One Person Company:
Now a days, Company registration in spitted into many types as per the Companies Act, 1956, and later it has been revised in 2013. It means a company which has only one member which is important to note that section 3 classifies OPC as a private company for all the legal purposes of the sole member. All the regulations are accompanied to the private company which is applied to an OPC,unless or otherwise expressly excluded. Though, one person company appears to be like the sole proprietor his liability to the debtors of the company has been limited to the shareholding of a company and his personal assets are never attached for the payment of company’s liability which in case of proprietorship never happens.
Prerequisites of forming an OPC:
If we plan to go by the pre-requisites of forming an OPC, we should know that as per the rule 3 of the companies (incorporation) rules, 2014, the OPC members must be a natural person and should be resident in India. He/she should not be a minor and must be an Indian citizen. A resident of India for the purpose of provisions governing the OPC is a person who stayed in India for a period of not less than 182 days during the last calendar year.
Natural person – It means a human being not an entity like partnership firm or proprietorship or HUF or a corporate body. A foreign citizen or a non-resident Indian cannot for man OPC in India. OPC needs to have one promoter and minimum one director.
Director and promoter maybe the same person in most of the cases. However, no individual is eligible to incorporate more than one OPC (One Person Company). This is as per the rule 3(2)of the companies’ incorporation rules, 2014. –
It is very significant to select a nominee of the single member of a company. If a member is unfortunately died or cannot continue due to some issues, the nominee should step in and become the member of the company as per the consent. It should be in a written format. In the memorandum of association, nominee name also needs to be mentioned. A person cannot be a nominee for more than one OPC as per the rule 3(2) of the companies’ incorporation rules, 2014.
Mandatory compliance that an OPC needs to observe:
The basic mandatory compliance is:
- At least one board meeting needs to be conducted in each half of the calendar year and the time gap between the two boards meetings should not be less than 90 days.
- Statutory audit of financial statements.
- Income tax returns should be filed before 30th September on every year.
- Financial statements have to be filed in Form AOC-4 and ROC annual return has to be filed in MGT 7.
Do you want to have a nomination by the subscriber or member of an OPC?
As per the definition of OPC in section 2(62) of the 2013 act only one person can be a member of an OPC. The first proviso to section 3 of the 2013 act allows the subscriber to the OPC to indicate the name of another person, who shall become the member of the company in the event of the subscriber’s death or incapacity. The person so nominated should also give his written consent to be filed with the registrar for such nomination at the time of incorporation of the company.
Following mandatory Documents are needed for successful registration of an OPC and for the Directors/Promoter and Nominee for incorporation of One person company (It maybe applicable to private Limited also) in India
1. PAN Card of individual (Mandatory)
2.Photo Identity Proof of Own (passport, election (voter identity) card, Driving license, Aadhar card, if any).
3. Address Proof (electricity bill, telephone bill, Mobile Bill, Bank Statement, if any)
4. Passport Size Photograph of own.
5.Proof for Place of Registered office of the Company in case it is a own property of the application (Gas Bill/Telephone Bill/Electricity Bill/House Tax Receipt if any)
6. NOC (No Objection Certificate) from the land owner for proof of registered office of the Company (If it is rental)
7. Rental Agreement, if any
If you start the business individually, you will file it as an OPC.
Following are the procedure to register a name of a startup company in India:
- Getting Digital Signature of Directors
- Getting a DIN ( Director Identification Number )
- Name Availability Check & Application for Name Reservation/ Approval
- File forms and documents for getting Registration Certificate
Registration fee differs from capital amount of the company and the number of person as Director in the company.
Benefits of One Person Company
Now, we discuss about top 10 benefits of an OPC and the most important reason why the entrepreneur chooses the OPC below.
Separate legal entity
One person company is basically a separate legal entity why because all the responsibilities carried by a person and the person is capable of doing everything as his/her wish.
Initially a person starts a firm as an OPC with his own fun. After that he will started earnings and raises his annual turnover. If he raises his annual income he is above to convert an OPC into Private limited company. And he also added the directors if he wants and it will definitely help to increase his business range. In this way, the funding of stating a private limited company is easily held without any hassle.
More opportunities, Limited liability
One of the most important benefits of One Person Company is that it has more opportunities than the others, limited liability since the liability of the OPC is limited to the extent of the value of the capital share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative persons to utilize their skills and ideas. It will also help to growth of our nation’s economic status.
- It has minimum only one shareholder
- And also it has minimum only one director
- And also the director and the shareholder can be the same person
- It has minimum one nominee
- And the acronym OPC provides a difference between the other forms of business.
And the only thing is An OPC can concentrate more on their functional areas and core areas for its formal growth.
Benefits of being a Small Scale Industries (SSI)
An OPC can applicable to lot many benefits like An SSI (small scale industries). The Director of an OPC can get loans easily with low rate of interest. And also he has a easy funding option in banks without showing any security for certain limits under Foreign trade policy. This kind of benefits will definitely increase the growth of his business in his starting point.
A director of an OPC, have all essential rights on his company.The director makes his own decision quickly without any hassle. And also have the capabilities of controlling and managing their business without following any existing organization methodologies. This kind of dedication inspires to raise the business further.
Credit ratings never affect the financial support of an OPC. The OPC with bad credit rating may even eligible to get the bank loan. The credit rating of OPC will not be essential material if the rating of OPC is as per norms and conditions.
Benefits under Income Tax Law
Any remuneration paid to the director will be allowed as reduction as per income tax law, unlike proprietorship. Other advantages of presumptive taxation are also available with respect to income tax act.
Receive interest on any late Payment
OPC apply all the benefits under Enterprises Development Act,2006. The newly start-up OPC is micro, small, or medium; hence they are carried under this act. As per the Act,
Increased Trust and prestige
Any business entity that operates in the form of the OPC Company always enjoys an improved trust and prestige.
Hope you all understand One Person Company Registration process and its regulations under the Companies Act, 2013 from this above article. For One Person Company Registration -> Click here