Overview of One Person Company (OPC) Registration

One Person Company (OPC) Registration is the legal process of incorporating an OPC under the Companies Act, 2013. An OPC is a type of private limited company in which only one shareholder and director runs the business. An OPC is a combination of a private limited company and a sole proprietorship where only one person works in the capacity of both director and shareholder.

The OPC is governed by the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA). Since there is only one member in the OPC, a nominee is named in the MoA at the time of incorporation (with consent in Form INC-3), who becomes the member if the sole member dies or becomes incapable of entering into contracts. The process of incorporating an OPC is simple and can be completed entirely online on the MCA portal.

Benefits of OPC Registration in India

Incorporation of OPC in India comes with several benefits that include the following:

1. Sole Ownership: OPC is owned by a single individual only. One person holds all the shares of the company. The sole ownership gives them the liberty to finance the business completely. The individual is the one who has the pocket to earn the profit as well as bear the expenses. Thus, the sense of independence streamlines the decision-making process and allows the business to run efficiently and smoothly.
2. Limited Liability: The owner of the OPC allows the benefit of Limited Liability Protection, i.e., unlike a sole proprietorship, the liability of the owners is not unlimited; the liability of its shareholders is restricted to the unpaid amount on their shares. Personal assets of the owner and shareholder remain unbothered by the loss/debt, or liability of the company.
3. Separate Legal Entity: OPC enjoys the benefit of a separate legal entity, just like a Private Limited Company. The legal entity of the company is separated from its owner. The company can enter into the contracts in its own name, and the business of the company is distinguished from that of the individual. So, even if there is some obligation on the company, the owner and shareholder are protected.
4. Perpetual Succession: The existence of the company is independent of existence of its shareholder and or owner. At the time of incorporating the OPC, the owner has to name a nominee, who would become the new owner (member) in case of the death or incapacity to contract of the founding owner. This perpetual succession guarantees the continuity of the business.
5. Easy Transferability of Shares: In an OPC, the sole member can transfer all the shares to another single person, but the company cannot have more than one shareholder unless it is converted into a private limited company. The leverage smoothens out the transaction in management of the company and later enhances the flexibility in business operations of the company.
6. Access to Investments and Funding: An OPC can raise funds through its owner’s capital and loans from banks and financial institutions. To bring in equity investors or venture capital, the OPC must first be converted into a private limited company.
7. Increased Trustworthiness: Registering an OPC enjoys greater market credibility compared to other business structures. The greater credibility leads to increased trustworthiness among investors. The advantage is gained by the company due to its registration. Registering a company makes the company legally recognisable and shows that it meets the regulatory standards.
8. Benefits of MSME: An OPC can easily avail MSME benefits after registering under Udyam Registration. Registration as an MSME allows the company to explore more business opportunities by providing it with the benefit of interest rates, collateral-free loans, and many credit facilities.

Tax Benefits for OPC Registration in India

These benefits collectively make OPC registration online a desirable choice for businesses who wish to start their company with a strong legal basis and minimum administrative load. It's a route to combine the freedom of a sole proprietorship with the benefits.

Requirements for OPC Registration in India

To incorporate a One Person Company, the following requirements have to be met:

1. Sole Director and Shareholder: One of the most important requirements of the OPC is that only one director and shareholder is sufficient to incorporate a company.
2. Minimum Capital Requirement: To incorporate an OPC, you don’t need a hefty capital; there is no minimum paid-up capital requirement under the Companies Act, 2013.
3. Registered Office Address: Another important requirement for OPC registration is the giving of a registered office address. This address serves as the official location for contact, legal letters, and regulatory compliance, stressing the need for a real presence to perform business activities successfully and stick to statutory duties.

Eligibility Criteria for OPC Registration in India

Incorporation of a One Person Company (OPC) must meet the following criteria:

1. Natural Person: A natural person is an individual human being. Any natural person who is an Indian citizen, whether resident in India or an NRI, can incorporate an OPC.
2. Indian Citizen: The person must be an Indian citizen. NRIs can also incorporate an OPC; the rules define a resident as someone who stayed in India for at least 120 days in the previous financial year.
3. Major Person: A person who is 18 years or older is eligible to incorporate an OPC in India. Minor, i.e., a person below the age of 18 years old, is a 'minor' and is incompetent to enter into a contract, thus ineligible to form an OPC in India.
4. No Other OPC Registration: A person cannot incorporate more than one OPC or become a nominee in more than one such company. This limit is in place to prevent a single person from forming multiple organisations and misusing the benefits given to OPCs.

These criteria are meant to keep the purity of the OPC structure and ensure that it remains a realistic choice for genuine entrepreneurs looking to run a business with a simpler company structure. Compliance with these qualifying standards is important for the successful creation and running of an OPC in India.

Who is Ineligible to Form an OPC in India?

