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What is One Person Company ?

The introduction of One Person Company in the legal system is a move that would encourage corporatisation of micro businesses and entrepreneurship. One Person Company (OPC) is a one shareholder corporate entity, where legal and financial liability is limited to the company only. In One Person Company only one owner with limited liabilities can act both as a shareholder as well as the director. One Person Company (OPC) 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. The concept of OPC is basically to eradicate the limitation of a sole proprietorship, which is the most popular form for small businesses in India. The liability of owner is limited to the invested capital in this form.

What are the Advantages Benefits of One Person Company ?

The concept of One Person Company is quite revolutionary.

Some of the benefits associated with an OPC are :-

1.) Get benefits available to companies :- It gives the individual entrepreneurs all the benefits of a company, which means they will get access to bank loans, access to market, limited liability, and legal protection available to companies.

2.) Only one member can form OPC :- Prior to the new Companies Act, 2013 coming into effect, at least two shareholders were required to start a company. But the concept of One Person Company (OPC) provides tremendous opportunities to small businessmen and traders owned by an individual, including those working in areas, like handloom, handicrafts and pottery. Earlier they were working as artisans and weavers on their own, so they did not have a legal entity of a company. But now the OPC would help them do business as an enterprise and give them an opportunity to start their own ventures with a formal business structure. OPC can have more than one directors.

3.) OPC has a distinct legal entity separate from its member :- The member/shareholder of an OPC has a limited liability in case of bankruptcy.

4.) Perpetual Existence :- Not affected by the death of a member or shift in ownership.

5.) Less Compliances :- The amount of compliance by a one person company is much lesser in terms of filing of returns, balance sheets, audit reports, etc.

6.) Full Control over the Company with a Single Owner :- A single owner can make fast decision for execution. OPC can, however, select as many as 15 directors for official functions, without providing any share to them.

7.) No Profit sharing :- Rather than the middlemen usurping profits, in the context of one person company, the sole member has direct access to the income of the company.

What are the required Documents ?

What are the pre-requisites for One Person Company Registration ?

Below mentioned are the pre-requisites to register an OPC in India :-

1.) Only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company and there shall be a nominee for the sole member of a One Person Company. “Resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year.

2.) No person shall be eligible to incorporate more than a One Person Company or become nominee in more than one such company.

3.) Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall be required to meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days. i.e., he/she shall withdraw his /her membership from either of the OPCs within one hundred and eighty days.

4.) No minor shall become member or nominee of the One Person Company or can hold share with beneficial interest.

5.) Such Company cannot be incorporated or converted into a company under One Person of the Act.

6.) Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.

Is it mandatory to convert OPC into Private Company ?

No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except under the following conditions :-

  • When the threshold limit of paid up share capital exceeds beyond 50 lakhs.
  • When its average annual turnover of immediately preceding 3 consecutive financial years exceeds two crore rupees.
  • Under such situations, the OPC has to mandatorily convert itself into a private or public company by informing RoC in form INC-5.

Incorporation of One Person Company :-

How to Apply for DSC :-

The first Step is to obtain the Digital Signature Certificate (DSC) of the proposed Director which shall be followed by the following procedures.

Procedure of Incorporation through SPICe (Without filling RUN) :-

1.) Here the stakeholder is required to file SPICe form (INC-32). Simplified Proforma for Incorporating Company electronically :- directly without any need for reserving a name separately before filing of the SPICe form. This is an integrated form for 5 different services, namely, Name Reservation, Allotment of Director Identification number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN.
2.) One name for the proposed company can be applied through SPICe (INC-32).
3.) The form has to be filed with eMoA (INC-33), eAOA (INC-34). In case eMoA, eAoA are not applicable, users are required to attach the pdf of MoA and AoA.

Procedure for Incorporation through SPICe (With RUN) :-

1.) Name reservation :- RUN service shall be used for name availability.
2.) Incorporate OPC :- After name approval, form SPICe shall be filed for incorporation of the OPC within 20 days from the data of approval of RUN along with eMoA (INC-33), eAOA (INC-34) as mentioned above.

Other necessary documents to be filed with MCA :-

Consent from Nominee :- Since OPC is characterized by only 1 Director and a member, a nominee on behalf of such person has to be appointed because in case he becomes incapacitated or dies and cannot perform his duties the nominee will perform on behalf of the director and take his place. His consent in Form INC 3 will be taken along with his PAN card and Aadhar Card.
• Proof of the Registered office of the proposed Company along with the proof of ownership and a NOC from the owner.
• Affidavit and Consent of the proposed Director in Form INC-9 and DIR-2 respectively.
• A declaration in from INC 8 by a professional including an Advocate, a Chartered Accountant, a Cost accountant or a Company Secretary in practice certifying that all compliances have been made.

On verification, the Registrar of Companies (ROC) will allot a Unique Company Identification No. (CIN) and shall issue a Certificate of Incorporation pertaining to the OPC.

Note :- The company shall file form INC-22 within 30 days once form SPICe is registered in case the address of correspondence and registered office address are not same.

Statutory requirements which are required to fulfilled after registration process is completed :-

•Opening a current account of the company.
•Appointment of a statutory auditor.
•Depositing the paid-up capital mentioned while registration.
•Issuance and allotment of shares.

