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One Person Company Registration

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.

Though a One Person Company allows a lone Entrepreneur to operate a corporate entity with limited liability protection, a OPC does have a few limitations. For instance, every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the company - who will become the owner of the OPC in case the sole Director is disabled. Also, a One Person Company must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. Therefore, it is important for the Entrepreneur to carefully consider the features of a One Person Company prior to incorporation.

Advantages to Register a One Person Company

Single Promoter

One Person Company is the only type of corporate entity that can be started and operated by a single promoter with limited liability protection in India. A corporate form of legal entity in One Person Company ensures that the business has perpertual existence and easy ownership transferability.

Uninterrupted Existence

A company has 'perpetual succession', meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership. Borrowing Capacity

Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns. However, a one person company cannot issue different types of equity security, as it can only be owned by one person at all times.

Easy Transferability

Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a one person company, the ownership can be transferred by altering the shareholding, directorship and nominee director information.

Owning Property

A company being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., Further, the nominee director cannot claim any ownership of the company while serving as a nominee director.

Limited Liability

Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company's debts is limited.

Compliances After Incorporation Of One Person Company (OPC)

1. Apply for Sales Tax / Service Tax Registration based on the nature of Business.
2. Filing Income Tax Return of Company on or Before 30th September every year.
3. To maintain proper Books of Accounts.
4. To Maintain Minutes Book and all statutory registers
5. To comply with SS-1 and SS-2
6. Get your account books Audited Every Year.
7. Filing of form MGT-7, Form AOC-4 every Year.
8. No intimation required to be given to ROC in case of First Auditors. Form ADT 1 to be filed within 15 days of 1st AGM of the Company

Documents Required for OPC Registration

To be submitted by Director

Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
Scanned copy of Voter's ID/Passport/Driver's License
Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned passport-sized photograph
Specimen signature (blank document with signature)

Note: The director must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

For the Registered Office

Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned copy of Notarised Rental Agreement in English
Scanned copy of No-objection Certificate from property owner
Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence, too.

OPC Registration Process

5 Working Days

The director must apply for the Digital Signature Certificate (DSC), which is necessary to file the company registration documents. For this, you will only need to provide a few scanned documents and details; our representatives will fill the form and submit it online. 7 Working Days

As soon as we apply for the DSC, we will ask you to pick a name for your company, and send us some scanned documents regarding it. These will be used to file SPICe i.e. INC-32 and the Memorandum of Association (MoA) and Articles of Association (AoA). The Certificate of Incorporation will be approved at the end of this process.

2 Working Days

Every company needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves, but you will need to courier hard copies of the required documents yourself. The PAN and TAN will be couriered to the your registered office address in 21 working days.

EXEMPTIONS FOR AN OPC

Sign on annual returns.
Hold Annual General Meetings and Board Meetings.
Sign on Financial Statements.
Option to dispense with the requirement of holding an AGM.
Power of Tribunal to call meetings of members.
Calling of extraordinary general meeting.
Notice of meeting.
Statement to be annexed to notice.
Quorum for meetings.
Chairman of meetings.
Proxies
Restriction on voting rights.
Voting by show of hands.
Voting through electronic means.
Demand for poll.
Postal ballot.
Circulation of members’ resolution.

FACTORS TO CONSIDER IN OPC NAME SELECTION

The name of your OPC is very important. Your OPC’s name is the first impression to your buyers, suppliers and stakeholders. It should therefore be attractive, relevant and suggestive. There are several factors that you should keep in mind while choosing a name for your company.

Short & Simple

The name should be concise and not be too long. People should be able to recall and pronounce your company’s name easily the first time they hear or read it.

Meaningful

The name of your OPC should be relevant to your business. It should fit the company’s branding strategy. For example, Infosys refers to information systems or IT technologies.

Unique

Name of your OPC should not be exactly the same or identical to an existing LLP or company or trademark or for which a trademark has been applied for. You can go to search.legalraasta.com to check if your company name matches any others. Ideally, you should avoid plural version e.g, “Snapdeals” or merely changing the letter Case or punctuation marks or spacing in an existing LLP, Company and Trademark name.

Suffix

OPC’s are not required to end their name with “Private Limited” or “Limited”.

Should not be illegal / offensive

The name of your LLP should not be against law. It should not be abusive or against the customs and beliefs of any religion and should not use words or phrases which are used as a slur and are offensive to a particular group of people. Further, names cannot include foul words or phrases. Should not violate any laws

Your OPC’s name should not be given under and violate the Emblems and Names (Prevention of Improper use) Act, 1950. Click here to check the names. (See the Schedule).

Should not use the words “British India”.

FAQ

Why One Person Company?
One Person Company is set to organize the unorganized sector of proprietorship firms. OPC will have incredible prospect and it will be embraced as a booming business model. For small to mid level entrepreneurs, OPC is the scope for them to grow and to get recognition globally even for their single person entity. Comparatively in OPC there will be less paper work. OPC allows a single person to run a company with limited liability, in case of a sole proprietorship.

What is the Capital requirement for starting a one person company?
One Person Company can be started with any amount of capital. There is no requirement to show proof of capital invested during the incorporation process..

Can a OPC mandatory covered into Private Limited Company or Public Limited Company?
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company..

Can a foreign national form an One Person Company?
No. Only an Indian citizen and resident can form an One Person Company..

