A One Person Company (OPC) is the latest variety of business in India projected by the companies Act, 2013.
A forward-thinking plan was launched that promotes the incorporation of micro-businesses and persons with entrepreneurial concepts and to provide uplift to entrepreneurs who have high potential to start their venture by allowing them to create one person company.
You can simply register one person company below the outlines of the companies Act 2013 and therefore the laws to it, wherever it absolutely was created viable for one person company to figure as a corporation while not the complexness of getting partners. This encourages a lot of individuals to return forward to begin a business. The OPC is appropriate for tiny businesses wherever the turnover isn’t possible to cross Rs. 2 Crores. IN OPC Registration it’s vital to notice that the campaigner or the director ought to be Indian Resident.
It is said that “A One Person Company is a paradigm shift in the Indian corporate regime, bringing it at par with global standards.” As per section 3(1)(c) of the Companies Act, 2013, an OPC may be formed for any lawful purpose by one person being a citizen of India.
As per provision of section 2(62) of the Companies Act, 2013 defined (62) “one person company” means a company which has only one person as a member.
For the formation of OPC – Only a natural person who is an Indian citizen and resident in India-
- shall be eligible to incorporate a One Person Company;
- shall be a nominee for the sole member of a One Person Company.
The term “resident in India” means a person who has stayed in India for a period of not less than 182 days immediately preceding one calendar year.
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Why Should We Choose OPC?
1. Separate Legal Entity: This is the main feature of OPC. The director’s and the company’s assets are considered different. The personal assets of the directors are not used to pay the debts of the company. It protects the liability.
2. More credibility: As the company is registered with the Ministry of Corporate Affairs it has more credibility with the stakeholders. It helps in the expansion of the business.
3. It enjoys perpetual succession. Even if the director resigns or there is a change the company continues.
What Are The Minimum Requirements To Form An OPC?
1. Member – There is a minimum requirement of one member.
The member should:
- be a natural number
- cannot be a minor
- should be an Indian citizen
- Should be resident of India
2. Director – There is a minimum requirement of minimum one director and a maximum of 15. The member and the director can be the same person or different persons. Generally, the director will be paid remuneration and the profit part goes to the member. The director will take care of the management of the company.
3. Nominee – There is a minimum requirement of one nominee. Written consent of the nominee in INC-3 is mandatory. The same is filed with the ROC. The nominee of one OPC cannot start his own OPC. A nominee at a later stage may withdraw his nomination if he desires so. The nominee should communicate about the intention to withdraw his nomination to the member and the member will further intimate the same to the Board within 15 days. The Board, in turn, informs the ROC within 30 days in INC-4. It is very important to note that, the member should appoint a new nominee. An OPC cannot function without the presence of the nominee.
Steps for Incorporation of an One Person Company (OPC):
1. The first step is the directors have to obtain Digital Signature (DSC) and Director Index Number (DIN). DIN is mandatory for all directors. To apply DIN the person must have a PAN. DIN is applied using e-form DIR-3 downloaded from MCA. The DSC obtained should be registered with the MCA portal.
2. The second step is to reserve a unique name for the OPC through RUN (Reserve Unique Name) or SPICe-32. This is done through form no. INC-1. Only after receiving the Certificate of Registration from the ROC, the OPC can enter into a contract or business in the proposed name.
3. Consent letter has to be obtained from the nominee in INC-3. The nominee will become the member of an OPC when the owner loses his capacity to contract. The name of the nominee is to be mentioned.
4. Now we have to draft the Memorandum of Association (MOA) and Articles of Association (AOA). The models for AOA are given in tables F, G, H and J of schedule I. If the AOA has entrenchment provisions, it has to be intimated to the Registrar through Form INC-2. This is in the case of newly incorporated OPC. The MOA and AOA have to be signed. The sign should be attested by a witness. The address and occupation of the member who signs are mandatory. INC-33 and INC-34 have to be prepared and uploaded.
5. The next step is the filing of the application with the Registrar of Companies (ROC). The form is INC-2. It is the incorporation form. INC-3 is a part of this. We should fill all the details with the required attachments.
6. The affidavit in Form No. INC-9
Cons of One Person Company
Once we have decided to register an OPC we should be aware of the cons of an OPC also. Pros we have already seen.
- We can only incorporate only one OPC. The law does not permit the incorporation of more than one OPC by the same owner. This is the same case with regards to the nominee of an OPC also. A nominee of an OPC cannot be a nominee of another OPC.
- A minor cannot become a nominee or can hold shares of a beneficial interest in an OPC.
- An OPC cannot enjoy the status of an OPC after achieving the ceiling limit as prescribed by the Companies Act, 2013. The rules state that where the paid-up capital of a PC exceeds Rs. 50 lakhs and its average annual turnover exceed Rs.2 crores. Upon crossing the above-mentioned threshold it should be converted to a private or public company. The conversion should take place within 6 months.
- It cannot voluntarily convert into a private or public company unless it has completed two years from the date of incorporation except in point (3).
- Many of us feel that the cost of registration is cheaper than that of the private company. But in practice, that is not the case. The cost of registration depends upon the authorized capital.
- An OPC also has a list of compliances::
- to file an Income Tax return (ITR)
- to file an annual return with Registrar of companies (ROC)
- to get its account audited by the chartered accountant in practice.
- to file its GST returns
- to file its TDS Returns etc.
- It is difficult for an OPC to get financial aid. It cannot issue shares. The only additional financial aid available is loans from banks.
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.
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If sole member wants to transfer his100% shares/OPC to the nominee then what will be the process ?
How can nominee become member without death of sole member?