One Person Company

Get One Person Company (OPC) Registration @ affordable price

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 an 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 Private Limited 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.

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Incorporating a Company as Sole proprietorship

The concept of One Person Company in India was introduced by Dr. Jamshed J. Irani in his Report on Company Law dated 31st May, 2oo5 . As per the report, Dr. Irani recommended that with the increasing use of information technology and emergence of a strong service sector in India, it was time for the Government to empower entrepreneurs who on their own are capable of developing ideas and participating in the marketplace. He suggested that entrepreneurs who on their own are capable of starting a venture should not be made to do it through an association of persons, and should be able to create a single person economic entity in the form of ‘One Person Company’. Further, it was also suggested that such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not compelled to fritter away his time, energy and resources on procedural matters.

This led to the introduction of “One Person Company” in the Companies Bill 2013, which got its assent in the Lok Sabha on 18 December 2012 and in the Rajya Sabha on 8 August 2013. After obtaining the assent of the President of India on 29 August 2013, it has become the Companies Act, 2013.

Till the introduction of One Person Company in India, the Limited Liability and Continuous Existence feature was only available to an association of persons such as a Private Limited Company or Limited Liability Partnership or a Limited Company. With the introduction of One Person Company, the limited liability and continuous existence feature is now also available for One Person Company, which is an entity with just one member. As One Person Company has just one member, it is necessitated by the law for the single member of the Company to designate another person in the Memorandum of Association, who on the event of subscriber’s death or incapacity shall become the person to contract. This mechanism provides an adequate safeguard to ensure continuous existence of the entity even in case of incapacitation of the single member.

All companies in India are required to hold an annual general meeting each year, in addition to any other meetings and not more than fifteen months should elapse between the dates of subsequent annual general meetings. One Person Company is exempt from holding an annual general meeting or extraordinary general meetings. The resolution signed by the single Director and entered into the minutes book is sufficient, in lieu of a General / Extraordinary General Meeting.

Every company in India is required to prepare and file financial statements that includes balance sheet, profit and loss account, cash flow statement, statement of changes in equity and explanatory notes. In case of One Person Company, cash flow statement is not required.

  • Before exploring the concept of a one person company, let us have a brief understanding of the various types of companies that can be formed. A company can be established for a lawful purpose by the following number of persons:

    • Seven or more persons, in case of a public limited company.
    • Two or more persons, in case of a private limited company.
    • One person, in case of a one-person company.
  • Unlike a private limited company, a one person company has certain restrictions associated with its incorporation. Hence, before starting an OPC registration, its essential to understand the constraints and ensure the promoter is eligible as per the Companies Act to register a OPC.

    • Only a natural person who is Indian Citizen and resident in India can incorporate OPC.
    • Resident in India means a person who had resided in India for a period not lesser than 182 days in the prior calendar year.
    • Legal entities like Company or LLP cannot incorporate a OPC.
    • The minimum authorised capital is Rs 1,00,000.
    • A nominee must be appointed by the promoter during incorporation.
    • Businesses involved in financial activities cannot be incorporated as a OPC.
    • OPC must be converted to a private limited company when paid-up share capital exceeds Rs.50 lakhs or turnover crosses Rs.2 crores.

    Thus, a one-person company can be formed by an Indian citizen who has his/her presence in India for at least 182 days during the immediately preceding calendar year. A person can incorporate not more than one OPC. Finally, an OPC is prohibited from having a minor as its member.

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Documents Required

Pan Card

PAN Card of shareholders and Directors. Foreign nationals must provide a valid passport.

Identity Proof

Aadhar card | Voter ID | Passport | Driving License of Shareholders and Directors.

Address Proof

Latest Telephone Bill | Electricity Bill | Bank Statement | Gas/Water Bill of Shareholders and Directors

Photograph

Latest Passport size Color photograph of Shareholders and Directors.

Registered office Proof

Latest Electricity Bill | Telephone Bill/Water/Gas Bill of the registered office address

NOC from owner

No Objection Certificate to be obtained from the owner(s) of registered office

Rent Agreement

If Property is taken on Rent, then rent agreement required. Agreement must be notarized.

For NRI

All the documents must be apostilled(if applicable) and notarized.

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Frequently asked questions

Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years.

A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company.

Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.

Authorized capital of a Company is the amount of shares a company can issue to it shareholders. Companies have to pay the Government an authorized capital fee to issue shares in a Company. Companies have to pay authorized capital fee for a minimum of Rs.1 lakh.

Only a natural person who is an Indian citizen and a resident in India is eligible to incorporate a One Person Company or be a nominee member. The Director or Nominee must also be over 18 years of age. A person can incorporate upto five One Person Companies.

Yes, there are procedures for converting your proprietorship business into a company or an LLP at a later date. However, the procedures for the same are cumbersome, expensive and time-consuming. Therefore, it is wise for entrepreneurs to consider and start an LLP or a company in case they are expecting it to be operational at a bigger scale or they want to raise investment.