What is OPC company and its Types?

One person company

One Person Company (OPC) is a famous business structure in India that allows a single entrepreneur to establish and run a company with limited liability. It provides the benefits of a separate legal entity, allowing individuals to operate their businesses without needing partners. 

Process of One-Person Company Registration:

Obtain Digital Signature Certificate (DSC):

The first step in One Person Company registration is to obtain a Digital Signature Certificate (DSC) for the proposed Director of the company. A DSC is required to submit one person company registration documents electronically to the Ministry of Corporate Affairs (MCA).

Obtain Director Identification Number (DIN):

The next step is to obtain a Director Identification Number (DIN) for the proposed Director. DIN can be received by submitting Form DIR-3 on the MCA portal and the required paperwork.

Name Reservation:

The company name should be unique and comply with the naming guidelines prescribed by the MCA. An application for name reservation should be filed in Form SPICe+ (Part B) along with the required fee. The name will be held after approval for 20 days.

Preparation of Incorporation Documents:

After name reservation, the next step is to prepare the incorporation documents, including the Memorandum of Association (MoA) and Articles of Association (AoA). These documents outline the company's objectives, rules, and regulations.

Filing of Incorporation Documents:

The incorporation documents and other necessary forms should be filed with the Registrar of Companies (RoC) within the specified time. The forms to be filed include SPICe+ (Part A), SPICe+ (Part B), and AGILE-PRO.

Payment of Fees and Stamp Duty:

The required fees and stamp duty should be paid online at the prescribed rates. The fee varies based on the authorized share capital of the company.

Certificate of Incorporation:

The RoC will issue a Certificate of Incorporation (COI) with a particular Corporate Identification Number (CIN) after the documents have been successfully verified. The OPC company is considered officially registered from the date mentioned on the CoI.

Types of One-Person Companies:

There are two types of One-Person Companies:

OPC with Limited Liability:

This is the most common type of One Person Company, where the liability of the sole member is limited to the extent of the unpaid subscription money in the company. The member's assets are protected in case of any liabilities or debts incurred by the company.

OPC without Limited Liability:

In this type, the sole member assumes unlimited liability for the debts and obligations of the company. Their personal assets can be utilized to settle the company's liabilities, making it a riskier option than OPCs with limited liability.

Documents Required for One Person Company Registration

To register an OPC company in India, the following documents are typically required:

Director/Member Documents:

• Copy of PAN Card or Passport (for identity proof).
• Copy of Aadhaar Card or Voter ID/Passport/Driving License (for address proof).
• Passport-sized photograph.

Registered Office Documents:

• Proof of registered office address, such as a recent utility bill or rent agreement.
• No Objection Certificate (NOC) from the owner of the premises.

Consent and Declarations:

• Form DIR-2 authorization to serve as a director.
• Declaration of Director in Form INC-9, declaring their eligibility and non-disqualification under the Companies Act.

Nominee Documents:

• Consent of the nominee in Form INC-3, declaring their willingness to become a nominee in case of the member's death or incapacity.
• Copy of PAN Card or Passport and Aadhaar Card/Voter ID/Passport/Driving License of the nominee.

Memorandum of Association (MoA) and Articles of Association (AoA):

• Drafted and digitally signed MoA and AoA outlining the company's objectives, rules, and regulations.

Other Documents:

• Identity and address proofs of the witnesses to the incorporation documents.
• DSC (Digital Signature Certificate) of the Director.

Benefits of One Person Company in India

OPC Company (OPC) is a unique business structure that offers several advantages to solo entrepreneurs. The following are some significant advantages of choosing the correct option from the types  of OPC registration in India:

Limited Liability:

It is one of the OPC's key benefits. Owner liability is constrained to the amount of unpaid share capital, protecting personal assets. In case of any financial liabilities or legal disputes, the owner's personal assets remain safe.

Separate Legal Entity:

OPC company has a separate legal entity distinct from its owner. It denotes that the law views the business as a distinct entity. It can acquire assets, incur debts, and enter into contracts in its name. This gives the company legitimacy and improves its reputation, which makes it simpler to raise money and draw clients.

Sole Ownership:

OPC Company allows single entrepreneurs to enjoy complete control and ownership of the business. The owner can make decisions independently without any interference from partners or shareholders. This enables quick decision-making and faster execution of business strategies.

Continuity and Perpetual Existence:

OPC Company enjoys perpetual existence, which means it continues to exist even if the owner dies or becomes incapacitated. It offers stability and ensures the continuity of the business. Unlike traditional proprietorships, the company ceases to exist after the owner's demise.

Easy Funding and Bank Credit:

OPCs have better funding and bank credit access than sole proprietorships. They can raise funds through equity shares, venture capital, and angel investments. Due to their limited responsibility and legal structure, banks and other financial institutions are more ready to provide OPCs with loan facilities.

Tax Benefits:

OPCs are eligible for various tax benefits and incentives provided by the government. They enjoy similar tax advantages as private limited companies, such as lower tax rates, deductions, and exemptions. This helps in reducing the tax burden and maximizing profits.

Business Expansion:

OPCs can convert into private limited companies as the business grows. This allows for easy expansion and attracts potential investors. OPCs also have the option to appoint additional directors to manage the company's affairs, providing scalability and organizational structure.

Minimal Compliance Requirements:

Compared to private limited companies, OPCs have fewer compliance requirements. They have relaxed regulations related to annual filings, board meetings, and shareholders' resolutions. This reduces the administrative burden and makes managing the company's affairs easier.

Conclusion: 

One-Person Company registration in India allows single entrepreneurs to establish their businesses with limited liability. By following the prescribed process and submitting the required documents, individuals can register their OPC Company while deciding on choosing the correct one from the types of One-Person Companies and benefit from having a distinct legal entity. It is advisable to seek professional assistance or to be sure you adhere to all legal obligations, speak with professionals, and make the registration process smooth and hassle-free. OPC registration opens numerous opportunities for solo entrepreneurs to pursue their business aspirations and contribute to India's vibrant business landscape. Lawgical India is a reputable service provider specializing in offering professional assistance for One Person Company registration and related legal services in India.