Why startup needs One Person Company Registration in India?

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Are you making plans to start your own company however do no longer have a partner that will help you construct your startup? There’s no need to worry, as you still have an alternative of starting your own ‘one person business enterprise’. However, most of you won’t be having a whole set of knowledge regarding the system of formation and felony necessities with recognize to the incorporation of One Person Company (OPC). This article will quick you with the expertise of an OPC, the blessings of incorporating it and the legal formalities in its formation.


As according to segment 2(62) of the Companies Act, 2013, One Person Company is the one in which best one individual is the member. The idea of one person company was added for the first time by the Companies Act, 2013. Before this, the previous Companies Act of 1956, particularly supplied that at least two directors and shareholders are required to shape a non-public constrained enterprise. However, in case of a One Person Company registration, a single one person can act because the shareholder in addition to the director of that startup enterprise.

Thus, the concept of OPC gives immense opportunities for sole owners and marketers who can take gain of restrained legal responsibility and company however had been held back in doing so because of the non-availability of a secondary director or 2nd shareholder.

Things you must keep in mind before forming an OPC:

Only a natural individual who become a resident of India in the preceding year (i.E. He has stayed in India for greater than 182 days in that year) will be eligible to shape an OPC. This means that any association of individuals or body of individuals or enterprise or another entity can not shape OPC. A person under 18 years old is also not eligible to be a member or nominee in an OPC.

You can’t comprise more than one OPC at a same time.

An OPC can both be a organisation limited by proportion or constrained via assure or an unlimited agency.

Once an OPC is formed, you will still must comply with the minimal requirement i.e. The agency need to have an average annual turnover of Rs. 2 crore in the straight away previous three monetary years, failing which the startup will lose its status.

An OPC can not perform Non- Banking Financial Investment activities including investment in securities of any frame corporate.

Why must startup for an OPC?

One character: The quality characteristic of this form of commercial enterprise structure is that you do now not want some other man or woman to begin the startup. It can completely run by using one person. This will also make sure faster decision making and execution of plans. Further, OPC can hire as many as 15 directors.

Separate criminal entity: In the eyes of law, a organisation and its member are separate entities.

Ease to form & Free from compliances:  It is very easy to contain an OPC with constrained documentation. Also, there is no mandate to behavior annual standard or other normal compliances.

Best desirable for startup: The OPC facilitates startups marketers to easily test their business model and upon building a marketable product they can method angel investors, undertaking capitalists for funding and without problems convert their OPC into multi shareholder Private Limited Company.

Better than proprietorship: In case of a One Person Company, your liability in case the commercial enterprise fails, is constrained to most effective the business property. In case of a proprietorship, the liability is unlimited and the lenders of your enterprise can even take hold of your house and personal assets like your house, private financial institution accounts, jewelry and many others which can be used to settle the business liabilities.

Less hassle: Companies are required to employ statutory auditors, behavior preferred meetings but one person company isn’t required to follow any of these. Board meetings are not necessary for a One Person Company.

Startup that have just entered the game or those making plans on doing so begin their corporations by using registering as personal limited corporations. Almost 93 percentage of the agencies included in India are registered as non-public limited companies.

The authorities has introduced a new idea called the One Person Company (OPC) for people who do now not want to proportion ownership inside the business. An OPC is also a non-public limited organization. We will discuss each private limited companies and OPCs.

Entrepreneurs ought to know the subsequent things earlier than registering a company as a private limited company.

No minimal capital required to register a organization


Earlier, the shareholders needed to pay at the very least Rs 1 lakh as a subscription amount to include a personal limited enterprise. Looking at this amount, many startup companies chose to interchange to sole proprietorship. Now, the government has distributed with the minimal capital criteria, that is, now a organization may be included with ZERO capital. But yes, the organisation will want capital to run a business. Therefore, it could boom its capital in destiny in line with the requirement of the business.

Minimum man or woman administrators are required

Minimum two administrators are required to comprise a non-public limited organization. Companies Act, 2013, has added the idea of One Person Company (OPC) personal limited, wherein a single man or woman can begin a private limited corporation. Thus, if you plan to include OPC, you could contain it with simplest one director.

Minimum two shareholders are required

Shareholders are owners of the company and that they have sure rights, which include appointment and elimination of directors. A non-public limited company may be included with no less than shareholders. Again, with the introduction of OPC private limited, now a enterprise may be integrated with a single individual as the shareholder. The shareholders might be herbal people or organizations, such as foreign agencies. But in case of OPC or private limited, handiest herbal person may be the shareholder of the enterprise.

The same person can be each a director and a shareholder

An character can preserve the location of each a director as well as a shareholder in a private limited company, however a body corporate shareholder cannot preserve the placement of a director.

Maximum range of shareholders or individuals in a personal employer may be 200

To include a non-public limited business enterprise, no less than shareholders are required and a maximum of 200 shareholders are allowed. In case of OPC personal limited, because the name says, there can’t be multiple shareholder.

One director have to be a resident in India

At least one director of a non-public limited enterprise must be a resident in India. Resident in India method any individual who has stayed in India for a complete period of no longer less than 182 days within the previous economic year.

Shares of private limited agency can not be traded on inventory trade

If you are making plans to list your company’s stocks on inventory alternate you should go for public limited agencies, since shares of private limited company can not be listed and traded on inventory exchange.

Restrictions on transfer of stocks to outsiders

In case of personal agency there is limit on switch of shares to outsiders. If shareholders of a personal corporation want to transfer their shares, they want to provide a written be aware to the employer about his purpose to transfer. The employer might in turn notify different contributors of the employer, mentioning that sure shares are available, which may be purchased by way of the participants. However, if none of the contributors consents to purchase the shares, the stocks may be transferred to an outsider, to which the employer cannot refuse.

We “Solubilis Corporate Services” will help you to achieve most of your entrepreneurial dreams in the startup level. We located our offices in Chennai, Bangalore, Coimbatore, Hyderabad, Cochin, Madurai, Salem and Tirupur for the customer convenience. We providing One Person Company Registration in Chennai, Bangalore, Coimbatore, Hyderabad, Cochin, Madurai, Salem, tirupur, Erode, Trichy and Karur.

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