One Person Company
What is a One Person Company (OPC)?
In 2013, the Companies Act, 2013 introduced the concept of a 'One Person Company (OPC)'. This created an entirely new set of opportunities for budding entrepreneurs who can start a business single-handedly by creating their own single-person economic entity. A one-person company (OPC) is a refinement of a sole proprietorship.
In an OPC, a single promoter gains complete control of the company, limiting his or her liability for contributions to the enterprise. However, a director nominee is present but has no authority until the real director is unable to continue. According to Section 2 (62) of the Company's Act 2013, a company can be formed with only one director and one member. A One Person Company Registration in India is a type of entity with fewer compliance requirements than any other type of company. An OPC is simple to manage because it is run by a single person. If you are an entrepreneur looking for a one-of-a-kind success, you can register as an OPC in India.
Types of OPC
OPC Company Registration Documents
Each prospective partner's self-attested PAN card must be utilised to complete the One Person Company Registration Process.
The Self-attested address proof must include the Partner's name as it appears on their
For Indian citizens, self-attested passports, election cards or voter identification, Aadhaar cards, or any other form of identity verification is acceptable and is included in the One Person Company Registration documentation.
The Self-Attested Partner's Ownership Proof must include the most recent Electricity Bills, Telephone Bills, Gas Bills, Mobile Bills, or any other utility bills from the company's location that are no more than 2 months old.
And most recent two passport-size photos.
All directors and members are required to provide two months’ worth of bank statements.
Registration Criteria for OPC Companies
- There must be only one shareholders and only one directors.
- An OPC must have only one directors and must be an Indian citizen.
- There is no minimum capital requirement.
- There is no continued existence allowed in One Person Company Registration.
Benefits of OPC Registration
OPC is the only corporate entity in India that can be operated by a single promoter with limited liability protection, ensuring the business's perpetual existence as well as easy ownership transferability.
In the event of the original director's incapacity or death, the only owner of the OPC shall nominate another person who is an Indian resident In the event of the original director's incapacity or death, the only owner of the OPC shall nominate another person who is an Indian resident The incorporated OPC has "perpetual succession," or continuous existence until legally dissolved. Because the company has its own legal existence, it is unaffected by the death or departure of any of its members and continues to exist regardless of changes in ownership.
In OPC, ownership can be transferred by changing the nominee director's information, shareholding, or directorship, or by signing, filing, and transferring share certificates and share transfer forms, which are sufficient to transfer the company's ownership.
Due to the requirement that an OPC have its books audited annually, it has greater credibility among vendors and lending institutions. Venture capital, financial institutions, angel investors, and other sources of funding are readily available. It is clear that banks and other financial institutions prefer to provide funding to corporations rather than partnership firms or proprietary concerns that require very little ROC filing to be registered with the Registrar of Companies.
A company with artificial person status is allowed to acquire, own, enjoy, and alienate property in its name, such as buildings, intangible assets, factories, residential property, and so on, and can claim any ownership of the company while serving as the nominee director.
Minimum Requirements for OPC Registration
The minimum requirements that are needed to comply for the registration of a one person company are as follows:
- For Incorporating a One Person Company, only a single individual who is both a citizen and resident of India is required. Further, the term Resident of India means that the said person must have lived in India for a time period, not less than 182 days in the previous financial year.
- Business Models such as a Company or an LLP cannot join a One Person Company.
- The promoter should select a nominee at the time of incorporation.
- The minimum authorized capital must be at least Rs 1 Lakh.
- An OPC is restricted from functioning a minor as its member.
- One thing which is noteworthy to note is that if an OPC surpasses an annual turnover of Rs 2 crore or has the paid-up share capital more than Rs. 50 lakhs, then, in that case, it must be converted into a private limited or a public limited within six months.
- There must be at least one nominee and one director.
Minimum Requirements for OPC Registration
Forms Required for OPC Registration
The following listed forms must be filed to complete the process of One Person Company Registration:
What are the Taxation Rules applicable to a OPC?
It is mandatory for the company to file Income Tax Returns.
TDS (Tax Deducted at Source) is to be filled for all the quarters by mentioning the TAN.