1. Individuals below the age of 18 years.
2. An individual who is already the member (shareholder) of an existing OPC.
3. A foreign citizen. Indian citizens living abroad (NRIs) can form an OPC since 1 April 2021.
4. Individuals disqualified under the Companies Act, 2013.

Documents Required for One Person Company Registration

The following are the essential documents required for the establishment of an OPC in India:

1. PAN Card: The Permanent Account Number card of the director is an important identity proof needed by the MCA to incorporate any company in India.
2. Aadhar Card: The Aadhar card is another important record required by MCA that proves the name and location of the director. It is used to prove the Indian residency status of the director.
3. Address Proof: Proof of the listed office address is needed to confirm the site of the OPC. This can be a recent energy bill, lease or rent agreement, or any other government-issued document that clearly says the address and the name of the owner or the company.
4. Passport-size Photographs: Recent passport-sized pictures of the head are needed to finish the steps of the OPC application. These pictures are usually attached to different forms and applications filed with the MCA.

Process of One Person Company Registration in India

The process of registering the OPC in India is straightforward but needs to strictly comply with procedural requirements as laid down under the Companies Act, 2013:

1. Step 1: Obtain a Digital Signature Certificate (DSC)
   The certificate is used to sign the documents early for the documents that have to be submitted online. It is obtained from the government recognized certifying authorities.
2. Step 2: Obtain a Director Identification Number (DIN)
   It is a unique identification number issued by the Ministry of Corporate Affairs (MCA). Mandated under the Companies Act, 2013, it is an essential number that legally recognises the director in a company. The number is new and unique for every director. The application for DIN is filed on the MCA portal using SPICe+ Form, known as (Simplified Proforma for Incorporating Company Electronically Plus on the MCA portal.
3. Step 3: Reserve a Company Name
   After obtaining DSC and DIN, the next step is to choose the name for the company. The name has to be new, unique, and not similar to any existing company. You also need to keep an eye out for it not infringing on any registered trademarks. The proposed name of the company has to be checked for availability on the MCA portal.
4. Step 4: Draft the Memorandum of Association (MoA)
   After choosing the name, the next step is to draft the MoA. MoA is the document that outlines the main objectives, purpose, activities, and scope of the company. It is pertinent to note that the MoA of the company can be altered after incorporation only by a special resolution under Section 13 of the Companies Act, 2013 (in an OPC, passed by the sole member).
5. Step 5: Draft the Articles of Association (AoA)
   It is the document that outlines the rules and regulations governing the internal management of the company. The AoA contains the purpose/objective, capital structure, corporate governance, and internal administration of the company. The AoA of the company can be altered post-incorporation by a special resolution under Section 14 of the Companies Act, 2013 (in an OPC, passed by the sole member).
   
   It is pertinent to note that the subscriber (sole member) is mandated by law to sign the MoA and AoA, which are filed online as e-MoA (INC-33) and e-AoA (INC-34).
6. Step 6: File Incorporation Documents with the Registrar of Companies (ROC)
   Once the MOA and AOA of the company are drafted and are ready to be filed, the next step is to file them online through the MCA portal with the appropriate fee, along with the following necessary documents with the Registrar of Companies (ROC):
   • Identity and Address Proof of Directors and Shareholders: It includes PAN card, passport, or voter ID, an Aadhar card, bank statements, or utility bills (not more than 2 months).
   • Proof of Registered Office Address: It includes a utility bill of the premises (not older than 2 months), the lease or rent agreement if rented, and a No Objection Certificate (NOC) from the owner.
   • Consent from Director(s): The director of the company is mandated to consent to their appointment and sign that consent form.
7. Step 7: Obtain a Certificate of Incorporation
   When the RoC verifies all the company's compliance requirements and all the documents, a Certificate of Incorporation will be issued by the ROC. The certificate officially states that the OPC is incorporated and officially marks the formation of your OPC. The certificate includes the Corporate Identification Number (CIN), which is the unique Identification number for each company.
   
   It is pertinent to note that post Certificate of Incorporation, PAN Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are automatically generated.
8. Step 8: Open a Bank Account
   After applying for a PAN and TAN number, a new bank account in the name of the company has to be opened to enable the company to make monetary transactions.

Post-Incorporation Compliances of OPC

Incorporating an OPC is not enough; it has to complete the following compliances to legally operate in India:

• File the financial statements
• Conduct a statutory audit
• File the Annual Return
• File the director KYC (DIR-3 KYC) once every three years by 30 June, and update any change in mobile number, email or address within 30 days
• File the Tax returns
• File the GST returns (if registered)

Things to keep in mind while incorporating an OPC

• The OPC cannot be incorporated for carrying on non-profit business activities.
• The rules to hold AGM are different for OPC. An OPC is not required by law to hold an Annual General Meeting (Section 96(1) of the Companies Act, 2013).
• There is no capital or turnover limit for an OPC. Since 1 April 2021, an OPC can grow to any size and can convert into a private or public company at any time.