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Overview of One person company registration
A new concept has been introduced in the company’s Act, as per section 2(62) of the company’s Act a one person company means a company having only one person as a member. Such a type of company will bring the unstructured proprietorship into a structured form of private business.
As per the company’s Act, a one person company is an entity owned and run by a single person only. That means he will play the roles of shareholder and director at the same time. This type of business structure is best for sole entrepreneurs planning for opening a venture. They can also enjoy the benefits of limited liability and separate legal entities.
A one person company is a hybrid form of business structure i.e sole proprietor and a corporate company that enjoys benefits of both forms thereby eliminating the hassles of finding a suitable partner for them.
What is a one person company (OPC)?
According to the Companies Act, 2013 a one person company is a business entity owned and run by a single person which provides complete authority to the owner to run the business as limiting his duties and financial liabilities for the business. In this type of company, there is a lesser compliance requirement as compared to a private company.
One person company (OPC) registration is simple and easy with Taxpotter.
Eligibility criteria for one person company registration
The applicant must be a resident of India
The applicant should not be a minor
Minimum one person is required for one person company registration. who acts as a shareholder and director of the company
The minimum authorized share capital required for registration of one person company is Rs 1lakh
Other business entities like private ltd company or limited liability partnerships cannot be a part of one person company
Apart from the owner there is a requirement of a nominee for OPC registration
A one person company should not cross the turnover limit of Rs 20crores. If it surpasses the limit it will be converted to a private limited company. Now this limit is done away
The share capital of OPC should not go beyond Rs 2 crores. Now this limit is done away
Benefits of a one person company
A one person company has many benefits as compared to a private ltd company as it is owned and run by a single person. Following are the benefits of a one person company
Complete control by an individual : As the company is owned by a single person the complete control of business remains in his control. So that they can take up more risks and opportunities without any pressure.
Separate legal entity : The company has the feature of a separate legal identity that means in case of death of the OPC the company goes to the nominee as it continues to exist.
Limited liability : This is the prime advantage for a one person company. The liability of the shareholders is limited to a particular extent only which means in case of disputes related to debts the creditors cannot claim any personal assets of the shareholder and director.
Ease of funding : Like the private ltd company, one person company can also raise funds through angel investors, venture capitalists, and financial institutions.
Lesser compliances : As compared to the Private ltd company the one person company requires very fewer compliances to follow.
Benefits of small scale industries : An OPC can avail of all benefits offered to the small businesses like loans at lower industry rates, easy investment without security deposit to a certain limit, advantage under foreign trade policy, and many more.
Documents required for one person company registration
PAN card of designated director and nominee
Passport sized photographs of director and nominee
Identity proof (voter ID, Aadhaar or driving license) of director and nominee
Consent of nominee in INC- 3 form
NOC from the landlord if the business place is rented
Ownership documents of business place if the business place is owned
Utility bills (electricity bill or telephone bill) of registered office place
Digital signature certificate
Copy of Memorandum of Association (MOA) and Article of Association (AOA) of the company.
One person company registration process
The registration process for an OPC is completely online and done according to the provisions of the company’s Act, 2013
Step 1: applying for DSC and DIN
The first step for OPC registration is applying for DSC and DIN of the directors along with name and address proof of the director
Step 2: Applying for name approval
In the next step, the applicant has to select a unique name and apply for the reservation process. This is to be done through the RUN facility of MCA portal . The company name should be ending with OPC private ltd.
Step 3: Application for OPC
An application must be filed with the registrar of companies in the specific jurisdiction within which the registered office of OPC is situated.
Step 4: Submitting the documents
After getting the name approval, recheck all the documents and submit all the documents on the MCA portal along with the SPICe + form.
Step 5: Applying for declaration forms
As there is only 1 member in one person company, a nominee has to be appointed. The responsibilities of the company will pass on to the nominee if the owner dies or cannot perform his duties. His consent form has to be filed in INC-3.
Step 6: obtaining a certificate of incorporation
After verifying all the documents, the registrar of the company will issue an incorporation certificate that contains the CIN number.
Difference between a one person company and sole proprietorship
One person company
Registered under company's Act, 2013
No formal registration required
Separate legal entity
30% of profits
5-30% based on the tax slab under which business falls