ONE PERSON COMPANY- AN OUTLINE

One Person Company(OPC) has the combined features of a sole proprietorship and a personal enterprise. OPC is likewise referred to as a one-man agency. Like a sole proprietorship allows you to own the firm absolutely, an OPC additionally has simply one shareholder. But unlike a sole proprietorship, in an OPC the proprietor has restrained legal responsibility and the burden of incredible money owed does not fall on the proprietor, as an OPC is handled as a separate entity

DEFINITIONS

one-person-company-registration-in-indiaSection 2(62) of Companies Act defines a one-individual organisation as an employer that has only one character as to its member. Furthermore, members of an employer are nothing however subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

Such businesses are usually created while there is best one founder/promoter for the commercial enterprise. Entrepreneurs whose companies lie in early ranges opt to create OPCs in place of sole proprietorship enterprise due to the several advantages that OPCs provide.

DIFFERENCE BETWEEN SOLE PROPRIETOR AND ONE PERSON COMPANY

A sole proprietorship form of commercial enterprise would possibly appear very much like one-person companies because they both involve a single man or woman owning the enterprise, however they’re certainly exist some differences among them.

The important difference among the 2 is the character of the liabilities they create. Since an OPC is a separate criminal entity outstanding from its promoter, it has its very own belongings and liabilities. The promoter isn’t for my part at risk of pay off the debts of the enterprise.

On the alternative hand, sole proprietorships and their proprietors are the same persons. So, the law allows attachment and sale of promoter’s very own assets in case of non-fulfilment of the commercial enterprise’ liabilities.

 

FEATURES OF ONE PERSON COMPANY (OPC)

  1. Private company: Section 3(1)(c) of the Companies Act says that a unmarried person can form an organization for any lawful cause. It similarly describes OPCs as non-public corporations.
  1. Single-member: OPCs could have most effective one member or shareholder, not like other private organizations.
  1. Nominee: A particular feature of OPCs that separates it from different varieties of companies is that the only member of the enterprise has to say a nominee even as registering the enterprise.
  1. No perpetual succession: Since there is handiest one member in an OPC, his death will result in the nominee choosing or rejecting to emerge as its sole member. This does no longer happen in different organizations as they comply with the concept of perpetual succession.
  1. Minimum one director: OPCs want to have minimal one person (the member) as director. They could have a most of 15 administrators.
  1. No minimal paid-up percentage capital: Companies Act, 2013 has not prescribed any quantity as minimum paid-up capital for OPCs.
  1. Special privileges: OPCs experience several privileges and exemptions beneath the Companies Act that different sorts of groups do now not own.

Documents Required for OPC Registration

  • PAN card or passport
  • Passport, for NRIs and foreign nationals
  • Scanned transcript of driver’s license or voter’s ID
  • Updated gas or electricity invoice //bank account statement / mobile or landline phone invoice
  • Specimen signature or Impression
  • Passport-size photo.

Documents Necessary for the Registered Office

  • Scanned transcript of current bank account statement/Phone or mobile bill/Gas or Electricity bill
  • Scanned transcript of rental agreement written inside the English language
  • Scanned transcript of a no-objection certificate from the worried property landowner
  • Scanned transcript of assets or sale deed published in English (if the property is owned).

Note: Your registered workplace space needs to be a industrial premise; however, it may be the only director’s place of residence as properly.

 

Process for One Person Company Incorporation

Step 1: Check eligibility and documents

Step 2: Apply for DSC & DIN of all the directors

Step 3: Application for call reservation

Step 4: File Spice+ form for company incorporation

Step five: Apply PAN and TAN in your new Company

Step 6: RoC issues a certificate of incorporation with a PAN and TAN

Step 7: Open bank account and begin operation.

MANDATORY COMPLIANCES FOR OPC

 

  • At least one Board Meeting in every 1/2 of the calendar year and the time gap among the 2 Board Meetings need to no longer be less than ninety days.
  • Maintenance of proper books of Accounts.
  • Statutory audit of Financial Statements.
  • Filing of business income tax returns every year earlier than 30th
  • Filing of Financial Statements in Form AOC-4 and Annual Return in proposed Form MGT 7-A

FORMATION OF ONE PERSON COMPANY

Company can be formed for a lawful item with minimum 7 individuals in case of Public organization- minimum 2 contributors in case of private company & 1 in case of OPC.

