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One Person Company
The concept of One Person Company [OPC] was newly introduced under The Companies Act, 2013, thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework. Though it is one form of the Company, however it carries certain features of a proprietorship concern and has to abide by far less formalities, in comparison to Private or Public Limited Companies.
Features of One Person Company (OPC)
- Single Shareholder:
Only a Resident Indian citizen shall be eligible to incorporate a One Person Company. The term “Resident Indian” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year. - Nominee for the Shareholder:
The Shareholder shall nominate another Resident Indian Citizen to act as the nominee of the shareholders in case of death/incapacity of the original shareholder. - Director:
The OPC must have a minimum of one Director with maximum number of Directors being 15. The same person can act as the shareholder and the member at the same time.
Advantages of OPC:
- Separate Legal Entity: One Person company is a separate legal entity and capable of doing everything that an entrepreneur would do.
- Less incorporation costs: The initial cost to incorporate OPC is lee as compared to a Private or a public Company.
- Lesser Compliance Burden: OPC is liable to comply with fewer regulatory burden, in comparison to a Private Limited Company or a Public Limited Company.
- Better reputation: A person carrying on business through a Company presents a better picture about its business in contrast to person carrying out business through proprietorship, thus increased probability to receive loans from banks other finance companies.
- Adequate safeguards: in the event of death of the only Shareholder, the rights ownership of the Company will automatically come in the hands of the Nominee.
- Complete control: Since the Company is owned by the single person, he/ she shall be in complete control of the functioning of the Company.
Terms and Restrictions of OPC
- A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
- Minor cannot become the member or nominee of the One Person Company or can hold share with beneficial interest.
- An OPC cannot be incorporated or converted into a Non-profit company.
- An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body-corporate.
- An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except paid up share capital is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores.
Steps to Incorporate One Person Company (OPC)
Checking the name availability of the Company and applying to ROC for obtaining the approval of the name.
Applying for the DIN and digital signatures of the Director/ Directors of the Company.
Drafting of the Memorandum and the Articles of association of the Company
Filing of the all the relevant documents with the ROC and obtaining the Certificate of Incorporation of Company
Opening the bank account and applying for PAN/ TAN/ other registrations
Documents Required
- DIN of all the Director/ directors of a proposed company;
- DSC – Digital Signature Certificate for the Director/ Directors of the Company;
- PAN of the Director/ Directors;
- Identity proof of the Director/ Directors;
- Copy of the bank statement/ electricity bill/ telephone bill;
- NOC from the landlord, in case of rented premises;
- Copy of telephone bill/ electricity bill/ gas bill, etc as proof of place of business
Precautions to be taken while keeping the name of the Company
- The name of the One Person Company should have a suffix “OPC” in brackets at the end of the name of the Company;
- Proposed name should NOT be identical with another existing name of the Company.
- Certain words such as India, Prime Minister, President, etc shall not be used in the name of the Company.
- It is not necessary to reflect the object of Company in Name of the Company.
- Company can be incorporate with the abbreviated word of the name of the promoters.
- It is prohibited to use certain emblems and names in an improper way.
FAQ’s
1. How much minimum capital is required to set up an OPC?
The minimum capital requirement is Rs 1,00,000, required at the time of incorporation of the Company.
2. How many Directors can we have in One Person Company?
A minimum of one is required while starting a One Person Company, but you can have up to 15 Directors for your OPC.
3. Can a person form more than one One Person Company?
No, you are not allowed to form more than one OPC and nominee in your company cannot be appointed as nominee in any other One Person Company.
4. Can a Foreign national open an OPC?
No. A Foreign national cannot open an OPC as per the FDI norms issued in this regard.
5. Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.
6. What is the current rate of tax in case of Companies?
Before April 1, 2017:
All companies: 30% as increased by surcharge and education cess
After April 1, 2017:
Companies having turnover < Rs. 50 crores: 25% as increased by surcharge and education cess.
Companies having turnover > Rs. 50 crores: 30% as increased by surcharge and education cess.
7. What shall be the date of Incorporation of the Company?
The date of issuance of Certificate of Incorporation of the Company shall be the date of incorporation of the Company.
Other auxiliary services provided by us with regard to setting up of business:
- Obtaining DIN for the Directors;
- Obtaining DSC for the Directors;
- Opening of the bank account for the Company;
- Applying PAN and TAN of the Company;
- Registration under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Review and maintenance of records as required under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Applying for Import/ export code;
- Assisting the clients in getting loans from the bank;
- Book-keeping services;
- Filing of TDS/ GST/Service tax/ VAT/ Excise returns;
- Computation of income tax and filing of Income tax returns;
- Filing of other forms as required by MCA;
- Maintenance of statutory registers/ minutes of the meetings;
- Filing of annual returns with MCA;
- Providing internal audit services;
- Assisting in finding CA’s/ lawyers/ CS and other solicitors for your work;
- Registration of Copyrights, trademarks and patents;
- RBI approval for foreign companies investing in India and FIPB approval.