One Person Company
People have believed the myth that opening a business enterprise or commencing a new start-up cannot be done single-handedly for many years. They think one always needs a co-founder to start their own company and meet the possible requirements for OPC registration of the same. But a new concept was introduced in 2013 under the Company's Act about One Person Company (OPC).
This concept states that any person willing to operate a company single-handedly has the full right to do so. They don't need any co-founder for this purpose. One Person Company is a company incorporated by a single person without the consent or support of any other. Before the implementation of the Companies Act 2013, a single individual could not open or establish their company without the presence of a co-founder. But now the situation has been changed. It has become comparatively easier for any individual to easily commence their company by completing a few legal formalities and adhering to some norms. According to the Company's Act 2013 Section 2(62), a company can be started with just one director and one member. It is that Form of the company where the compliance requirements are lesser than the private company.
The Companies Act states that any individual can form a company with a single member and one director. This also means that the owner or the director of the company is solely responsible for the growth, development, assets and liabilities of the company. Today, in this article, we'll be talking about the registration process of a One Person Company with the completion of the required documentation and formalities for its establishment.
Benefits of One Person Campany
One person company is easy to establish with a minimum of capital and people involved. It just needs one single director for its commencement. The most important benefit of a one person company is that the owner is solely responsible for the assets, liabilities and the management of the company without the interference of the other.
1. OPC avails the benefits of having small scale industries with various benefits and easy funding available from banks to execute the management of these industries.
2. The best advantage is of a single owner. Single owner is much more helpful than two owners in a business. There are no chances of any conflicts and issues with a single owner. 3. Another advantage is that OPC with a bad credit score can also avail the required funding and apply for loans without any hurdles and barriers of getting rejected. 4. OPC also enjoys limited liability as compared to Private Limited Company. 5. OPC also enjoys continuous existence and legal identity. It would, later on, pass to the nominee director. 6. Another benefit of OPC is that it is easy to sell because of its minimum documentation. 7. It enjoys full control of a single owner without any conflicts between partners and so on. Therefore the company has smooth functioning and management of affairs.
8. It enjoys adequate funding options with ear and comfort in returns.
Requirements to Establish a One Person Company
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- Only one person who is an Indian citizen and not any NRI has the privilege to commence a One Person Company.
- A natural person shall not be a nominee of any other One Person Company at any point in time. No minor person can become a member of One Person Company or hold any advantage associated with it.
- This company cannot be converted into a company under section.8 ( Company with Charitable Objects) by any chance.
- Such a company is not entitled to carry any Non-Banking Financial Investment Activities in terms of security and other things.
- No such company has the power to get converted into some other kind of corporation unless it has expired 2 years from the date of its commencement.
- Company is required to use the word OPC in brackets after the name of the company. This is a mandatory clause.
- Once an OPC is formed, you will have to meet the minimum requirements, i.e. the company must have an annual turnover of Rs. 2 crores in the current financial year with progressive standards to grow in future.
- Such a company cannot incorporate more than one OPC at a time.
- It should have at least one shareholder/nominee/director.
Documents Required for the Registration of an OPC
The following documents are essentially required for the registration of a One Person Company under the Companies Act :
1. Copy of PAN Card ( Owner)
2. Passport size photographs ( 5-6) of the owner.
3. Copy of Aadhaar Card/Voter Identity Card.
4. Copy of Rent agreement ( in case if it is a rented property)
5. Electricity / Water bill ( of the business place)
6. Copy of property papers 7. NOC by the Landlord
Steps for Incorporation of an OPC
- The proposed directors of the company must obtain DSC ( Digital Signature Certificate ) from 8 authorized DSC markets.
- An application with a suitable reservation name must be filled as soon as possible In case the articles of association consist of provisions for entrenchment, the company should inform the Registrar of such provisions in Form No.INC -2 at the same time.
- An application for the incorporation of the OPC must be filed with the ROC.
- The MOA and the AOA must be signed by the sole member responsible for the company's functioning.
- They must also give the details like name, address, contact information, occupation, etc. to the Registrar of Companies.
- Next, the affidavit must be submitted by the sole member of the company who has subscribed to the memorandum. The sole member of the company is entitled to file the particulars of the subscription with the Registrar of Companies.
- On Verification of all the applications and documents, the Registrar will provide a Certificate of Incorporation, and you can smoothly commence business.
- A Checklist of meeting all the requirements for the establishment of an OPC
- Minimum no. of members
- A nominee must be appointed before the commencement and incorporation.
- Clearance of the nominee should be obtained in Form INC-3.
- There should be a minimum authorised capital of at least Rs. 1 Lakh.
- DSC of the proposed owner of the company
