Introduction to One Person Company (OPC)

One Person Company (OPC) registration in India was introduced as a concept under the Companies Act of 2013, enabling a single individual to establish a company and enjoy the combined benefits of both a sole proprietorship and a traditional company structure. This concept became available with the implementation of the Companies Act in 2013.

The primary objective behind creating one-person companies was to foster entrepreneurship and encourage the formalization of Micro, Small, and Medium Enterprises (MSMEs). According to Section 2(62) of the Companies Act 2013, a company can be formed with just one director and one member, and interestingly, these roles can be held by the same individual. Simply, OPC Company registration allows a single person to set up a limited liability company in India.

The following describes the eligibility and procedure to register one person company.

Eligibility Criteria

• Natural Person and Indian Citizen: Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs cannot create an OPC.
• Resident in India: The promoter must be a resident in India, meaning they should have lived in India for at least 182 days during the previous calendar year.
• Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company's capital clause during the OPC Company registration.
• Nominee Appointment: The promoter must appoint a nominee during the OPC's incorporation. This nominee would become a member of the OPC in the event of the promoter's death or incapacity.
• Restrictions on Certain Businesses: Businesses involved in financial activities such as banking, insurance, or investments are not eligible for OPC company registration.
• Conversion to Private Limited Company: If the OPC's paid-up share capital exceeds 50 lakhs or its average annual turnover surpasses 2 Crores, it must be converted into a private limited company to comply with the regulatory requirements for larger companies.

Advantages of One Person Company (OPC)

• Legal Status: An OPC obtains a separate legal entity status, safeguarding the individual who founded it from personal liability for company losses.
• Easy Fundraising: Being a private company, OPCs find it easier to raise funds through venture capitalists, angel investors, and banks compared to proprietorship firms.
• Reduced Compliance: OPCs enjoy certain exemptions from compliance requirements under the Companies Act, 2013, simplifying administrative obligations.
• Simple Incorporation: OPCs can be established with just one member and one nominee, with the member also serving as the director. No minimum paid-up capital requirement simplifies the incorporation process.
• Efficient Management: With a single person managing the OPC, decision-making is swift, leading to efficient company management without conflicts or delays.
• Perpetual Succession: OPCs maintain perpetual succession, ensuring the company's continuity even with only one member.

Disadvantages of OPC

• Suitable for Small Businesses: OPCs are primarily suitable for small-scale businesses as they can only have one member. This limits their ability to raise additional capital as the business expands.
• Restriction on Business Activities: OPCs are restricted from engaging in certain activities, such as non-banking financial investments and charitable objectives. Hence, the companies with these business activities are not eligible for OPC company registration.
• Ownership and Management: There's a lack of clear distinction between ownership and management in OPCs, as the sole member can also be the director. This can potentially lead to ethical concerns or conflicts of interest.

Required Documents for OPC Registration Online

• Memorandum of Association (MoA)
• Articles of Association (AoA)
• The nominee's consent, along with their PAN card and Aadhaar card, must be submitted via Form INC-3.
• Proof of Registered Office
• The proposed director should furnish a declaration in Form INC-9 and their consent in Form DIR-2.
• A declaration by a qualified professional certifying that all necessary legal compliances have been adhered to.

Registration of One Person Company (OPC) in India

In India, OPC company registration is facilitated through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which has replaced the previous application forms for company incorporation.

The OPC Registration process consists of two parts:

Part A: This initial section of the SPICe+ form is dedicated to securing approval for the desired company name and applying for the Director Identification Number (DIN) or Permanent Account Number (PAN) for the proposed director.

Part B: The subsequent segment, known as Part B, involves furnishing incorporation-related details. Here, essential information such as the registered office address of the OPC, details about share capital, particulars of the director, and information about the shareholder is provided.

Post-Incorporation Formalities for OPC

Following the successful incorporation of a One Person Company (OPC), specific compliance formalities must be adhered to, akin to those applicable to private limited companies. Our experts are ready to assist you in fulfilling OPC compliance requirements, ensuring that your business remains in full legal compliance.