STEPS TO INCORPORATE ONE PERSON COMPANY

Following are the technique to incorporate one-character agency are as observe-

As according to rule 3 of the companies (Incorporations) rules 2014

  1. MOA of OPC shall incorporate nominee who will be within the occasion of subscriber’s dying or incapacity to contract shall end up member of enterprise.
  2. Nominee’s consent will be taken in Form No. INC 3.
  3. If member wants to exchange Nominee or
  • Nominee have given written consent to organization to withdraw his name or
  • Nominee will become member because of loss of life/ disability of member
  1. In these kinds of 3 instances, new nominee’s consent within 15 days in Form no INC 3 will be filed with employer.
  2. Company inside 30 days of receiving such consent shall put up INC 4 with

     INC 3 connected to ROC.

  1. Both member & Nominee shall be natural person or Citizen of India. They may or may not be Resident of India. Resident of India way who are living in India in at once preceding economic year for atleast 120 days.
  2. A person can turn out to be member in most effective 1 OPC & Nominee also in only 1 OPC. If a person who is already a member in 1 OPC turn out to be member in every other OPC due to the fact, he was a nominee in that OPC and its member died/ incapable then the member shall be allowed 180 days to select any 1 OPC in which he wants to keep as a member.
  3. No minor can end up a member/ nominee
  4. OPC can’t be SEC 8 CO. & Non-Banking Financial Investment Company

ADVANTAGES OF ONE PERSON COMPANY

  • A Separate felony entity

OPC is a separate felony entity and capable of doing the whole lot that an entrepreneur could do.

  • Easy Funding

It is a corporation is a personal organization, OPC can raise price range thru venture capital, financial establishments, angel traders, etc. An OPC can improve price range therefore graduating itself to a private constrained business enterprise.

  • More opportunities, Limited legal responsibility

One of the benefits of One Person Company is that it has extra possibilities, restrained legal responsibility because the liability of the OPC is constrained to the volume of the price of the proportion you keep, the individual could take extra danger in enterprise without affecting or struggling the loss of private property. It is the encouragement to new, younger and modern begin-ups.

  • Minimum Requirements:

  Minimum 1 Shareholder

Minimum 1 Director

The director and shareholder may be the same man or woman

Minimum 1 Nominee

  • Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other corporations

       OPC have to face little compliance burden in comparison to non-public constrained agencies, consequently OPC can greater consciousness on different useful and middle regions.

  • Benefits of being a Small Scale Industries (SSI)

An OPC can avail the diverse blessings furnished to Small Scale Industries just like the decrease price of Interest on loans, clean funding from the financial institution without depositing any safety to a certain restriction, manifold advantages underneath Foreign Trade policy and others. All those blessings can be boon to any business in initial years.

  • Single Owner

You, handiest the proprietor beneficial in short choice-making, controlling and dealing with the commercial enterprise without following any elongated procedures and methodologies as adopted in different businesses. The feel of belonging conjures up to grow the business similarly.

  • Credit score

The OPC with bad credit score score may additionally even get the mortgage. The credit rating of OPC will no longer be fabric if the rating of OPC is as according to norms.

  • Benefits under Income Tax Law

Any remuneration paid to the director might be allowed as deduction as according to profits tax law, in contrast to proprietorship. Other blessings of presumptive taxation also are available concern to profits tax act.

 

  • Receive interest on any late Payment

OPC avails all of the advantages below Enterprises Development Act, 2006. The newly start-up OPC is micro, small, or medium, hence they may be covered below this act. As in step with the Act, if customer or receiver gets any late price (gets charge after an exact period), then he’s entitled to acquire hobby which is 3 instances the financial institution fee.

  • Increased Trust and status

Any business entity that runs within the form of the employer constantly enjoys an expanded consider and status.

DISADVANTAGES OF ONE PERSON COMPANY

Following are the disadvantages of one-person employer are as follow-

  • Management and Ownership:

There may be no apparent line among possession and control because the only member also can be the organisation’s director. All choices have to be made and authorized via the lone member. The barrier among ownership and manipulate is becoming increasingly more blurred, possibly main to unethical industrial activities.

  • Only suitable for small agencies:

OPC (One Person Company) is properly suitable to the structure of a small firm. At any given time, the OPC can have not more than one member. To acquire extra funds, OPC cannot recruit more contributors or shareholders. As a result, more individuals can’t be joined as the business enterprise expands and grows.

 

  • Business operations are restrained:

The OPC is illegal from engaging in non-banking economic investment operations, inclusive of making an investment in company securities. It cannot be modified to a charity cause enterprise underneath Section 8 of the Companies Act, 2013.

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