Getting an ESI (Employee State Insurance) registration is compulsory for an OPC if in case it employs more than ten persons.
Under the tax rates slab, the income of an OPC is taxed at 30 percent of its entire income in the financial year
What are the Exemptions available after OPC Registration?
Sign on Annual Returns
Hold Annual General Meetings (AGM) and Board Meetings (BM).
Sign on the Company’s Financial Statements.
Option to give out with the requirement of conducting an AGM
Power of the Tribunal to call meetings of its members.
Calling of EGM (Extraordinary General Meeting).
Notice of the meeting.
Statement to be annexed with the notice.
Quorum for meetings.
Proxies
Restriction on voting rights.
Voting by show of hands.
Voting by electronic means.
Demand for poll.
Circulation of the members’ resolution
Mandatory Annual Compliances for One Person Company
Minimum 2 Board Meetings are required as per the Companies Act, 2013
Statutory Audit by a Practising Chartered Accountant
Appointment of Auditor
Filing of ITR (Income Tax Return)
Power of the Tribunal to call meetings of its members.
Annual filings to the ROC (Registrar of Companies)
Maintaining Minutes and Statutory Registers
Form AOC-4 for the financial statement
MGT-7 for an annual return
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Difference between OPC and Private Limited Company
| Basis of Difference | One Person Company | Private Limited Company |
|---|---|---|
| Regulating Act | Companies Act, 2013 | Companies Act, 2013 |
| Registration Requirement | Obtaining Registration is Mandatory | Obtaining Registration is Mandatory |
| Number of members Required | Only 1 | 2 – 200 |
| Status of Separate Legal Entity | Yes, enjoys the status of Separate Legal Entity | Yes, enjoys the status of Separate Legal Entity |
| Liability Status | Limited Liability | Limited Liability |
| Requirement of Statutory Audit | Getting Statutory Audit done is Mandatory | Getting Statutory Audit done is Mandatory |
| Perpetual Existence | Yes | Yes |
| Foreign Participation | Not Allowed | Allowed |
| Tax Rates | Moderate | Moderate |
| Statutory Compliances | Moderate | High |
Difference between OPC and Limited Liability Partnership
| Basis of Difference | One Person Company | Limited Liability Partnership |
|---|---|---|
| Regulating Act | Companies Act, 2013 | Limited Liability Partnership Act, 2008 |
| Registration Requirement | Obtaining Registration is Mandatory | Obtaining Registration is Mandatory |
| Number of members Required | Only 1 | 2 - Unlimited |
| Status of Separate Legal Entity | Yes, enjoys the status of Separate Legal Entity | Yes, enjoys the status of Separate Legal Entity |
| Liability Status | Limited Liability | Limited Liability |
| Requirement of Statutory Audit | Getting Statutory Audit done is Mandatory | Dependent |
| Ownership Transferability | Transfer of Ownership is not Allowed | Transfer of Ownership is Allowed |
| Perpetual Existence | Yes | Yes |
| Foreign Participation | Not Allowed | Allowed |
| Tax Rates | Moderate | High |
| Statutory Compliances | Moderate | Moderate |
Difference between OPC and Sole Proprietorship Firm
| Basis of Difference | One Person Company | Sole Proprietorship Firm |
|---|---|---|
| Regulating Act | Companies Act, 2013 | No specified Act |
| Registration Requirement | Obtaining Registration is Mandatory | Not Required |
| Number of members Required | Only 1 | Only 1 |
| Status of Separate Legal Entity | Yes, enjoys the status of Separate Legal Entity | No, does not enjoy the status of Separate Legal Entity |
| Liability Status | Limited Liability | Unlimited Liability |
| Requirement of Statutory Audit | Getting Statutory Audit done is Mandatory | Getting Statutory Audit done is not Mandatory |
| Ownership Transferability | Transfer of Ownership is not Allowed | Transfer of Ownership is Allowed |
| Perpetual Existence | Yes | No |
| Foreign Participation | Not Allowed | Not Allowed |
| Tax Rates | Moderate | Low |
| Statutory Compliances | Moderate | Less |
