one person company registration process in India

One Person Company Registration in India – Complete Guide

One Person Company in India was introduced through the Companies Act, of 2013 with a specific objective. It supports entrepreneurs carrying on the business in the sole proprietor form of business with a corporate framework. An OPC is a separate legal entity from its members and offers limited liability protection to its shareholders. Formation and maintenance of an OPC are easier and more cost-effective. Here in this article, we have provided a complete guide to form a One Person Company with benefits, features, documents required, and more.

Table of Contents

What is a One Person Company?

A One Person Company (OPC) is a type of company established and operated by a single person as a separate legal entity, with limited liability. In India, OPCs were introduced to provide a simpler alternative to traditional sole proprietorships while offering limited liability protection to the sole owner.

Key Features of a One Person Company

Some of the important features of One Person Company are listed below:

a) Single Owner

As the name suggests, an OPC can have only one owner or shareholder, making it ideal for individual entrepreneurs who want to establish a corporate identity.

b) Limited Liability

One of the main advantages of OPC registration is that it provides limited liability protection to the owner. It means that the personal assets of the owner are protected in case of business liabilities or debts.

c) Separate Legal Entity

Like other types of companies, OPCs are considered separate legal entities distinct from their owners. This means that the OPC can enter into contracts, own assets, and incur liabilities in its name.

d) No Minimum Capital Requirement

Unlike some other types of companies, there is no minimum capital requirement for registering an OPC in India. It makes it accessible to entrepreneurs with varying financial capacities.

e) Nominee Director

To comply with legal requirements, an OPC must nominate a person as a nominee director. He/ She will take over the management of the company in case the sole owner becomes incapacitated or passes away.

f) Less Compliance Burden

OPCs have less stringent compliance requirements compared to other types of companies. It makes it easier for single entrepreneurs to manage their businesses efficiently.

g) Conversion to Other Business Structures

As the business grows, the owner of an OPC can convert it into a private limited company or any other suitable business structure to accommodate changes in business requirements.

h) Perpetual Existence

An OPC enjoys perpetual succession, meaning its existence is not affected by changes in ownership or management. The death or incapacity of the sole shareholder does not dissolve the company, and it continues to exist as a separate legal entity.

i) Tax Benefits

OPCs are eligible for certain tax benefits available to small companies. They enjoy lower corporate tax rates and are exempt from dividend distribution tax (DDT), resulting in tax savings for the business.

j) Access to Funding

OPCs can raise funds through equity or debt financing from investors, banks, or financial institutions. The limited liability structure and separate legal entity status make it more attractive to potential investors.

Overall, One Person Company registration offers a balance between the benefits of a corporate structure and the simplicity of sole proprietorship, making it an attractive option for individual entrepreneurs looking to establish a formal business entity with limited liability protection.

Documents Required for Registering a One Person Company

To register a One Person Company (OPC) in India, the following documents are typically required:

⇒ Director Identification Number (DIN)

The proposed director of the OPC must obtain a DIN from the Ministry of Corporate Affairs (MCA). If the director already has a DIN, this step can be skipped.

⇒ Digital Signature Certificate (DSC)

The director must also obtain a Digital Signature Certificate from authorized agencies. The DSC is required to file electronic documents with the Registrar of Companies (RoC).

⇒ Name Approval Application

The applicant must apply with the RoC to obtain approval for the proposed name of the OPC. The name should comply with the naming guidelines prescribed by the Companies Act, 2013.

⇒ Memorandum of Association (MOA)

The MOA of the OPC defines the company’s objectives, its authorized share capital, and the type of business it intends to undertake.

⇒ Articles of Association (AOA)

The AOA contains the rules and regulations governing the internal management and operations of the OPC.

⇒ Consent of Nominee Director

The nominee director appointed by the OPC must provide his/her consent to act as a director in the company.

⇒ Proof of Registered Office

Documents establishing the registered office of the OPC, such as rent agreement or ownership deed, along with utility bills as proof of address.

⇒ Affidavit and Declaration

The director and the nominee director must submit an affidavit and a declaration stating their consent to act in their respective capacities.

⇒ Identity and Address Proof

Identity proof (such as PAN card, Aadhar card, or passport) and address proof (such as utility bills, bank statements, or voter ID) of the director and nominee director.

⇒ Passport-sized Photographs

Recent passport-sized photographs of the director and nominee director.

⇒ Board Resolution

In case the subscriber to the memorandum is a corporate entity, a board resolution authorizing the incorporation of the OPC and appointment of the director and nominee director is required.

⇒ Other Documents

Any other documents as required by the RoC or prescribed under the Companies Act, 2013.

