What is a One Person Company (OPC)?
According to section 2 (62) of the Companies Act of 2013, a “One Person Company (OPC)” is defined as a Company with only one member.
By attaining the legal status and perpetuity, OPC provides individual entrepreneurs with all of the benefits of a company, including credit, bank loans, market access, restricted liability, and legal protection that Companys enjoy.
Before enforcement of the Companies Act of 2013, a company had to have at least two shareholders. However, the OPC model currently offers significant opportunity to individual company owners and dealers, including those in the handloom, handicrafts, and ceramics industries. They used to operate as sole proprietors, therefore they didn’t have a formal body to call their own. However, an OPC framework would enable them to operate as a business and provide them the ability to launch their own companies with a legitimate business structure.
OPC is also entitled to a number of benefits under the Companies Act of 2013.
Number of people required for the creation of the OPC
With just one Director and one Member, an OPC company can be incorporated.
What are the steps to incorporate a One Person Company?
Step 1:
Application for Reservation of Name:
An application for reservation of name of a OPC must be filed in RUN Form and accompanied by a government fee of Rs. 1000/-. If the name(s) applied are unique and are not identical/similar to an existing Company/LLP/Trademark, MCA will allow the name(s) for 20 days, otherwise the RUN form will be sent for re-submission, and we will be able to apply two new names by re-submitting the RUN form in the above mentioned Govt. Fee of Rs 1000/-, which we have already paid.
Step 2:
Obtaining Digital Signature Certificates:
Once the proposed company’s name has been approved, the next step is to obtain DSC for of the promoter director and subscriber.
Step 3:
Spice E Forms for One Person Company Incorporation:
Spice E Forms for One Person Company Incorporation are filed with MCA alongwith Memorandum and Articles of Association of the Company and pay the required Government fees including Stamp Duty, as applicable.
Step 4:
Certificate of Incorporation, PAN and TAN:
The Registrar shall review the filed forms and their attachments, and if the filed forms are correct and meet the provisions of the Companies Act, 2013 and the rules issued thereunder, he shall issue a Certificate of Incorporation.
PAN and TAN of the Company : PAN and TAN will be issued alongwith the Certificate of Incorporation.
Required Documents for Incorporation of One Person Company
1.Documents from Director, Shareholder and Nominee:
a) Identity Proof:
- Permanent Account Number (PAN) Card
- Aadhaar Card / Passport / Driving License / Voter Identity Card
b) Address Proof:
- Telephone Bill / Mobile Bill
- Electricity Bill / Water Bill
- Bank Statement /Bank Passbook with latest transaction (Any one of the Document not older than 2 months)
c) Passport size Photographs – 1 each
Note: All the Copies of Documents must be Self Attested by the applicant
2. Documents to be Signed by Director:
- Consent to Act as Director: Form DIR-2
- Other Particulars of Subscriber and Nominee
- Declaration by Subscriber & Director: INC-9
3. Registered Office – Address:
a) No-Objection letter from the Owner of Address to use the address of the registered office of the Company.
b) Address Proof – In the name of the Owner
Electricity Bill, Telephone Bill (Fixed Line Only), Gas Bill or Water Bill (Not older than 2 months)
c) Copy of Registered Sale Deed
Minimum Requirements for a One Person Company Registration
Company Name Should Be Unique:
The proposed company name should be unique and should not be similar to or identical to the name of an existing company, LLP, or Registered Trademark.
Only one Person:
A One Person Company can be formed by only one shareholder who will function as the company’s shareholder and director.
Requirement of a nominee:
In a One Person Company, nomination is mandatorily required which would be effective in case of death of the sole shareholder.
Capital Requirements:
To register a One Person Company, no minimum paid-up capital is required. Investments might be made based on the needs of the company.
The Company’s Key Objects:
Before the company is formed, the company’s main objects must be established in order to describe the company’s business activities.
Mandatory Conditions for the Formation of a One Person Company (OPC). [Rule 3 of the Companies (Incorporation) Rules, 2014]
(1) Only a natural person who is an Indian citizen [whether resident in India or otherwise]
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company.
