One Person Company (OPC)
The concept of One Person Company in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP). Similar to a Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
Concepts Behind One Person Company Registration
1. One shareholder: This is the fundamental concept of a One Person Company. In fact, One Person Company is defined in the Companies Act as a Company which has only one member. A single shareholder holds 100 percent shareholding.
2. One Director The other important point is that a One Person Company may have only one director. But at the same time there is no bar on more number of directors. However, as per the Act, the total number of directors shall not be more than 15. As per the Companies Act, if nothing is mentioned in the incorporation document, it would be assumed the sole shareholder shall also be the sole director in the one person company and which shall be practically the case in most One Person Companies incorporated.
3. Nominee This is a very important concept where the person forming the One Person Company has to nominate a Nominee with his written consent who, in the event of death or inability to contract of the owner of the One Person Company, shall come forward and take over the reins of the one person company. One more thing, the member can change the nominee at any point of time.
4. Taxation Since nothing has been specified as such by the finance ministry, it is assumed that the rates of taxation applicable for a private limited company shall apply to a One Person Company. Tax @30% along with other cess is to be paid.
5. Freedom from compliance One Person Company also gets freedom from complying with many requirements as normally applicable to other private limited Companies.
Certain sections like Section 96, 98 and sections 100 to 111 are not applicable for a One Person Company. Some of these are mentioned below:
No requirement to hold annual or extra ordinary general meetings. Only the resolution shall be communicated by the member of the company and entered in the minutes book and signed and dated by the member and such date shall be deemed to be the date of meeting For the purposes of holding board meetings, in case of a OPC which has only One director, it shall be sufficient compliance if all resolutions required to be passed by such a company at a board meeting are entered in a minute book – signed and dated by the member and such date shall be deemed to have the date of the board meeting for all the purposes under Companies Act, 2013. No requirement of Cash Flow Statement in the annual financial statements Annual returns can be signed by the Director himself instead of A Company Secretary
6. Related Party Transactions Where One Person Company enters into a contract with the sole owner of the company who is also the director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract.
Further, the company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors under sub-section (1) within a period of fifteen days of the date of approval by the Board.
This clause shall be very much in vogue since the business of the One Person Company may use many assets of the owner and may pay compensation for that. Examples may be rent paid for using property or machinery or Furniture owned by the Owner. It may pay interest on loans taken from the owner. It may pay salaries to the Owner. All these contracts are covered under the section.
Terms and Restrictions of OPC
- A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
- Minor cannot become member or nominee of the One Person Company or can hold share with beneficial interest.
- An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].
- Can’t carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
- An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e., if the Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.
Steps for Incorporation:-
- Step - 1 Acquire DSC.
- Step-2 Acquire Director Identification Number
- Step-3 Register DSC
- Step-4 Apply For Reservation of Name
- Step-5 Getting Consent of a Person As Nominee
- Step-6 Drafting and Printing Of Memorandum And Articles Of Association
- Step-7 Filing Of Company Incorporation Form – E-Form Inc 2, Dir 12 (Except When Promoter Is The Sole Director of The Opc.) & Inc 22
- Step-8 Filing Of Commencement of Business – E-form Inc 21
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1. How many people are required to start One Person Company ?
At least one nominee is required to start an OPC who can act as shareholder as well as director.
2. Who can become a member in One Person Company ?
Any individual/organization can become the member of One person company including foreigners/NRI’s.
3. For incorporation of One Person Company do I have to be present in person ?
The entire procedure is 100% online and you don’t have to be present at our office or any other office for incorporation. A scanned copy of documents has to be sent via mail.
4. Are there any other payments to be made for incorporation certificate in addition to fee paid at the time of registration ?
There is absolutely no other payment. We will send you an invoice that is all-inclusive, with no hidden charges.
5. What are the compliance exemptions for an OPC ?
An OPC is exempted from doing the following compliances :
1.Sign on annual returns
2.Hold Annual General Meetings and Board Meetings
3.Sign on Financial Statements
4.Option to dispense with the requirement of holding an AGM
5.Power of Tribunal to call meetings of members
6.Calling of extraordinary general meeting
7.Notice of meeting
8.Statement to be annexed to notice
9.Quorum for meetings
10.Chairman of meetings
12.Restriction on voting rights
13.Voting by show of hands
14.Voting through electronic means
15.Demand for poll
17.Circulation of members’ resolution
6. In which cities does TCSL incorporate OPC ?
TCSL provides OPC incorporation services across India in all cities. We have done OPC registration in Mumbai, Delhi, Gurgaon, Noida, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, Surat, Pune, Jaipur, Lucknow, Kanpur, Nagpur and other Indian cities.
7. Why should I choose TCSL for OPC registration ?
taracorporate.com is one of the best online service portals to help register OPC’s in India. We have 10 years of experience in application of OPC registration. TCSL has 30+ regional offices in India and expand its network in India with 2000+ customers for OPC Company.
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