A One Person Company (OPC) in India is a type of business where a single person can start and run a company. The person is the sole owner and director of the company. The company is considered a separate legal entity, which means the person's personal assets are protected in case of any liabilities or losses. The person must nominate a director who will take over the company if something happens to them. There is no minimum capital requirement, but the maximum capital and turnover limits apply. If the company grows beyond those limits, it must be converted into a private limited company. OPCs are beneficial for small business owners who want limited liability and the advantages of a company structure with a single owner.
BENEFITS
LIMITED LIABILITY
The primary advantage of OPC is limited liability. The owner's personal assets are separate from the company's liabilities. In case of any financial or legal obligations faced by the company, the personal assets of the owner are not at risk.
SEPARATE LEGAL ENTITY
An OPC is considered a separate legal entity from its owner. It has its own identity, distinct from the owner. This provides credibility and protection to the owner's personal assets.
EASY FORMATION
OPC formation is relatively easy and requires fewer compliance requirements compared to other types of companies. It has a simplified structure, and the owner can incorporate it quickly with minimal paperwork.
SINGLE OWNERSHIP
OPC allows an individual to own and operate a company independently. This gives complete control and decision-making authority to the owner without any interference from partners or shareholders.
BETTER ACCESS TO FUNDING
OPCs have access to various funding options, including loans and investments, which may not be available to sole proprietorships or partnerships. The separate legal entity status enhances the credibility of the company, making it easier to attract investors or secure loans.
PERPETUAL EXISTENCE
An OPC has perpetual existence, meaning it continues to exist even if the owner dies or becomes incapacitated. The nominee director takes charge in such situations, ensuring the smooth continuation of the company's operations.
TAX BENEFITS
OPCs enjoy the same tax benefits as other companies. They are subject to the corporate tax rate, which can be advantageous in terms of tax planning and optimization.
LIMITED COMPLIANCE REQUIREMENTS
OPCs have fewer compliance obligations compared to larger companies. They have relaxed reporting requirements, making it easier for the owner to manage the company's operations and comply with legal obligations.
ENHANCED BUSINESS OPPORTUNITIES
Being a registered company, OPCs have better opportunities to participate in government tenders and contracts. They can also establish business relationships with other companies and entities more easily.
STEPS TO REGISTER
To register a One Person Company (OPC) in India, you need to follow these steps:
- DIRECTOR IDENTIFICATION NUMBER (DIN): The first step is to obtain a DIN for the proposed director(s) of the OPC. DIN can be obtained by filing an online application with the Ministry of Corporate Affairs (MCA) and providing the necessary documents.
- DIGITAL SIGNATURE CERTIFICATE (DSC): Next, you need to obtain a digital signature certificate for the proposed director(s) of the OPC. DSC is required for filing online forms during the registration process. It can be obtained from certifying authorities.
- NAME RESERVATION: Choose a unique name for your OPC and apply for name reservation with the Registrar of Companies (ROC). You can apply for name reservation through the MCA's online portal by submitting the required documents and paying the prescribed fee.
- MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLES OF ASSOCIATION (AOA): Prepare the MOA and AOA, which are the constitutional documents of the company. These documents define the company's objectives, rules, and regulations. They need to be signed by the proposed director(s) and witnessed.
- PREPARATION OF DOCUMENTS: Prepare the necessary documents, including identity proof, address proof, and photographs of the proposed director(s). Additionally, prepare the consent to act as a director and the nominee's consent to act as a nominee director.
- INCORPORATION FILING: Once the name is approved, you can proceed with the incorporation filing. File the incorporation documents, including the MOA, AOA, and other required forms, with the ROC. These filings can be done online through the MCA portal.
- PAYMENT OF FEES: Pay the prescribed fees for incorporation and stamp duty, based on the authorized capital of the OPC.
- CERTIFICATE OF INCORPORATION: Upon successful verification of the documents, the ROC will issue a Certificate of Incorporation (COI) for the OPC. The COI contains the unique Corporate Identification Number (CIN) of the company.