Explanation – For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and twenty daysduring the immediately preceding financial year.
(2) A natural person shall not be member of more than a One Person Company at any point of time and the said person shall not be a nominee of more than a One Person Company.
(3) Where a natural person, being member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days.
(4) No minor may become a member or nominee of the OPC, or acquire a beneficial interest in a share.
(5) Such Company cannot be incorporated or converted into a company under section 8 of the Act.
(6) Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporates.
Nomination by the Subscriber or Member of One Person Company [Rule 4 of The Companies (Incorporation) Rules, 2014]
(1) The subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.
(2) The name of the person nominated shall be mentioned in the memorandum of One Person Company and 1[such nomination in Form No.INC-32 (SPICe) along with consent of such nominee obtained in Form No.INC-3] and fee as provided in the Companies (Registration offices and fees) Rules, 2014shall be filed with the Registrar at the time of Incorporation of the company along with its memorandum and articles.
(3) The person nominated by the subscriber or member of a One Person Company may, withdraw his consent by giving a notice in writing to such sole member and to the One Person Company:
Provided that the sole member shall nominate another person as nominee within fifteen days of the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent of such other person so nominated in Form No.INC.3.
(4) The company shall within thirty days of receipt of the notice of withdrawal of consent file with the Registrar, a notice of such withdrawal of consent and the intimation of the name of another person nominated by the sole member in Form No INC.4 along with the written consent of such another person so nominated in Form No.INC.3.
(5) The subscriber or member of a One Person Company may, by intimation in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the prior consent of such another person in Form No INC.3:
Provided that the company shall, on the receipt of such intimation, file with the Registrar, a notice of such change in Form No INC.4 alongwith the written consent of the new nominee in Form No.INC.3 within thirty days of receipt of intimation of the change.
Important: Any such change in the name of the person shall not be deemed to be an alteration of the memorandum
(6) Where the sole member of One Person Company ceases to be the member in the event of death or incapacity to contract and his nominee becomes the member of such One Person Company, such new member shall nominate within fifteen days of becoming member, a person who shall in the event of his death or his incapacity to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form No INC.4 within thirty days of the change in membership along with the prior written consent of the person so nominated in Form No.INC.3.
OPC Management and administration
- There must be at least one director.
- The individual whose name appears in the Articles of Association is the first director.
- The first director will keep the position until the general meeting is held.
- The first director, on the other hand, can be re-appointed at general meeting, or another individual can be appointed.
- A maximum of 15 directors may serve on the OPC.
- The OPC does not need to designate independent directors to its Board of Directors.
- OPC is exempt from the provisions of Retirement by Rotation.
- OPC’s Financial Statements:
The balance sheet, profit and loss account, and statement of changes in equity are all included in OPC’s financial statement.
The cash flow statement may or may not be included in the financial statement.
Within 180 days of the financial year’s end, the OPC is required to file a copy of the financial statements validly adopted by its member, along with all the documents required to be attached to such financial statements [Section 137(1)].
- Report of the Board of Directors :
In the case of OPC, the term “Board’s report” refers to a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report..
Meetings OPC is exempt from the requirement to hold an Annual General Meeting.
Any business that must be transacted at an annual general meeting or other general meeting of a company by way of an ordinary or special resolution shall be sufficient if, in the case of OPC, the resolution is communicated to the company and entered in the minutes-book required to be kept under section 118 and signed and dated by the member, and such date shall be deemed to be the date of the meeting for all purposes under this Act.
The OPC is expected to have at least two Board meetings per calendar year, one meeting in each half of the calendar year, with a 90-day interval between meetings. The provisions of sections 173 (Board meetings) and 174 (Quorum for Board meetings) will not apply to an OPC with only one director.
Managerial Remuneration
In any financial year, a one-person company’s total managerial salary payable to its directors, including managing director and whole-time director, and its manager may exceed eleven percent of net profits.