WHAT IS ONE PERSON COMPANY (OPC)?

OPC is defined under section 2(62) of Companies Act, 2013. One Person Company means a company which has one person as its member. This means that it’s a company with only one member.

OPC is a form of a private company that needs no complex procedure or lengthy documentation in case any person wants to start a business or start-up in India. Since there is no intervention from any third party, more of new ventures are motivated to create their own single-person company.

Thus, it provides benefits of doing business in the following ways:

• Not too many compliances
• Not much documentation.
• Perpetual succession, i.e., not affected by the death of members as the nominee will be taking over the office.
• Minimum office expenditure
• Few compliances as per Companies Act, 2013

WHO CAN FORM OPC IN INDIA?

Any individual person who is Indian citizen and resident of India can form OPC. A resident of India means any person who has stayed for 180 days or more in the previous financial year in India.

Only such people are eligible for:

• For the Incorporation of OPC in India.
• For being appointed as a nominee for the sole member or only member in an OPC.

ADVANTAGES OF FORMING OPC

Following are the benefits of OPC:

• Only 1 director is sufficient.
• Only 1 member is required.
• Minimum 1 nominee is there.
• No Need to comply section 173 of Companies Act, 2013 i.e., no need to conduct at least 4 board meetings in a year.
• Mandatory rotation of auditor in every five-year period is also not required in OPC.
• An OPC is a separate legal entity. It is capable of doing things like an entrepreneur would do.
• Liability is limited to the extent of shareholding. That is a person can take more risks without adverse effects on the personal asset.
• OPC can enjoy all the benefits avail by Small Scale Industries (SSI), benefits like lower interest rates of loans, easy finance availability from Banks, etc.
• Minimum documentation and paperwork is required

STEPS BY STEP PROCESS TO REGISTER OPC

Apply for name

• The first and foremost step for the incorporation of a Private Limited Company is started by applying a suitable name for the Company. Name can be applied online through web service available at www.mca.gov.in by using Reserve Unique Name (RUN) service by signing in through workspace service.
• After receipt of an application by the registrar, if all the information and documents furnished are correct and accurate, the registrar may accept an application and reserve a name for 60 days. That means after the name is being approved, the Name Approval Letter is allotted to the applicant with name reserved for 60 days.
• A company is not allowed to be registered with the name:
  • Which too nearly resemble or is similar to the name already registered as a Company, LLP or registered under Trademark Act. • Such words or symbols which are prohibited by Central Government from time to time • If Company is incorporated: as per the further orders of Registrar.

Apply for Digital Signature Certificate (DSC)

Although DSC is not defined under the Companies Act, 2013, but it has been defined under the Information Technology Act, 2000. Digital signature means authentication of any electronic record by a subscriber by any means of the electronic method in accordance with provisions of Section 3. Digital Signature Certificates is a certificate issued under section 35(4). The individual can apply DSC through SIFY, E-Mudhra, or any other websites for applying DSC online.

Following documents of the applicant are required for applying DSC online:

• Aadhaar Card
• PAN Card
• Passport size Photograph
• E-Mail Id
• Contact Number.

Apply for Director Identification Number (DIN)

• Every director who intends to be appointed as a director in any Company is required to first obtain unique Director Identification Number (DIN) from Registrar of Companies.
• For allotment of DIN, online application is made to the Central Government in the form of DIR-3 with necessary documents scanned adequately as an attachment. Following documents are required to be submitted:
  • Passport size Photograph • Identity Proof • Address Proof
• Provided, in case proposed directors don’t have DIN number and it’s their first company as a director which is being incorporated, those directors can apply for DIN in Form No. INC-32 (SPICe) at the time of the Incorporation of a Company directly. Maximum three directors can apply for DIN through SPICe forms.

Application for Incorporation

Further after name approval, the next step is to apply for registration of a company. Application for incorporation has to be made online through the MCA portal using three linked forms with the necessary attached documents stated above. It's a simplified method for incorporating a company electronically (SPICe). Following forms are filed online with MCA:

• Form INC-32 (SPICe)
• Form INC-33 (SPICeMoA)
• Form INC-32 (SPICeAoA)

While choosing ‘Class of Company' SPICe gives three options out of which applicant has to select the category of the company it willing to Incorporate:

• Private Limited
• Public Limited
• OPC

Authorized Capital and Paid-up Capital

One Person Company can be registered with a minimum authorized capital of Rs.100000/-however there is no mandatory requirement of any minimum paid-up capital.

Certificate of Incorporation

After the application is made, i.e., forms are filed online on the website of the MCA portal, Registrar after scrutinizing the forms; verify an application for its approval. If an application is correct and accurate up to Companies Act standards, Certificate of Incorporation (CoI) is issued with CIN, PAN and Date of Incorporation mentioned on it.

Documents required for registration of One Person Company (OPC)

Following documents are required to be prepared as attachments to be uploaded with e-forms online:

• Memorandum of Association (MoA) & Article of Association (AoA) with brief details of the Company Name, Capital, Registered Office signed by all the subscribers or promoters.
• A duly signed declaration that has to be given by an advocate, Chartered Accountant, Cost Accountant or Company Secretary in Practice.
• An affidavit in form INC-9 which is a declaration which states no- conviction of any offense and/or he/she is not found guilty of any fraud/ misfeasance/or any breach of duty.
• Consent to act as a director in form DIR-2.
• A detail of nominee of such member is mandatory in case of OPC registration. A nominee is appointed in OPC since there is only 1 director and member, and in case of his/her incapacity or death or any reason due to which he cannot perform his duties, the nominee can perform the duties and take place on behalf of the first member. 
• Address proof of its registered office where it has to be situated along with the proof of address like registry in case of owned premises and rent agreement or lease deed in case of property is rented or leased as the case may be. Along with a NOC of the owner. 
• If any of the directors already hold directorship in any other company apart from the Proposed Company in which being appointed, such interest in other entities has to be attached as a declaration.
• Professional Declaration byAdvocate, Chartered Accountant, Cost Accountant or Company Secretary in Practice should be given in Form-8.
• The nominee has to give consent to act as a nominee in Form- INC-3 with full details such as full name, father's name, address, etc. Documents such as Aadhar card, PAN card, copy of proof of Identity, and residential proof.

CHARACTERISTICS OF OPC IN BRIEF

Following are the main concerns of OPC in brief:

• Minimum Authorized Share Capital – Rs.100,000/-
• Minimum number of member- 1
• Maximum number of member-1
• Subscriber is required to pay the full amount of share subscribed by him during incorporation.
• Voluntary conversion of OPC to Private/Public Company is allowed after two years of incorporation.
• An OPC is subject to the same tax as Private Limited Company.

EXEMPTIONS FROM COMPANIES ACT, 2013

OPC is exempted from complying certain provisions of Companies Act, 2013 which are mandatorily to be complied by private/public companies. Such exemptions are:

• No need of signing of annual return
• AGM not required
• No compulsory 4 board meeting in a year
• Notice of meeting not required to be given
• No minimum quorum for meetings is required.
• Restriction on voting rights is simplified.