- PAN AND TAN APPLICATION: After receiving the COI, apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the OPC. These are required for tax-related purposes.
- BANK ACCOUNT OPENING: Open a bank account in the name of the OPC using the COI, PAN, and other required documents.
DOCUMENTS REQUIRED FOR OPC
- Identity Proof: PAN Card, Aadhaar Card/Voter ID/Passport/Driving License of all directors.
- Address Proof: Aadhaar Card/Voter ID/Passport/Driving License of all directors, recent utility bills/bank statements.
- Passport-sized Photographs: Recent passport-sized photographs of all directors.
- Proof of Registered Office Address: Ownership proof or rent agreement/NOC, recent utility bills in the name of the property owner.
- Memorandum of Association (MOA) and Articles of Association (AOA): Signed by all directors.
- Nominee consent.
- Consent to act as director.
- Affidavit and declaration.
- Digital Signature Certificate (DSC): Application form and supporting documents.
REGISTERATION COMPLIANCES
One Person Companies (OPCs) in India are subject to certain compliance requirements to ensure legal and regulatory compliance. The key compliance obligations for OPCs in India are as follows:
- ANNUAL GENERAL MEETING (AGM): OPCs are not required to hold an AGM, as there is only one director/shareholder. However, if the OPC has converted into a private limited company or the company's articles require an AGM, the OPC must comply with the AGM requirements.
- BOARD MEETINGS: OPCs are required to hold at least one board meeting in each half of a calendar year (with a minimum gap of 90 days between two meetings). The minutes of these meetings should be duly maintained and documented.
- FINANCIAL STATEMENTS: OPCs must prepare and file financial statements, including the balance sheet, profit and loss statement, and cash flow statement, with the Registrar of Companies (ROC) within 180 days from the end of the financial year.
- ANNUAL RETURN: OPCs are required to file an annual return with the ROC within 60 days from the end of the financial year. The annual return contains details such as the company's financials, shareholding pattern, and changes in the management or directorship.
- STATUTORY AUDIT: OPCs must conduct a statutory audit of their financial statements by a qualified auditor. The auditor will provide an audit report, which must be submitted along with the financial statements.
- INCOME TAX FILINGS: OPCs must file their income tax returns annually, disclosing their income, expenses, and tax liabilities. The due date for filing income tax returns is generally July 31st of the assessment year.
- GST COMPLIANCE: If the OPC is registered under the Goods and Services Tax (GST) regime, it must comply with the applicable GST rules and regulations, including timely filing of GST returns and payment of GST liabilities.
- COMPLIANCE WITH OTHER LAWS: OPCs must also comply with various other laws and regulations applicable to their specific industry or business activities, such as labor laws, environmental regulations, and any specific sector-specific laws.
FAQs
An OPC is a type of business entity that allows a single individual to operate a company with limited liability.
Only one director is required to form an OPC.
Yes, a foreign national or NRI can form an OPC in India, subject to certain conditions.
There is no minimum capital requirement. The maximum authorized capital is limited to Rs. 50 lakhs
Yes, if an OPC exceeds the prescribed limits (capital or turnover), it must be converted into a private limited company.
Yes, every OPC must nominate a person as a nominee director to take charge in case of the director's death or incapacity.
OPCs offer limited liability protection, separate legal entity status, and better access to funding compared to sole proprietorships.
OPCs are not required to hold an AGM unless it is converted into a private limited company or specified in the company's articles.
OPCs must prepare and file financial statements and annual returns with the Registrar of Companies (ROC) within specified timelines.
Yes, an OPC can be voluntarily closed or dissolved by following the necessary procedures and obtaining the required approvals.
An OPC can engage in any lawful business activity specified in its Memorandum of Association (MOA).
Yes, OPCs can raise funds through venture capital, angel investors, or other funding sources, subject to compliance with applicable regulations.
No, an OPC cannot be converted directly into a public limited company. It can only be converted into a private limited company.
No, a person can be a director in only one OPC at a time.
Yes, OPCs can avail tax benefits and incentives applicable to small businesses, subject to meeting the eligibility criteria.