ONE PERSON COMPANY: Brief Introduction
A One Person Company is a company that has only one person as a member. One Person Company (OPC) came into effect to encourage individuals who are potential holders for starting their own business. OPC enables a sole proprietor to convert his firm into a Limited Liability company and also avails the benefit related to the Company.
OPC is a kind of a business structure that enjoys the benefits of both forms of business i.e. a sole proprietorship and a company. It also eliminates the complications related to finding the right kind of co-partners for starting a business as a registered entity.
As Per Section 2(62) of the Companies Act, 2013, One Person Company means a company that has only one person as a member. 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.
One Person Company feature is such that it has only one shareholder who owns 100% stake of the company. To understand one person company definition, we first need to get into the identity it creates. A registration not only provides corporate status but it also provides many benefits to the members and the directors. In case of Private Company, at least two members are required which is not the same in the case of OPC. To eliminate this drawback and allow a single person to get the advantages of One Person Company, this sort of a company structure is introduced through the Companies Act, 2013. One Person Company registration is simplified with online filing and process.
The structure of the one person company (OPC) in recent times was launched as a refinement of the structure of a sole proprietorship firm. In an OPC, a single promoter gains full authority over the company thereby, restricting his/her liability towards their contributions to the enterprise. Therefore, the said person will be the sole shareholder and director (however, a director nominee is present, but has zero power until the real director proves incapable of carrying on). Also, there can be no opportunity for contributing to employee stock options or equity funding. Additionally, if an OPC has an average turnover of ₹2 crores thrice in a row and over or acquires a paid-up fund of ₹50 lakh and over, it has to be converted to a private limited company or public limited company within six months.
DOCUMENTS REQUIRED FOR ONE PERSON COMPANY (OPC)
- PAN Card -it must be of shareholders, nominee and director.
- Identity Proof -Aadhar card and Voter ID card/Passport/Driving Licence of shareholder, nominee and director.
- Director’s Address Proof– Latest Telephone bill/Electricity bill/Bank Account Statement of shareholder, nominee and director.
- Photograph– latest passport size photograph of shareholder, nominee and director.
- Business Address Proof– latest Electricity Bills/Telephone Bills of the registered Office address.
- NOC from owner- No objection certificate (NOC) to be obtained from the owner of a registered office.
- Rent Agreement- Rent agreement of the registered office should be provided.
Please Note: The OPC director must self-attest to the first three documents. All paperwork for a foreign citizen or NRI must be notarised (if they are currently residing in India or a non-commonwealth country) or apostilled (if living in a commonwealth country at present).
DOCUMENT REQUIRED FOR REGISTERED OFFICE
- Scanned copy of current bank account statement/phone or mobile invoice/gas or electricity invoice
- Scanned copy of rental agreement written in the English language
- Scanned copy of a no objection certificate from the concerned property landowner
- Scanned copy of property or sale deed printed in English (if the property is owned).
Note: Your registered office space needs to be a commercial premises; however, it can be the sole director’s place of residence as well.
PROCESS FOR ONE PERSON COMPANY INCORPORATION
1. Apply for DSC and DIN
2. Application need for the approval of name
3. Essential Documents
4. Issuance of the Registration Certificate
5. Forms filing with MCA
Step 1: Apply for DSC and DIN : The first step of the OPC registration is to get a DSC or Digital Signature Certificate of the Directors. For this some documents are needed these are as follows:
i. Aadhar card of the proposed director
ii. Address proof of the proposed director
iii. Email id and Phone number of the proposed director
iv. Latest photo of the director
v. PAN card of the director
Once the DSC is made, now the next step will be to get the Director Identification Number (DIN) of the proposed director in SPICe Form (Simplified Proforma for Incorporating a Company Electronically) along with the address and identity proof of the Company’s director.
Form DIR-3 is the option only available for present companies. The candidate does not need to file the Form DIR-3 separately. Now the Director Identification Number can be applied within SPICe Form for up to 3 directors
Step 2: Application for Name Approval:After obtaining DSC and DIN, the next step is to decide the company’s name. The company’s name will be in the form of XYX (OPC) Private Limited. The name can be approved in the SPICe and 32 Form. Only one preferred name and the importance of keeping that name can be given in the SPICe and 24 Application Form. In case the name of the company is not accepted or get rejected, another name can be submitted by applying another SPICe and 32 Form. Once the suggested name is approved by the Ministry of Corporate Affairs (MCA), you can move to the next step.
Step 3: Essential Documents: After the approval of the name, the documents which are required must be submitted to the registrar of companies mentioned bellows:
- Memorandum of Association (MOA) must be submitted in which the objects to be followed by the proposed business or company.
