One Person Company

Starting a One Person Company is a straightforward process. The provisions for a one person company registration are present under the Companies' Act 2013. There are many benefits to one person company registration. Some of the benefits which can be enjoyed by an individual are a separate independent entity, limited liability, limited compliances and separate legal entity. Obtaining a registration for a one person company requires specific compliance. However, it is suitable to choose expert advice for your one person company registration.

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    Deliverables

    Process of One Person Company Registration (OPC Registration)

    Liaising with the Registrar of Companies and Ministry of Corporate Affairs

    DSC and DIN

    Name approval for your one person company

    Drafting – Memorandum of Association and Articles of Association for OPC

    Certificate of Incorporation for OPC

    PAN and TAN assistance for your One Person Company

    Info

    Definition of One Person Company

    Section 2(62) of Companies Act defines a one-person company as a company that has only one person as to its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

    Such companies are generally created when there is only one founder/promoter for the business. Entrepreneurs whose businesses lie in early stages prefer to create OPCs instead of sole proprietorship business because of the several advantages that OPCs offer.


    Advantages of one Person Company

    Limited liability

    Lesser compliance

    Perpitua status

    Exit route is easy by transfer of Shares

    Who can form one person company?

    Only Natural person can form an OPC

    Should not be minor

    Should be Indian citizen

    He should be Indian resident

    Nominee

    One nominee has to be appointed

    ONE Person can be member or Nominee of any one OPC only


    Compulsory conversion of OPC

    Paid up share capital need to be LESS THAN OR EQUAL TO 50 Lacs

    AVERAGE ANNUAL TURNOVER should be less than or equal to 200 Lacs in last three consecutive years


    Voluntary Conversion

    Only after two years from incorporation of one person company

    Maximum directors 15


    Nominee

    Nominee has no role in the company till death of the member

    Or

    Member being incapable to execute a contact


    Incorporation

    Digital signature

    Director identification number

    Name approval

    Memorandum and articles of association

    KYC documents

    Ownership proof of registered office

    Documentation

    Documents and Forms required for the One Person Company Registration Process

    Declarations from the respective individuals

    Digital Signature Certificates

    MOA and AOA

    Declaration from Promoters relating to Non-Deposit rules under the Foreign Exchange Management Act

    Consent from the member and director DIR-2

    Registered Premises of the Business- In case the premises are leased, then No Objection Certificate should be taken from the landlord.

    Pan and Address Details of the Owner

    Utility Bills of the Premises

    Aadhaar Card of the Owner

    Passport Size Photographs of the Owner

    Property Proof

    Process

    What is the Process of One Person Company Formation?

    Obtain DSC (Digital Signature Certificate) of proposed Director for which the following are required:

      1. Address Proof
      2. Aadhar card
      3. PAN card
      4. Photo
      5. Email ID
      6. Phone Number

    5 different services (Name Reservation, Allotment of Director Identification Number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN) can be applied for in one single form by applying for Incorporation of OPC through SPICe+ form (INC-32) with Emma (INC-33) and AOA (INC-34). In the case of emo, you are not applicable, a PDF of MoA and AoA requires to be attached. There is no need for reserving a name separately before filing the Form-A

      1. The word ‘One person Company formation’ must be mentioned along with the name of the company
      2. e.f. March 23, 2018, two proposed Names and one re-submission has been permitted.

    Pay prescribed fees wherever applicable;

    Scanning of the submitted forms and documents by ROC;

    Registrar of Company issues Certificate of incorporation.

    In case the paid-up share capital of the OPC exceeds rupees 50 lakhs or its average annual turnover of the immediate period preceding 3 consecutive financial years exceeds rupees 2 cr, then the OPC has to mandatory convert itself into the private or public company. Such information must be supplied to the RoC in form INC-5, within 60 days of exceeding such threshold limits.

    OPC can voluntarily convert into the private or public company by filing a Form INC-6.

    A private company may also convert into an OPC by filing form INC-6, the restriction being that the paid-up share capital of the private company should not exceed rupees 50 lakhs and the average annual turnover should not exceed rupees 2 cr at the time of such conversion.

    The company shall then have 1 member and shall appoint a nominee to act as the member in case of death or incapacity of the present member.

    Features of an OPC

    Some of the important features of an OPC are as follows-

    It is a Private Company

    Section 3(1) (c) of the Companies Act clarifies that for all legal matters, an OPC will be considered as a Private Limited Company. All prevailing rules applicable to an Indian Private Nominee: At the time of the One Person Company Registration, the only member of the OPC will need to mention a nominee.

    No perpetual succession

    After the death of the only member in an OPC, the nominee will get the option of rejecting or choosing to succeed him as the sole member. This is in contrast to other companies as they go by the method of perpetual succession.

    No minimum paid-up capital

    The Companies Act has prescribed no amount, in particular as the minimum paid-up capital for a One Person Company.

    A number of directors

    An OPC needs to have a minimum of one director and can have a maximum of 15 onboard. It needs to file a resolution to increase the number of directors.

    Benefits of an OPC

    Limited Liability

    Liability is treated differently in an OPC as it is a separate entity, and so shareholder liability is limited to the payment of subscription money. Hence, the member’s personal assets are not at risk.

    Smooth Succession

    As the name of the nominee is made during the creation of the OPC, succession laws are simple. In the event of the death of a member, all the shares and investments of the OPC are handed down to the nominee. There is no need for any lengthy procedure or submission of will as is the case with sole proprietorships.

