One-Person Company (OPC) Registration

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About OPC Registration

One-Person Company (OPC) Registration

One-Person Companies (OPCs) are preferred by business owners who want to have minimal liability and a unique legal identity. An OPC is a special kind of business structure that allows one individual to operate as a corporation and enjoy all the advantages of limited liability with total control. A person can function as both a director and a shareholder in an OPC, combining the benefits of a sole proprietorship with the legal security of a private limited company.

Our speciality at TaxHint is streamlining the One Person Company registration procedure so that business owners may easily handle the intricate legal requirements for affordable one-person company registration costs. Our knowledgeable staff is committed to helping you at every stage, from document preparation to filing. We provide professional advice to enable you to make well-informed decisions about registering as a one person company.

The Companies Act of 2013 established the idea of One Person Company (OPC) registration in India, allowing one person to form a business and benefit from both a standard company structure and a sole proprietorship. With the 2013 passage of the Companies Act, this idea became accessible.

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Eligibility Criteria

Prior to proceeding with the OPC registration process, it is imperative that you comprehend the particular eligibility requirements and constraints that dictate its establishment. To guarantee that the person advertising the OPC is qualified to do so, certain conditions are outlined in the Companies Act.

Natural Person and Indian Citizen

An OPC can only be established by a natural person who holds Indian citizenship. Companies and other legal bodies are not permitted to form an OPC.

Resident in India

The promoter needs to be a resident of India, which means they need to have spent at least 182 days there in the preceding year's calendar.

Minimum Authorized Capital

The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company's capital clause during the OPC Company registration.

Nominee Appointment

The promoter must appoint a nominee during the OPC's incorporation. This nominee would become a member of the OPC in the event of the promoter's death or incapacity.

Restrictions on Certain Businesses

Businesses involved in financial activities such as banking, insurance, or investments are not eligible for OPC company registration.

Conversion to Private Limited Company

To meet the regulatory criteria for larger enterprises, the OPC must convert into a private limited company if its average annual turnover exceeds 2 crores or its paid-up share capital exceeds 50 lakhs.

Advantages of One Person Company (OPC)

Legal Status

An OPC is protected from personal accountability for company losses by obtaining separate legal entity status. This allows the founder to remain free from liability.

Reduced Compliance

Under the Companies Act of 2013, OPCs are free from certain compliance standards, which simplifies administrative tasks.

Efficient Management

When the OPC is run by a single individual, decisions are made quickly, resulting in effective management of the business without delays or disagreements.

Easy Fundraising

Compared to proprietorship businesses, OPCs find it simpler to raise financing from banks, angel investors, and venture capitalists because they are private companies.

Simple Incorporation

One member and one nominee may form an OPC, with the member acting as both the director and the member. Simplifying incorporation has no minimum paid-up capital requirement.

Perpetual Succession

OPCs ensure the company's continuity even in the event of a single member by maintaining perpetual succession.

Disadvantages of OPC

Suitable for Small Businesses

OPCs can only have one member, hence they are best suited for small-scale enterprises. This restricts their capacity to raise more money as their company grows.

Restriction on Business Activities

OPCs are prohibited from participating in specific activities, including philanthropic endeavours and non-banking financial ventures. Therefore, businesses engaging in these kinds of activities are not qualified to register as OPC corporations.

Ownership and Management

In OPCs, the director might also be the lone member, making it difficult to distinguish between ownership and management. Potential conflicts of interest or ethical issues may result from this.

One Person Company (OPC) Registration Process

Prior to proceeding with the OPC registration process, it is imperative that you comprehend the particular eligibility requirements and constraints that dictate its establishment. To guarantee that the person advertising the OPC is qualified to do so, certain conditions are outlined in the Companies Act.

Step 1: Apply for DSC

The first step is to obtain the Digital Signature Certificate (DSC) of the proposed director which requires the following documents:

  • Address proof
  • Aadhaar card
  • PAN card
  • Photo
  • Email Id
  • Phone number

Step 2: Apply for DIN

The proposed director must next apply for the Director Identification Number (DIN) in SPICe+ form along with verification of their identity and residence after obtaining their Digital Signature Certificate (DSC). Only companies that already exist can choose to use Form DIR-3. That indicates the applicant will not need to file Form DIR-3 separately as of January 2018. Up to three directors can now apply for DIN within the SPICe+ form.

Step 3: Name Approval Application

Choosing a name for the company is the next step in the incorporation process of an OPC. The company will be known by the name ABC (OPC) Private Limited.
In the Form SPICe+ application, the name may be authorised. In the Form SPICe+ application, only one preferred name and the rationale for retaining that name may be provided. If the name is refused, another Form SPICe+ application can be made with a different name.
We proceed to the following stage after the MCA approves the name.

Step 4: Documents Required

We have to prepare the following documents which are required to be submitted to the ROC:

  • The company's objectives or the stated business for which it will be incorporated are stated in the Memorandum of Association (MoA).
  • The Articles of the Association (AoA) lays down the by-laws on which the company will operate.
  • Since there is only one director and one member, it is necessary to appoint a nominee on their behalf. This is because, in the event that the director becomes incompetent or passes away and is unable to carry out his obligations, the nominee will act in the director's place. His PAN card and Aadhar card would be collected along with his agreement in Form INC - 3.
  • Evidence of ownership, a NOC from the owner, and the new company's registered office.
  • Declaration and Consent of the proposed Director of Form INC -9 and DIR – 2 respectively.
  • A declaration by the professional certifying that all compliances have been made.

Step 5: Filing of forms with MCA

All these documents will be attached to the SPICe+ Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be uploaded to the MCA site for approval. The Pan Number and TAN is generated automatically at the time of incorporation of the Company. There is no need to file separate applications for obtaining PAN Number and TAN.

Step 6: Issue of the Certificate of Incorporation

We can start our firm after receiving a Certificate of Incorporation from the Registrar of Companies (ROC) following verification.