One Person Company
What is an OPC?
The OPC format was introduced recently as an upgrade over the Sole Proprietorship system. In this setting, a single promoter has full authority over the company which limits their liability towards contribution to the enterprise. It is limited to the amount that is invested into the company so debts cannot be recovered by attaching the personal property of the said person. This person is sole shareholder and director of the company. A nominee director is appointed who may only step in if the original director is unable to operate. In case of death of the promoter, the nominee director steps in, unlike Sole Proprietorships where the company ceases to exist.
Why should I go for an OPC?
Unlike public limited company & private limited company, the liability of the member will be to the extent he has invested in the business. In an OPC, one person holds all the shares and has complete authority over the operation of the business.
– Tax Flexibility and Savings: OPC makes a valid contract with its shareholder or directors. Since there is only one member in the company, this means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can advance money to your own company and earn interest. Directors’ remuneration, rent and interest are a deductible expense which reduces the profitability of the Company and ultimately brings down taxable income of your business.
– An OPC is completely controlled and managed by the Single Owner. It leads to quick decision making and execution. There is no scope for a clash of opinions
– Legal Status and Social Recognition for Your Business: OPC is the most popular business structure in the world. Large organizations prefer to deal with private limited companies instead of proprietorship firms. Private Limited business structure enjoys corporate status society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations, like directorships.
How to register an OPC?
- Step 1: The first step is to apply for the Digital Signature Certificate (DSC) of the proposed Director.
- Step 2: Once the Digital Signature Certificate (DSC) is obtained, the next step is to apply for the Director Identification Number (DIN) of the proposed Director in SPICe Form along with the name and the address proof of the director. Form DIR-3 is the option only available for existing companies. It means with effect from January 2018, the applicant need not file Form DIR-3 separately. Now DIN can be applied within SPICe form (Simplified Proforma for Incorporating Company Electronically) for up to three directors.
- Step 3: Name Approval Application: The next step while incorporating an OPC is to decide on the name of the Company. Once the name is approved by the MCA we move on to the next step.
- Step 4: Submitting all the required documents to the Registrar of Companies:
- The Memorandum of Association (MoA) and Articles of Association need to be submitted. The MoA contains the objects to be followed by the Company or stating the business for which the company is going to be incorporated. The Articles of Association AoA lays down the by-laws on which the company will operate.
- Since there is only one Director and member, a nominee on behalf of such person has to be appointed in case of death or incapacitation. Then the nominee takes his place. His consent in Form INC-3 will be taken along with his PAN card and Aadhar Card.
- Proof of the Registered office of the proposed Company along with the proof of ownership and a NOC from the owner.
- Affidavit and Consent of the proposed Director of Form INC-9 and DIR-2 respectively and then a declaration by the professional certifying that all compliances have been made.
- Step 5:Filing of forms with MCA: All these documents will be attached to SPICe Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be uploaded to the MCA site for approval. After uploading, Form 49A and 49B will be generated for the PAN and TAN generation of the Company which have to be uploaded to MCA after affixing the DSC of the proposed Director.
- Step 6: Issue of the certificate of Incorporation: On verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and business can be commenced.
What is required to register as a One Person Company?
Proofs to be given as Promoter –
- Copy of Passport (Foreign Nationals & NRIs) or PAN Card
- Copy of Passport, Voter’s ID or Driver’s License
- Copy of Current Bank Account Statement/Phone or Mobile Invoice/Electricity or Gas Invoice
- Scanned passport-sized photo
- Specimen autograph or impression (blank document with autograph)
- The OPC director as a mandate should self-attest the first three documents. If an NRI or a foreign national, all the document sheets should be notarized without fail (if at present in India or a non-Commonwealth nation) or apostilled (that is, living in a Commonwealth country).
Proofs required for the office –
- Copy of current Bank Account Statement/Phone or Mobile Invoice/Gas or Electricity Invoice)
- Copy of rental agreement written in the English language
- Copy of NoC from the landlord
- Copy of Property or Sale Deed printed in English in case of owned property