Overview of One Person Company

One Person Company is a unique business structure that is quite popular these days as it is registered and governed by the Companies Act, 2013 and a single person is required to start this business. It is a company that includes the features of limited liability and perpetual succession. Even an OPC is a separate legal entity, but as it only has a single director, therefore, it is mandatory to add name of a nominee who shall conduct the operations of company even after the death of the sole owner or director.

Before the enactment of the Companies Act, 2013, a company was only formed by a minimum of two people. This is a new form of company that has emerged after the enactment of the new Companies Act of 2013. This act governs the formation of One Person Companies (OPCs). It also controls the formation and operation of a one person company in India. A private company, must have at least two directors and two members; however, a one person company registration only requires a single person. Promoting entrepreneurship and fostering growth were the main goals of establishing one person company. A business may be founded with just one director and one member, per Section 2(62) of the Companies Act of 2013. 

What are the Advantages of One Person Company?

The major advantages of a one person company are mentioned below:

Easy to obtain funds 

OPC can easily seek funding from angel investors, venture capitalists, incubators, and other sources because it is a privately held company. Banks and financial institutions prefer lending money to a company rather than sole proprietorships. As a result, obtaining finances becomes simple.

Legal status 

The OPC acts as a separate legal entity from the member. The OPC's unique legal entity protects the liability of sole individual who has incorporated it. The liability of the member or director of the OPC is limited and no one can sue the director of the OPC for the losses incurred due to the acts of the company.

Less compliances 

The OPC is not required to follow all the requirements of the Companies Act, 2013 that the other companies have to follow. For example, it is not required to prepare the cash flow statement. Moreover, the company secretary is not required to sign the books of accounts or annual returns, which must only be signed by the director. 

Easy to manage 

It is simple to administer the OPC's affairs because it can be founded and operated by a single person. It is easy to make decisions as there is only one decision-maker. Ordinary and special resolutions can be readily passed by the member shall be maintained in minutes of meeting and signing them. As a result, running and managing the company is simple because there will be no disagreements or delays.

Easy incorporation 

 It is simple to incorporate OPC because it only requires one member and one nominee. The member can also be the director of an OPC. Furthermore, the minimum authorized capital for incorporating OPC is Rs.1 lakh, although no minimum paid-up capital is required. It must be noted that incorporating an OPC is much easier than other companies. 

Perpetual succession

Even when there is only one member, the OPC has the feature of perpetual succession. At the time of incorporation, the member is required to appoint a nominee. When a member dies, the nominee takes over as a director of the company. 

Requirements of One Person Company Registration

Prior to registering a one person company (OPC), it is essential to comprehend the particular requirements for registering an OPC in India: 

• An OPC may only be established by a natural person who holds Indian citizenship. It cannot be established by legal entities such as businesses or LLPs.
• The director of an OPC must have spent at least 182 days of the preceding calendar year in India in order to qualify as an Indian resident for registering an OPC.
• OPC must have a minimum authorized capital of Rs 1 lakh as mentioned in the company?s capital clause at the time of its registration.
• At the time of OPC's incorporation, the promoter is required to appoint a nominee. In the case of the promoter's demise or incapacity, the nominee will take over the operations of an OPC.
• Companies engaged in financial operations, like banking, insurance, or investing cannot incorporate an OPC.
• An OPC will be converted into a private limited company if its paid-up share capital surpasses 50 lakhs or its average annual turnover exceeds 2 crores.

What are the documents required for OPC Registration?

The following documents are needed in order to register a one person company:

• Passport or PAN card.
• Passport of the foreign nationals and NRIs.
• Scanned driver's license and voter ID cards.
• Recent bank statement, landline or mobile phone bill, or bank account statement.
• Signature of the applicant.
• Passport-sized photos.
• Scanned copy of the rental agreement.
• Landowner's No-Objection Certificate (NOC) in a scanned copy. 
• A scanned copy of the sale deed, is the business property is owned by the business owner.