    Easier Compliances

    A One Person Company has more relaxed and less binding compliance regulations. This dramatically reduces paperwork associated with running the company and hence, reduces the load on the HR department.
    Helps in organizing the unorganized proprietorship by giving it the same legal status of a private limited company. This provides better banking facilities to such companies. It also helps such companies have better status and recognition with respect to other companies.

    FAQ

    1What is one person company (OPC)?
    According to section 2 (62) of the companies Act, 2013, ‘One Person Company (OPC) ’ means a company which has only one person as a member. 2. No. of Persons required for formation of OPC an OPC company can be formed with just 1 Director and 1 member. 3. Mandatory Conditions for formation of One Person Company (OPC)
    2What is the minimum authorized capital for starting up a One Person Company?
    The process of starting an One Person Company is the same as that of a general private limited company. Hence, the minimum paid-up and subscribed capital of the One Person Company would be Rs. 1, 00,000.
    3What is the minimum number of directors and shareholders to form a One Person Company?
    A One Person Company can be started with one director and shareholder only.
    4Who is a nominee in a One Person Company?
    A nominee is a person who in the event of death or disability of the subscriber of the One Person Company shall assume his position. Memorandum of Association of an One Person Company will mandatorily prescribe the name of the person.
    5Can I appoint my wife as my nominee for my One Person Company?
    Yes. Anyone can be appointed as a nominee, provided he or she holds a correct PAN in his or her name.
    6Can a nominee of a One Person Company be changed after incorporating the company?
    Yes. A nominee can be changed at any time with due intimation to the Registrar.
    7How many One Person Companies can I form?
    One individual can form only one One Person Company.
    8Can a foreign national form and One Person Company?
    No. Only an Indian citizen and resident can form a One Person Company.
    9Does a nominee of a One Person Company need to acquire a DIN number as well?
    No. Nominee is only required to hold a valid PAN in his/her name.
    10Who can be appointed as a nominee for a One Person Company?
    For the purpose of starting up a One Person Company, only an individual (natural person) who is an Indian Resident and citizen can be appointed as a nominee for the sole member of a One Person Company.
    11Who is considered as resident for the purpose of forming a One Person Company or being appointed as a nominee?
    For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year.
    12In how many One Person Companies can a person become a nominee?
    A person can become a nominee in not more than 1 One Person Company.
    13Can a One Person Company be converted into a Section 8 company or any other company?
    No. One Person Company cannot be converted into a Section 8 company. Further, One Person Company cannot be voluntarily converted into any other kind of company until the cooling period of 2 years is completed from the date of incorporation.
    14Who all are disqualified to form a One Person Company?
    Following persons are disqualified to form a One Person Company:
    A minor.
    A foreign citizen.
    Non-Resident.
    A person incapacitate to contract.
    Any other person apart from living person.
    15Can a One Person Company engage in any form of business activities?
    An One Person Company can engage in any sort of business activities apart from Non-Banking Financial Investment Activities including “investment” in securities of body corporates.
    16What is the process of appointing a nominee for the One Person Company?
    The name of the nominee should be included in the Memorandum of Association of the One Person Company. The sole member of the One Person Company will have to obtain a written consent from the nominee in Form INC. 3. This Form has to be submitted to the ROC along with Form INC.2 during its incorporation.
    17What will happen in case of death of the sole member of the One Person Company?
    The name of the nominee should be included in the Memorandum of Association of the One Person Company. The sole member of the One Person Company will have to obtain a written consent from the nominee in Form INC. 3. This Form has to be submitted to the ROC along with Form INC.2 during its incorporation.
    18Is a One Person Company required to hold a Board Meeting?
    A One Person Company is required to hold a Board Meeting, if the number of directors are more than one. It will be deemed to have complied with the provisions relating to Board Meetings, if at least one meeting is conducted in each half of the calendar year. However, the gap between the two meetings should not be less than ninety (90) days.
    19Is a One Person Company required to file its Annual return?
    Yes. The annual return of the One Person Company has to be signed by the sole member of the One Person Company.
    20Is One Person Company required to hold an AGM?
    Provisions of Annual General Meeting (AGM) and Extra-Ordinary General Meetings do not apply to a One Person Company.
    21When will a company cease to operate as a One Person Company?
    A One Person Company will cease to operate as an OPC where the paid up capital of a One Person Company exceeds Rs.50 lacs or its average annual turnover during the relevant period exceeds Rs.2 Crores, it shall cease to continue as a One Person Company.
    22Can a private company convert itself into a One Person Company?
    A private company can convert itself into a One Person Company provided it satisfies the following conditions:
    It must have a paid up capital of Rs. Fifty Lakhs or less;
    It must have its average annual turnover of Rs. 2 crores or less.
    23How can a private limited company be converted into a One Person Company?

    Post obtaining the same, it will have to pass a Special Resolution in the General Meeting.

    The One Person Company shall file file copy of the Special Resolution with the Registrar within thirty days from the date of passing such resolution in Form No. MGT. 14.

    The company shall file an application in Form No. INC. 6 for its conversion into One person Company.

    24How can a private limited company be converted into a One Person Company?
    A company form of business generally meant to bring forward two members at least for better degree of control over management. However, these intentions were wildly destroyed when people started bringing in members just for the sake of maintaining the minimum statutory limits. Also, for an entrepreneur, this seemed to be an inhibiting factor. Hence, the New Act brought about this new rationale of a One Person Company. This model gives an entrepreneur the necessary and much sought out freedom from the shackles of the risks and uncertainty of a sole proprietorship business. This Article is meant to furnish you with the FAQs ON ONE PERSON COMPANY!!!! . There is more to come in coming days. Till then. Enjoy browsing!
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