Most people believe that incorporating a company in India requires at least 2 persons. However, this is not the case anymore as the government allowed the incorporation of a company by a single person after the introduction of the Companies Act, 2013. It is known as One Person Company (OPC). Let’s understand in detail what is a One Person Company and how you can incorporate the same.
What is One Person Company?
As the name suggests, One Person Company is a form of company that can be incorporated by a single person. It consists of a single person as the director and shareholder of the company. This format was introduced to provide the benefit of sole proprietorship as well as company structure to the people. This was a great step towards fostering entrepreneurship while also formalising the Micro, Small and Medium Enterprises (MSMEs), a segment where most people operate as proprietors.
Requirements for One Person Company Registration in India
There are certain requirements you need to fulfil if you wish to incorporate an OPC in India. This includes the following:
- Indian Citizen: OPC can be incorporated only by an Indian citizen who is a natural resident. Legal persons like LLPs or companies cannot incorporate OPC in India.
- Resident in India: The promoter of the OPC should be resident in India. He should have lived in India for at least 182 days during the previous calendar year.
- Restrictions on Certain Businesses: OPCs cannot engage in businesses relating to financial activities like insurance, banking and investments.
- Nominee: The promoter of the OPC needs to appoint a person as the nominee of the company. In case of promoter’s death or incapacity, the nominee would become a member of the OPC.
- Conversion to Private Limited Company: In case the paid-up share capital of the OPC exceeds Rs. 50 lakhs or its turnover exceeds Rs. 2 crores, then the OPC should be converted into a private limited company. This means it shall be required to have at least 2 directors and shareholders.
Benefits of One Person Company Registration
OPC incorporation is gaining popularity amongst the people due to the following benefits of OPC registration in India:
- Single Person: OPC can be incorporated by a single person who acts as the director and shareholder of the company.
- Separate Legal Identity: One Person Company has a separate legal identity from the person incorporating the same.
- Limited Liability: Like normal companies, OPC too offers the benefit of limited liability. Thus, the liability of the promoter is limited only up to the amount of share capital contributed by the promoter.
- Reduced Compliances: The compliances in the case of OPCs are much lesser as compared to the private limited companies. This ensures less legal hassles and cost-effective compliance management.
- Perpetual Succession: Like normal companies, OPC too can maintain perpetual succession as it has its own separate legal identity. Thus, the company can continue even with one member.
- Simple Incorporation: The incorporation process of One Person Company is quite simple and easy and requires only one member and nominee where the member also serves as the director of the company.
Documents Required for One Person Company Registration in India
The following are the required documents for incorporation of OPC in India:
- Memorandum of Association
- Articles of Association
- KYC of the proposed director
- KYC of the proposed nominee along with his consent to act as the nominee of the OPC
- Proof of registered office of the company
- Declaration by the proposed director in Form INC-9 and consent in Form DIR-2
- Declaration issued by a qualified professional certifying that all the applicable compliances have been adhered to.
One Person Company Registration Process
Following is the legal process to incorporate an OPC in India:
- Obtain Digital Signature Certificate (DSC): You need to obtain the DSC of the promoter who will be acting as the director and shareholder of the company. This is important to sign all the necessary documents related to the incorporation and statutory compliances.
- Obtain Director Identification Number (DIN): The proposed director of the company needs to possess a valid DIN. In case the proposed director does not have DIN, then he can apply for the same along with the incorporation of the OPC.
- Name Reservation: You can apply for the reservation of the name of the company by filing Part A of the e-Form SPICE+. Alternatively, you can directly proceed with incorporation without the reservation of the name.
- Submission of MOA and AOA: You need to prepare the Memorandum of Association and Articles of Association of the company that shall contain all the details relating to the name, registered office, share capital, directors, shareholders, objects etc. of the company.
- File all the Relevant Forms: You need to file all the relevant forms associated with the incorporation of the company and pay the relevant fees. Also, you shall upload all the necessary documents.
- Issue of Certificate of Incorporation: The registrar will scrutinize the application. In case there is any discrepancy, a notice will be issued requiring the submission of additional information or documents. Once approved, the certificate of incorporation will be issued.
In a Nutshell
Incorporating OPC has conferred a lot of benefits for businessmen who want to operate as a legal structure. With limited liability, it helps reduce the inherent risk of business in case things go south. In case you need any assistance in relation to OPC registration in India, feel free to contact the ASC Group.
Also, Read "Private Limited Company Registration in India"
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