- Articles of Association (AOA) must be submitted which lays down the laws on which the company will operate.
- Since there is only one member, or director, a nominee on behalf of such individual has to be assigned because in case he or she becomes injured or dies and cannot perform their duties, the nominee will perform all of his or her duties on behalf of the director and take his or her place. Their approval in Form INC-3 will be taken along with their PAN Card and Aadhar card.
- Approval as well as declaration of the proposed Director of Form DIR-2 and INC-9 respectively.
- Submission of the proof of the registered premise or office of the proposed company along with the ownership proof and a No Objection Certificate from the owner.
- Submission of a declaration by the expert certifying that all compliances have been made.
Step 4: Forms Filing with MCA:all such documents will be attached to the SPICe +Form, SPICe-AOA, and SPICe-MOA with the Digital Signature Certificate of an expert and the director and will upload the same on the official website of MCA for approval. There is no need to file separate applications for getting TAN and PAN numbers.
Step 5: Issuance of the Registration Certificate: After verification of all the forms and documents, the ROC (Registrar of Companies) will issue a Registration Certificate and you can start a business.
TAXATION RULES APPLICABLE TO A OPC:
- Company has to file an Income Tax Return, it is one of the mandatory steps to be followed.
- Tax Deducted at Source (TDS) has to be filled for all the quarters by mentioning the TAN.
- It is compulsory for an OPC to register Employee State Insurance (ESI) if in case it employs more than ten persons.
- The income of an OPC is taxed at 30 percent of its entire income in the financial year, under the tax rate slab.
EXEMPTIONS AVAILABLE AFTER OPC REGISTRATION:
- Annual return must be signed
- To hold Annual General Meetings (AGM) and Board Meetings (BM)
- Company’s Financial Statements must be signed.
- Option to be given out with the requirement of conducting AGM.
- Tribunal Power to call meetings of its members.
- Calling of EGM (Extraordinary General Meeting).
- Notice of the meeting.
- Statement must be annexed with the notice.
- Quorum for meetings.
- Chairman of meetings
- Proxies.
- Restriction on voting rights.
- Voting by show of hands.
- Voting by electronic means.
- Demand for polls.
- Postal ballot.
- Circulation of the member’s resolution.
MANDATORY ANNUAL COMPLIANCES FOR ONE PERSON COMPANY:
- As per the Company Act, 2013 it is mandatory to conduct minimum two Board meetings.
- Statutory Audit by a Practising Chartered Accountant.
- Appointment of Auditor.
- Filing of ITR (Income Tax Return).
- Annual Filings to the ROC (Registrar of Companies)
- Maintaining minutes and statutory registers.
- Form AOC-4 for the financial statements.
- MGT-7 form for an annual return.
BENEFITS OF OPC REGISTRATION IN INDIA:
- No minimum Capital requirement: for the registration of One Person Company there is no minimum capital is required. However, the maximum authorised capital in case of one person company shall not anyhow exceed the threshold limit of Rs. 50 lakh at any point of time.
- Limited liability: another significant benefit connected with the concept of registration of One Person Company is of limited liability. This means that the liability of the concerned directors is limited to the extent of capital contributed by him or her in the business. Hence, the personal asset and belongings of the Director will not be attached in case of any loss incurred by the business.
- Fewer Compliances: The compliances that are to be adhered to for an OPC registration are very less in comparison to any other company. Hence, the registration of an OPC can be done easily that too with minimum paperwork.
- Perpetual Succession: The term perpetual succession means that the death or illness or the incapacity of the director will not affect the ongoing affairs of the company as the nominee will hold the position of member and director in the business in that case.
- Greater Credibility: One Person Company is obligated to get its books of account audited annually. This will, in return, increase the business credibility and consumer, vendor satisfaction.
- No legal Disputes: It is significant to note that whenever a company registers itself as a One Person Company, it ends the chances of any future legal disputes between the director or any third party.
- Privileges for small scale industries: An OPC can avail all the benefits that are offered to the small scale industries. These benefits include easy funding that too without depositing collateral security to certain prescribed limits, lower interests loans, privileges under the foreign trade policy etc. Therefore, these benefits play a significant role in the progress and development of the One Person Company in its initial days of incorporation.
WHY TO CHOOSE LEGALTAX FOR ONE PERSON COMPANY REGISTRATION?
- We submit an application for name approval for One Person Company registration.
- We draft the Memorandum of Association (MoA) and Article of Association (AoA)
- We file the incorporation documents with the MCA. The PAN and TAN are allocated simultaneously.
- We will keep you updated about the status of OPC registration.
- We provide one of the best and easiest ways to register the One Person Company.