One Person Company
Small vendors, artisans, and other service providers who want to start a company will benefit from the recognition of a single person economic organisation because it expands their possibilities while limiting their liability and requiring limited compliance. So let’s understand what all documentation and requirements are necessary to incorporate OPC.
Introduction to One Person Company
Companies Act 2013 has introduced a new concept of “One Person Company”(OPC). Under Section 2(62) it is defined as a “One Person Company” which means a company which has only one person as a member. One person company enjoys certain privileges or exemptions as compared to other companies.This Company is suitable for small businesses where the turnover is not likely to cross Rs. 2 Crores and the maximum amount of capital to be invested is limited to Rs. 50 Lac. An OPC can have more than one director. However one of them must be an Indian Resident. Limitation of OPC is that only an Indian Citizen can open an OPC Company and FDI is not allowed in One Person Company.
What are the features of a One person company?
- It can be incorporated as a private limited company only.
- It can have only one member at any point of time and the number of shareholders cannot go beyond one.
- It may have only one director and maximum number of directors is 15.
- “One Person Company” words must be mentioned in brackets below the name of the company.
- Holding Board Meetings is an exemption to this form of company.
What are the advantages of One Person Company?
1. Separate Legal Entity
One Person Company holds a separate legal entity from its members.2. Limited Liability
The liability under OPC is limited to the extent of the value of the share held by the Shareholder.3. Minimum Requirements
- Minimum 1 Shareholder
- Minimum 1 Director
- The director and shareholder can be the same person.
- Minimum 1 Nominee
- The Letters ‘OPC’ must be suffixed with the name of OPCs to distinguish it from other companies
4. Benefits of being a Small Scale Industries (SSI)
Various benefits are provided to OPC as it is included in Small Scale Industries.5. Receive Interest on any late Payment
It can avail all the benefits under Enterprises Development Act, 2006. As OPC is micro, small, or medium; hence they are covered under this act.6. Increased Trust and Prestige
Business entity in the form of the company always enjoys an increased trust and prestige.What are the disadvantages of One Person Company?
1. Annual Return Filing
Annual return of OPC is compulsorily signed by a director. It is generally not allowed to receive the mandatory requirement of company secretary signature.2. High Tax Rate
In the case of One Person Company, Fixed Rate directly charged to the income tax. It is a big disadvantage of one Person Company.3. Not Suitable for Turnover
Limited Share Capital and Turnover for One Person Company.What is the process for One person company Registration?
1. Digital Signature
As the application for LLP Registration is filed online, the process starts with the issuance of the digital signature of class-2 for the partners.2. Company Name Approval
The Company must be incorporated with a unique and new name which should not be similar to an already registered company, LLP or a registered/applied trademark.3. COI (CERTIFICATE)
For allotment of DIN, One single application (SPICE 32) is filed for incorporation of the company. With the approval of this form, the Certificate of Incorporation is issued.4. PAN, TAN & BANK A/C
The Income-tax Department allots a Permanent Account Number and TAN, which is mentioned on the certificate of incorporation. Next step is opening Bank A/c for the company for the purpose of commencement of business.Required Documents
| Acceptable Document | Document Type | Additional Details |
|---|---|---|
| Scanned Photographs of Director and Promoter | . | . |
| Utility Bill as proof must be Latest not later than 2 months | . | . |
| Identity Proof Promoter and Director (Voter ID / Driving License/ Passport) | . | . |
| Address Proof of Promoter and Director (Bank Statement / Electricity, Mobile, Telephone Bill) | . | . |
| PAN Card of Promoter and Director | . | . |
| NOC from the owner of the premises of Registered Office | . | . |
FAQs
You Ask, We Answer
Minimum one person is required while starting a One Person Company, but you can have up to 15 Directors for your OPC.
A Minor, Foreign citizen, Indian Non-resident, a person incapacitate to contract are restricted from forming a One Person Company.
Yes, it can be converted into Private Limited Company, if the One Person Company has exceeded the threshold limit by filing necessary forms.
No, a One Person Company does not required to hold Board meeting like Private Limited Company, but it has to hold Board Meeting once in every half year calendar, the gap between two Board Meetings shall not be less than 90 days.
One Person Company is a new company structure, contains the benefits of sole proprietorship and corporate status. It has only one member, who acts as the Member cum Director and a nominee.
A Director is the person who manages and controls the affairs of the company. A Director is the brain of a Company. They occupy a pivotal position in the structure of the company. Directors take the decision regarding the management of a company collectively in their meetings known as Board Meetings.
One Person Company can be registered like Private Limited Company, where all the rules and regulation are laid down by the Ministry of Corporate Affairs.
If the member dies, the nominee undertakes the affairs of the company and within 15 days of time, the company has to intimate the Registrar of Companies by filing Form INC-4 with prescribed fee.
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