Company Act 2013, section 2 (62), gives a definition of One Person Company as the one that has just one person as a member. Moreover, the company’s members will be the shareholders to the memorandum of association. So, on the whole, this OPC will have just one shareholder which be considered as it’s a member.
Why OPC Introduced ?
To support entrepreneurs who are capable enough to initiate a new venture.
How to get Membership in OPCs!
For the membership, some conditions need to be fulfilled.
- The person going to start an OPC must be a natural person and an Indian resident & citizen.
- One nominee can’t become the nominee of any other OPC at any time.
- The OPC nominee or member can’t be a minor.
Why should You Choose OPC? How is It Different from Other Business Forms?
One Person Company is the one registered under section 3 (1)(c) of Company Act 2013 and any one person can create it for a lawful purpose. Here, below some key points:
No Perpetual Succession
One person company doesn’t hold the feature of perpetual succession. The reason being, only one person manages the whole operations of the company.
No Minimum Paid-up Capital
There’s no mention about the minimum paid-up capital of one Person Company, unlike private companies which need to have one lack as minimum paid-up capital.
Only One Member & Director
One person company can be started by just one shareholder or member.
Nominee
OPC that differentiates from other business is that the sole member carries all the rights to select and mention a nominee
Benefits of OPC!
There is an abundance of benefits and exemptions that one person company enjoys contrasting other kinds of companies. Get it here!
- Limited Liability and Unlimited Opportunities
- Easy Funding
- Little Compliance Burden
- Minimum One Director
- Minimum One Nominee
- Minimum One Shareholder
- Shareholder and Director can be the same person
- Single Owner Benefits
- Credit Rating
- Income Tax Benefits
- The director’s remuneration is permitted as a deduction under income tax laws. However, other proprietorship businesses don’t have such benefits.
- SSI Benefits
- Easy funding from a bank, lower interest rates, foreign trade policy benefits, and many more benefits can be enjoyed by operating it.
Registration Process of One Person Company
By following some simple steps, you can incorporate a One Person Company easily. Here is the process:
- Application for DSC
- The Digital Signature Certificate is required to obtain for a proposed director with documents Asdhaar Card, Photo, Phone Number, Address Proof, Email ID, PAN Card, etc.
- Application for DIN
- After obtaining DSC, the application for Director Identification Number is required to be submitted in the SPICe Form along with address proof and name of the director.
- Application for Name Approval
- Preparation of Documents
- Filling Forms
- Certificate of Incorporation
- After verification, the certificate of incorporation will be issued to the Registrar of Companies.
FAQs
Does an OPC Pose Danger for Creditors? Do Banks Provide Them Credit Easily?
As the situation is already clear that an individual runs an OPC. So, it becomes quite difficult to get financial assistance from banks and other financial institutions as he can manipulate or do fraud by forging its name or other details.
Is OPC A Separate Legal Entity?
Yes, it is a separate legal entity as it owns its property and assets.
Is ‘One Person Company’ Required to Put After the Company’s Name?
Yes, it is necessary to do.
Can an NRI Open Up an OPC in India?
No, the person needs to be an Indian citizen and resident to start an OPC in India.
In How Many OPCs, the Same Person can Become Member?
Only one OPC.
Is There Any Condition for an OPC to Covert into a Public or Private Limited Company?
Yes. In case when OPC’s paid-up capital crosses either Rs. 50 Lac or it’s three years’ average annual turnover exceeds Rs. 2 crore.
What Taxation Rates are Applicable to OPC?
The same tax brackets apply to OPC as it’s with private limited companies.
Is There Any Restriction on Particular Persons to Form OPC?
Yes. Following persons can’t form an OPC:
- A Foreign Citizen
- A Minor
- A Person Incapacitated by Contract
- A Non-Resident
What is the Minimum Time Frame to Pass for Voluntary Conversion of OPC into a Private Company?
From the date of incorporation, the company must have passed at least two years.
Is the OPC Selling Process Hectic?
No. The sale of an OPC is quite simple with minimal documental work.