What is the registration process for OPC?

The OPC Registration Process in India is divided into a few steps. A form must be filed along with the requisite OPC documents for registration. The ROC will review the application and, if successful, will issue a Certificate of Incorporation in the name of the OPC. In India, the Certificate of Incorporation serves as definitive proof of OPC registration.

Step-1: Documentation

The preparation of all relevant papers is the first step in the One Person Company registration procedure. To register an OPC in India, you would require the promoters' basic KYC documents as well as documents from the registered office. Also, as the application will be digitally signed, ensure that the directors have their digital signature certificates.

Step-2: Select a name for your One Person Company

The next step in the OPC Registration procedure is to choose a valid name for the OPC in accordance with the MCA requirements. After you've decided on a name, you must file an application for approval and get it reserved by the ROC. An application in PART A of the SPICE+ form can be submitted to the ROC for this purpose. Once a name is reserved, it is valid for 20 days, and during this time period, the OPC must be incorporated.

Step-3: Drafting of MOA and AOA

The MOA is also known as the constitution, while the AOA is its set of internal rules and regulations. These are important documents that must be presented at the time of one-person company registration process. Therefore, these documents must be properly drafted and shall contain all the legal information. Moreover, they must be signed by all shareholders and stamped by a public notary after the necessary stamp duty has been paid.

Step-4: Submission of Application

Once you have completed all of the documentation and drafts, you can finally file the SPICE+ application for OPC incorporation online. The form must be accompanied by the appropriate documents and drafts, which must be uploaded in digital format. Finally, the authorized director can sign the form with his Digital Signature Certificate. A practising professional, such as an Advocate of the High Court, or CA, CS, or CMA, further certifies the form.

Step-5: Certificate of Incorporation

Following submission, the SPICE+ application is submitted to the Registrar of Companies office. The ROC verifies the correctness and authenticity of the facts and documents provided. If the ROC is satisfied with the form and documents, the application is approved and the OPC Company Registration process begins. Moreover, the ROC registers the OPC and issues a Certificate of Incorporation.

What is the time taken for OPC Registration?

You can get the proposed directors' DSC and DIN in a single day. An OPC can acquire its Certificate of Incorporation within three to five days. The entire OPC incorporation procedure, pending departmental approval and response from the relevant department, takes around ten days.

Reasons to choose PSR Compliance for OPC Registration

PSR Compliance can be your best partner for registering One Person Companies (OPCs) for the following reasons:

• We streamline the sometimes difficult OPC registration procedure with years of experience in company registration and a thorough awareness of the regulatory environment.
• From name reservation to document preparation and filing, we provide professional advice. 
• Our dedication to precision and adherence ensures that your OPC registration conforms to all legal prerequisites.
• Our committed team is always available there to help you with any questions or issues you may have.

Frequently Asked Questions

Who can become a nominee of an OPC?

Any person who is an Indian citizen and has completed the age of 18 years can become a nominee of the OPC.

Are there any restrictions on an OPC?

The OPC is not permitted to engage in non-banking financial investment operations, such as buying corporate securities. It cannot be converted into a company with the charitable purposes specified in Section 8 of the 2013 Companies Act.

What is annual compliance for OPC?

An OPC must file tax filings, financial statements, and annual returns each year. In addition, an AGM must be held by the OPC within six months after the end of every financial year.

How to convert an OPC into a Private Limited Company?

An OPC can convert into a private limited company if it has exceeded the paid-up capital of fifty lakhs or an average turnover of more than two crores. An OPC can voluntarily convert itself into a private limited company after 2 years of incorporation.

What is the difference between an OPC and Sole Proprietorship?

An individual who owns a firm and is solely responsible for any business debts is known as the sole proprietor. In contrast, a one-person company (OPC) is a separate legal organization that separates the owner's personal assets from the business and offers limited liability protection.