUN);
(iii) Preparation of MOA and AOA of the company;
(iv) Filing of Incorporation documents;
(v) Consent and declarations from Nominee;
(vi) Payment of statutory government fee and
(vii) Receiving Certificate of Incorporation on registered email address
Yes, audit is compulsory for OPC. The financial statements of an OPC is required to be audited by a qualified Chartered Accountant regardless of its turnover or business activities.
The time taken for incorporating a One Person Company (OPC) can vary depending on several factors, including the preparedness of the required documents, government processing time, and any potential delays in the approval process.
Generally, the OPC incorporation process can be completed within 10-12 working days, provided that all the necessary documents and information submitted is accurate.
The following documents are required for OPC incorporation:
- Identity, address proof and passport size photograph of Sole owner and Director;
- Identity, address proof and passport size photograph of Nominee;
- Registered Office documents – Rent Agreement/Sale Deed/Lease Deed; No objection Certificate (if premises are rented) and utility bill (not older than two months),