Difference between a Sole proprietorship and an OPC :-

1.) The fundamental difference between a sole proprietorship and an OPC is the way liability is treated in the latter.
2.) A one person company is different from a sole proprietorship because it is a separate legal entity that distinguishes between the promoter and the company.
3.) The promoter's liability is limited in an OPC in the event of a default or legal issues. On the other hand, in sole proprietorship, the liability is not restricted and extends to the individual and his or her entire assets.
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Do you have few more Questions ?

Let us help!

A Minor, Foreign citizen, Indian Non resident, a person incapacitate to contract are restricted from Forming a One Person Company.

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. The term “resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one financial year.

A person cannot incorporate more than one OPC.

Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of 180 days, i.e., he/she shall withdraw his membership from either of the OPCs within 180 days.

As per the Companies (Incorporation) Rules, 2014, a One Person Company has to change itself compulsorily into a private limited company or a public limited company, if at any point of time, its paid-up capital exceeds INR 50 Lac OR its average annual turnover of three immediately preceding consecutive financial years becomes more than INR 2 Crore. Under any of these conditions, the OPC is necessarily required to inform the relevant ROC through Form INC-5, within 60 Days of the exceeding threshold limits. Here, it may also be noted that an OPC cannot voluntarily change itself into any type of company, within two years of its incorporation, except under any of these two cases of exceeding the threshold limits.

 

Since the concept of a one person company has recently been introduced by the new Indian Companies Act of 2013, at present, there are no specific taxation laws available for OPCs in India, and therefore, these OPCs are put in the same bracket of taxation as the private limited companies. Again, in general, no tax-related advantages are available to OPCs in India, though some industry-specific advantages may be available to these from time to time. Hence, the OPCs in India are taxed in the following ways and rates:

  • Corporate Income-Tax: 30% of the Total Income/Net Profits
  • Surcharge: 5% of such income, if it exceeds INR One Crore
  • Education Cess: 3% of the total of Income-Tax and Surcharge
  • Dividend Distribution Tax (DDT): 15%

Lastly, the provisions of the Minimum Alternative Tax (MAT) are also applicable.

No, no other persons than an Indian citizen or a Resident in India, can register a one person company anywhere in India. This means, a non-resident Indian (NRI), or a foreign national, cannot set up an OPC in India.

No, FDI into a one person company in India is restricted.

Scope of our Services :-

A Company Secretary has an important role to play in incorporation of a Private Limited Company. We are ready to serve you through the integrated efforts of our strong team of expert professionals for all your needs pertaining to Incorporation of a Private Limited Company in a systematic and phased manner as outlined below :-

1.) Help in applying to RUN (Reserve Unique Name) form to obtain and reserve an appropriate name for the company. This is the first step of incorporating a Private Limited company.
2.) We help in applying for DSC and DIN for the directors.
3.) Preparation of all crucial documents, such as, MoA, AoA, financial statements and other declarations that are required to be filed.
4.) Filing the SPICe form along with prescribed documents.

On receiving a request, our representative shall contact you at the time of your convenience to collect necessary information and documents required for Incorporation of Private Limited Company. He/She shall act as a front-office Relationship Manager for all communication with you. At the back-office he/she shall coordinate with our in-house team of professionals comprising of legal experts, Chartered Accountants, Company Secretaries, Document Writers and other junior officers to get the work executed systematically, while remaining in touch with you throughout.

Why Filing Door Stands Out ?

   Strong team of qualified experts – Our strength in matters related to Incorporation of a Private Limited Company is attributed to our team of highly qualified and experienced working professionals from different disciplines, including legal experts, Chartered Accountants, Company Secretaries, Document Writers etc. who work in tandem with each other and are assisted by junior officers.

⇒  Smooth and seamless interaction – We endure to provide our best services in all matters relating to Incorporation of Private Limited Company, by ensuring smooth and seamless interaction with you preferably through digital communication mode to save your time and efforts.
 

⇒  The entire process is digitized – We have digitized the entire process of Incorporation of Private Limited Company using a dedicated software comprising a comprehensive checklist to ensure that all the obligations are fulfilled at each stage within the prescribed due time. Using this software, we are able to provide end to end services on all aspects relating to Incorporation of a Private Limited Company in a systematic manner. We also have specially designed data-entry forms which are essentially replicas of various e-forms prescribed for Incorporation of a Private Limited Company and shall be shared with you online for filling in the desired details under assistance from our team.

 

⇒  Regular Updating – The names and contact details of all our esteemed clients are preserved in a database which enables us to send them updates on new policies and regulations whenever they are announced, through SMS/ WhatsApp/e-mail entirely free of cost

 

 ⇒  Total Business Solution –  We provide service assistance in each and every aspect of doing business whether in relation to its establishment or its working as well as undertake to provide total business solution on turnkey basis.     

    FilingDoor is India’s most trusted technology-driven legal advisory and tax filing platform that ensures a smooth transition of accounting operations for startups and established businesses. Found in the year 2017, FilingDoor is based in Delhi and has successfully assisted 5000+ clients till now. Some of our core services include government registrations & filings, accounting, documentation, and annual compliances. We aim to offer hassle-free legal consultancy and tax-related services to individuals and businesses.

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