It’s essential to ensure that all documents are accurate, duly signed, and submitted in the prescribed format to facilitate the smooth registration of the One Person Company. Additionally, consulting with a professional or company secretary can help navigate the registration process effectively.

How to Register a One Person Company

To register a One Person Company (OPC) in India, follow these steps:

1. Obtain a Digital Signature Certificate (DSC)

The first step is to obtain a Digital Signature Certificate (DSC) for the proposed director of the OPC. The DSC is required to file electronic documents with the Registrar of Companies (RoC).

2. Apply for a Director Identification Number (DIN)

The proposed director must apply for a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). If the director already has a DIN, this step can be skipped.

3. Name Approval

Once the DSC and DIN are obtained, the next step is to apply for the reservation of the company name. The proposed name should comply with the naming guidelines prescribed by the Companies Act, 2013.

4. Drafting of Memorandum and Articles of Association

Draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC. These documents define the objectives, rules, and regulations governing the company.

5. Filing of Forms with RoC

Prepare and file the necessary forms (e.g., SPICe+ or INC-32) along with the MOA, AOA, and other required documents with the RoC for incorporation of the OPC.

6. Payment of Fees

Pay the requisite fees for the registration of the OPC as per the prescribed schedule of fees.

7. Verification and Approval

The RoC will review the application, documents, and name availability. If everything complies with the regulations, the RoC will issue the Certificate of Incorporation (CoI).

8. Obtain CoI

Once the RoC approves the application, the OPC will receive the Certificate of Incorporation. This document confirms the legal existence of the company.

9. Apply for PAN and TAN

After obtaining the CoI, apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the OPC.

10. Registered Office

Within 15 days of incorporation, the OPC must maintain a registered office and inform the RoC of its location.

11. Appointment of Nominee Director

The OPC must appoint a nominee director within 180 days of incorporation. The nominee director will take charge of the OPC in case of the death or incapacity of the sole director.

12. Commencement of Business

After obtaining the CoI and fulfilling other formalities, the OPC can commence its business operations.

It is advisable to seek professional guidance or consult with a company secretary to ensure compliance with all legal requirements and streamline the registration process for the One Person Company.

One Person Company (OPC) Registration Fees in India

The registration fees for a One Person Company (OPC) in India vary based on the authorized capital of the company. Here’s a general overview of the registration fees:

Government Fees: The government fees for registering a One Person Company depend on the authorized capital. For example:

  • For authorized capital up to Rs. 1 lakh, the government fees are Rs. 4,000.
  • For authorized capital between Rs. 1 Lac to Rs. 5 Lacs, the government fees are Rs. 200 for every Rs. 10,000 or part thereof.
  • For authorized capital above Rs. 5 lakhs, the government fees are Rs. 300 for every Rs. 10,000 or part thereof.

Stamp Duty: Stamp duty is payable on the memorandum and articles of association of the company, which may vary from state to state.

Professional Fees: Apart from government fees, there may be professional fees charged by chartered accountants, company secretaries, or other professionals for assisting in the registration process.

Incorporation Expenses: These may include expenses for drafting the memorandum and articles of association, digital signatures, name approval, etc.

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Frequently Asked Questions

Who can start a One Person Company?

Any individual, Indian citizen, or resident can start a One Person Company in India. However, only a natural person who is an Indian citizen and resident in India can incorporate an OPC.

What are the requirements for starting a One Person Company?

To start an OPC, the person must be at least 18 years old, have a valid PAN card, and must not be incapacitated by law to enter into a contract.

What is the minimum capital required to start a One Person Company?

There is no minimum capital requirement to start a One Person Company in India.

Can a One Person Company be converted into a Private Limited Company?

Yes, a One Person Company can be converted into a Private Limited Company subject to certain conditions and compliance with the Companies Act, 2013.

Is it mandatory to have a nominee for a One Person Company?

Yes, every One Person Company is required to nominate a person as a nominee who shall, in the event of the subscriber’s death or incapacity to contract, become the member of the company.

What are the tax implications for a One Person Company?

A One Person Company is taxed at the same rate as other companies in India, as per the applicable tax laws.

What are the compliance requirements for a One Person Company?

A One Person Company is required to comply with various statutory requirements such as filing annual returns, financial statements, conducting board meetings, etc., as per the provisions of the Companies Act, 2013.

Can a One Person Company have more than one director?

No, a One Person Company can have only one director who is also the sole shareholder of the company.

Can a One Person Company issue equity shares?

Yes, a One Person Company can issue equity shares subject to compliance with the Companies Act, 2013, and other applicable laws and regulations.