what is one person company?
One person company registration is a new concept introduced under companies act 2013, in which only a single person can form a company instead of having minimum 2 persons as required for a private company registration and 3 for a public company registration. It is considered as a hybrid of sole proprietorship firm and a company. There are several advantages of One Person Company registration in India. Now in OPC registration, a single person will be the only shareholder of the company, who can be director also (although a OPC can have maximum of 15 Directors). The procedure of OPC incorporation is comparatively easier and less complex than other entities formation. Only requirement is to make a nominee apart from the shareholder of the company. OPC company registration is best suited for every small and medium entrepreneur who want to start a bootstrapped business without any outside funding and also looking to save some compliances cost.
How to do OPC Registration in India
1. Preparation of Digital Signature Certificate (DSC) of the Proposed Director.
2. Apply the name of the proposed company is applied in form SPICE+. In this form you can give maximum of 2 names, which you desire to get for your company.
3. After getting the name approved by the Registrar of Companies (ROC), companies Memorandum of Association (MOA) and Articles of Association (AOA) is drafted as per the proposed business activities of the Company in e form INC 33 and INC 34 respectively.
4. You will get your DIN in the SPICE+ form only and no need now to fill and file form DIR 3, which not only saved professionals time but also cost of Rs 500/- is reduced in the company incorporation.
5. Next and final step is to prepare and file e form SPICE+ with the following attachments:
PAN card copy of the applicant
Address proof of the applicant (electricity bill, telephone bill, mobile bill, bank statement)
Consent of the nominee in e form INC 3
Address proof of the registered office of the company (Electricity bill, House tax receipt, water bill, gas bill)
Consent of the Director in form DIR 2
INC 9 and Affidavit of the subscriber and Directors.
All the three forms i.e. INC 32, INC 33 and INC 34 are uploaded as linked forms in the MCA. As per the latest amendment of the ministry, both the PAN and TAN gets applied along with the company incorporation form i.e. SPICE+. Once the form goes to central Registration Centre (CRC) you will get the certificate of incorporation (COI) of the Company. Time taken for incorporation of the One Person Company (OPC) usually takes between 7 to 10 working days (subject to government processing time).
Benefits of OPC Company Registration in India
1. OPC Registration online is less costly and complex as compared to other entities like private company and public company.
2. Less number of compliances to be done under companies act 2013, as various provisions and sections of the act are not applicable on the One person company, such as provisions related to holding of mandatory general meetings, holding Annual General Meeting (AGM), conducting minimum Board Meetings throughout the financial year, mandatory rotation of auditors, preparation of cash flow statements and many more.
3. As there is a sole owner, no chances of dispute and fraud between the management.
4. Doing business through proprietorship always have unlimited liability, but if such a proprietor is doing business through OPC, then his liability is limited.
5. Banks and financial institutions prefer a corporate to lend money rather than proprietor and partnership firms.
6. If your business is growing and funding is required, then you can also convert your OPC to private Limited company. Although the OPC promoter has to mandatory convert his One person company once the turnover of the company exceeds 2 crore in any financial year.
7. One person company has a perpetual succession i.e. the same will not get dissolved even the promoter is deceased and can only be dissolved through the process of law.
Minimum requirements for One Person Company registration:
Few restrictions on One person company (OPC)
1.A person is not allowed to form more than one OPC and neither is allowed to be nominee to one or more OPC.
2. OPC company is not allowed to carry any non banking financial activities
3. One person company is not allowed to be converted into a section 8 company (NPO).
4. OPC company cannot voluntarily be converted into a private company unless 2 years has been elapsed since incorporation or paid up capital in any financial year exceeded 50 lacs or turnover in any financial year exceeded 2 crore. Once this threshold limit gets exceeded it has to file a application to ROC for its conversion within 6 months from happening of such event.
5. It cannot invest into the securities of any body corporate
6. Minor cannot become a nominee in the one person company
How to close a one person company (OPC)
A one person company can be closed through fast track exit (FTE) scheme of the ministry if any of the following 2 criteria is fulfilled:
A company has failed to commence its business within one year of incorporation;
The company is not carrying out any business or Activity for preceding 2 financial years and has not sought the status of Dormant Company under Section 455 of the Act.
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