What is the Legal Nature of OPC?
OPC can be registered only as a private company which means that all the provisions applicable to private company will be applicable to an OPC, unless otherwise expressly excluded in the Act or rules made there under.

what is Restriction on Incorporation of an OPC?
OPC cannot be incorporated or converted into Section 8 Company (i.e. company with charitable objects, etc.) or carry out non-banking financial activities, including investment in securities of any body corporate..

How many types of OPCs can be incorporated under the Act?
There can be five types of OPCs that can be incorporated under the new Act, viz. 1. OPC Limited by Shares; 2. OPC Limited by Guarantee with Share Capital; 3. OPC Limited by Guarantee without Share Capital; 4. Unlimited OPC with Share Capital, and 5. Unlimited OPC with Share Capital. .

What are requirements regarding Annual Returns & Auditor’s Report of an OPC?
Annual Returns of an OPC must be signed by a company secretary and the director. In case there is no company secretary, the signature is required only from the Director. Mandatory rotation of auditor after expiry of maximum term is not applicable to an OPC..

What are the Exemptions Available to OPCs under the Act?
Following sections are not applicable to OPCs- • Section 98 (Power of Tribunal to call meetings of members, etc.) • Section 100 (Calling of EGM) • Section 101 & 102 (Notice of Meeting & Statements to be annexed to Notice) • Section 103 (Quorum of Meetings) • Section 104 (Chairman of Meetings) • Section 105 (Proxies) • Section 106 (Restriction on Voting Rights) • Section 107 & 108 (Voting by show of Hands & by Electronic Mode) • Section 109 & 110 (Demand for Poll & Postal Ballot) • Section 111 (Circulation of Member’s Resolutions).

Who is eligible to act as member of an OPC?
Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company. Explanation: The term "Resident in India" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

A person can be member in how many OPC?
A person can be member in only one OPC..

What are the Tax benefits in OPC?
The Director of the OPC can be remunerated and contracts can be entered with it shareholders and its directors. Directors’ remuneration, rent and interest are deductible expenses which reduces the profitability of the Company and ultimately brings down taxable income of your business..

Who all are disqualified to form an One Person Company?
Following persona are disqualified to form an One Person Company: o A minor. o A foreign citizen. o Non-Resident. o A person incapacitate to contract. o Any other person apart from living person.

Can a One Person Company engage in any form of business activities?
An One Person Company can engage in any sort of business activities apart from Non Banking Financial Investment Activities including “investment” in securities of body corporates

What are legal formalities of Board Meeting and AGM?
OPC (also Small Cos. and Dormant Cos.) is deemed to have complied with S. 173, if at least one meeting of the BOD is has been conducted in each half of a calendar year and the gap between two meeting is not less than 90 days. Section 173 and 174 (Quorum of Meeting of BOD) will not apply to an OPC in which there is only one director on its Board. Further, an OPC is not required to hold an AGM. .

What are the provisions regarding Financial Statements of an OPC?
Financial Statement of an OPC has to be approved by the Board and needs to be signed by only one director for submission to the auditor. It is to be noted that an OPC need not prepare Cash Flow Statement as part of its financial statement. The copy of such financial statement along with other documents etc. must be filed with the ROC within 180 days from the closure of the financial year. Report of the Board to be attached to the financial statement shall mean, in case of an OPC, a report containing explanations or comments by the Board on every qualifications, reservations or adverse remarks or disclaimer made by the auditor in his report..

What is the Penalty imposed on OPC for non-compliance of provisions of Companies Incorporation Rules, 2014
If an OPC or any officer of such company contravenes the provisions of Co. Incorporation Rules, 2014, such contravening party will be punishable with fine which may extend to Rs. 10,000/- and with a further fine which may extend to Rs. 1000 for every day after the first during which such contravention continues..

What are legal provisions for Appointment of Auditor in OPC?
Every company shall, at the first Annual general meeting appoint an individual or a firm as an auditor who shall hold the office from the conclusion of that meeting to the conclusion of its sixth annual general meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as may be prescribed..

How to incorporate an OPC?
Name reservation: Form INC-1 shall be filed for name availability. Incorporate OPC: After name approval, form INC-2 shall be filed for incorporation of the OPC within 60 days of filing form INC-1. Form DIR-12 shall be filed along with (linked) form INC-2 except when promoter is the sole director of the OPC. The company shall file form INC-22 within 30 days once form INC-2 is registered in case the address of correspondence and registered office address are not same.

How to inform RoC about change in membership of OPC?
The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.

Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.

How to intimate RoC that the OPC has exceeded the threshold limits and require conversion into private or public company?
The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.

What is the time limit for filing form INC-5?
Form INC-5 shall be filed within sixty days of exceeding threshold limits.

Is there any form that is to be filed for conversion of an OPC into private or public company? Is there any other purpose for filing this form?
Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company. Yes, the private company will also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.

What is the time limit for filing form INC-6?
Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.

Who is eligible to act as a member of an OPC?
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

A person can be a member in how many OPCs?
A person can be member in only one OPC.

What if a member of an OPC becomes a member in another OPC by virtue of being a nominee in that other OPC?
Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.

Which form is to be filed in case of withdrawal of consent by the nominee of an OPC or in case of intimation of change in nominee by the member?
Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in case of intimation of change in nominee by the member.



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