The concept of One Person Company in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in an OPC, while a minimum of two members is required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP). Similar to a Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
Concepts Behind One Person Company
- Only one Shareholder
Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company.
- Nominee for the Shareholder
The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder. Only a natural person, who is an Indian citizen and resident in India shall be a nominee for the sole member of a One Person Company.
Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.
How You Can Do One Person Company (OPC) Registration
The One Person Company (OPC) was recently introduced as a strong improvement over the sole proprietorship. This person will be the only director and shareholder (there is a nominee director, but with no power until the original director is incapable of entering into contract). So there’s no chance of raising equity funding or offering employee stock options. Furthermore, if an OPC hits an average three-year turnover of over Rs. 2 crores or has a paid-up capital of over Rs. 50 lakh, it must be turned into a private limited company or public limited company within six months.
Documents Required for OPC Registration
TO BE SUBMITTED BY DIRECTOR
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Scanned passport-sized photograph
- Specimen signature (blank document with signature)
Steps to Incorporate (OPC)
- Obtain Digital Signature Certificate [DSC] for the proposed Director(s).
- Obtain Director Identification Number [DIN] for the proposed director(s).
- Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name.
- Draft Memorandum of Association and Articles of Association [MOA & AOA].
- Sign and file various documents including MOA & AOA with the Registrar of Companies electronically.
- Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty.
- Scrutiny of documents at Registrar of Companies [ROC].