One Person Company
What is OPC registration?
Individual Company Registration in India can be obtained under the Companies Act of 2013 by one member and one Director. The Director and the member may also be one person. Here a potential resident or non-resident Indian can register an OPC in India.
Great reasons to install OPC in India
Unique legal business status: OPC registration in India acquires a unique legal status. Here the member’s debt is limited to his or her shares and he or she is not liable for any losses incurred.
Earning Money is Easy: Since the One-Company Company is a separate legal entity it is easy to raise funds through capitalists, angelic investors, incubators, etc. Individual companies get loans more easily than the own firm. It is very easy to get funding.
Fewer Compliance: There is a certain exemption from OPC when it comes to compliance under the Companies Act, 2013. The Company Secretary does not have to sign the books of accounts and annual returns and must be signed only by the director.
Easy Integration: It is easy to include an OPC as one member and only one Nominee is required to integrate. The member may also be a Director. To install OPC in India the minimum required fee is Rs.1 lakh. Therefore, it is easier to integrate an Individual Company compared to other types of business.
Easy to manage: OPCs are easy to manage as they can be established and managed by one person. Decision-making is easy and fast. So managing a company is easy as there can be no conflict or delay within the company.
Endless sequence: A person needs to be nominated as a nominee. When a member dies, the nominee will be the company’s successor.
Documents required for OPC registration
1. PAN card
2. Aadhar Card
3. Photo (Director and Nominee)
4. Recent Bank Statement or any bill with the name of the Director or nominee
5. The latest office address bill.
Process for obtaining OPC Registration
1. Proof of address
2. Aadhar Card
3. PAN card
5. Email Id
6. Phone number
Director’s Identity Number Application: Once the DSC has been found the next step is to apply for a DIN from the proposed Director on the SPICe Form and the Director’s name and proof of address. Form DIR 3 is the only option available to existing companies. WEF from January 2018 the applicant is not required to complete Form DIR 3 separately. DIR 3 can be used within the SPICE Form for up to three directors.
Name Authorization Application: The next step in compiling an OPC is to determine a Company name. The company name can be approved in the SPICE + 32 application. In case the name is rejected another name can be submitted by requesting another SPICe + Form. Once the name has been approved by the MCA we move on to the next step to register the company’s MOA and AOA.
Preparation of MOA and AOA: Memorandum of Association and Article of Association should be submitted to ROC. The Memorandum of Association contains the objectives to be followed by the Company. MOA means the business in which the company is invested. The Articles of Association sets the rules by which the company will operate.
As there is only 1 Director and a member must be nominated Nominee because if he or she is unable to work or the facilitator dies the Nominee should be replaced. Consent of the nominee will be taken along with the PAN and Aadhar card in Form INC 3. The Declaration and Permission of the proposed Director will be taken from Form 9 and DIR 2 respectively. Declaration by a professional who ensures that all compliance is met.
Completing Forms with MCA: All documents that will be attached to the SPICe Form, MoA, and AoA will be uploaded to the site for approval.
Issuance of Incorporation Certificate: In Confirmation, the Registrar of Companies will issue Incorporation and the business can be started.
Role of Nominee
Withdrawal of Permit: A nominee may withdraw his or her consent, in this case, only one member is required to appoint another member as the legal heir within 15 days of the notice of withdrawal. The appointment of new employees must be extended to the company with the written consent of Form INC 3. Next, Company is required.
Change of Nominee: Only One Company Member may change the Nominee by giving written notice to the company. The new nominee must approve the nomination form at INC 3. The Company must submit a notice of the change and the nominee’s approval to the registrar with a valid fee, within 30 days of receiving notice of a change.
Nomination of Nominees: If the nominee takes over the management of the company due to the expiry of the term of the first member due to the death or incapacity of that member, the new member must appoint a new successor.
Penalty: If an Individual Company or an official of any such company fails to comply with the prescribed rules, the company may incur fines of up to Rs.10, 000. In addition, for each day of non-payment, a fine will be increased to Rs, 1000.
Is there a difference between a One-Person Company and a Sole Proprietorship?
Limited Responsibility: For OPC as it is a separate legal entity the shareholder’s obligation is limited to the unregistered registration fee in his or her name. On the other hand, the obligation of land ownership is that any claims against him will be made against the business.
Tax bracket: OPC can be considered for the same Tax Collectors as other private companies because although OPC is included under the Companies Act, 2013 the concept of OPCs is not in the tax laws. Conversely, Sole proprietorships are required to file income tax returns as ownership and the owner is considered one under the tax law.
Sequence: The nominee is nominated by the member. The nominee will be in charge of the Company if a member dies or becomes inactive. But in the case of a single patent, this can only be done by making a will that may or may not is challenged in a court of law.
Compliance: The OPC registered in India must file annual returns as a normal company and will also need to have the accounts audited similarly. Although sole ownership will only need to be audited under the provisions of Section 44AB of the Income Tax Act, 1961 if profits exceed the limit.
Major amendments to the Union Budget for 2021-22
- OPC registration will be allowed to be converted to any type of company at any time following the minimum requirements as set out in the Companies Act, 2013. The Union Budget 2021-22 has increased the pay limit to no more. Rs. 2 crores from the start of Rs.50 lakh and the profit should not exceed Rs. 20 crore from the start of Rs.2 crores.
- According to the previous rules if the payment or benefit exceeds the limits specified in the three years then the entity must be converted to a Private Company or Limited Company.
- The residency limit for Indian citizens is now limited to 120 days from the previous 182 days.
- Non-resident Indians will also be allowed to consolidate People Companies in India.
Conversion of OPC into Limited Company
OPC may be converted to a Private Limited Company voluntarily or compulsorily. See detailed description of both modifications.
The OPC may be transferred to a Private Limited Company before it has met the conditions set out below:
A-One Person Company can be converted to Private Limited
The company two years after its inception If more than one director is appointed to a company, a board meeting will have to transform the OPC into a Private Limited Company.
Mandatory modification is required if the Individual Company meets the criteria set out below:
If the OPC fee is more than Rs. 2 macros. Therefore, in any of these cases, the Individual Company needs to be converted to a Private Limited Company within six months. The amendment is made by passing a special resolution to the General Assembly. NOC is required of lenders and other members before a decision can be passed.
Documents Required to Transform OPC into a Limited Independent Company
The directors of the company must be given an affidavit confirming that all members and directors have given their approval for the conversion.
- List of members and creditors
- Recent Balance Sheets and Profit and Loss Accounts
- Copy of NOC copy of protected debtors
Frequently Asked Questions
A nominee is a person who becomes a member of a company if the facilitator dies or is unable to work.
Make sure the name you choose is unique and has all the required documentation before the merging process can be submitted immediately.
If the annual compliance is not met it becomes a Silent Company and can be terminated after some time. The Struck Company can be revived for up to 20 years.
DSC establishes the identity of the sender or signer electronically while completing the online document. The MCA authorizes Directors to sign additional application documents using their Digital Signature.