One Person Company Registration in India

The registration of a One Person Company is the preferred option for individual entrepreneurs. If you are encountering difficulties with OPC registration, our consultants are available to assist you in resolving issues related to compliance, growth, nominee arrangements, and taxation.

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    One Person Company Registration – An Overview

    The introduction of One Person Company (OPC) registration under The Companies Act, 2013 marked a significant advancement in protecting the interests of individual entrepreneurs in India. This framework grants OPCs the legal authority to operate independently within the country. Essentially, an OPC is a business entity formed by a single individual who also oversees its management.

     

    An OPC operates similarly to any other corporate entity, benefiting from characteristics such as limited liability, recognition as a distinct legal entity, and perpetual succession. This structure serves as an avenue for sole proprietors seeking a formalized business organization.

     

    Before the enactment of The Companies Act, 2013, individual entrepreneurs lacked the option to establish a single-person company, being limited to the formation of sole proprietorships. Previously, the requirement for company formation mandated a minimum of two directors and two members, a stipulation that has been revised with the introduction of the OPC framework.

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    Benefits of One Person Company Registration

    1. Simple Incorporation Process – The process to incorporate an OPC is simple and hassle free. It requires just one member and one nominee, and the member can also become the director. However, the OPC needs INR 1 Lakh as the minimum authorised capital, but at the same time, it does not need a minimum paid-up capital.
    2. Separate Legal Entity – The OPC is a fully functional separate legal entity. It is entitled to operate its business and conduct operations within the legal and regulatory frameworks. The OPC gives immunity to the person who incorporates it in terms of limiting their liabilities.
    1. Limited Liability – Since the OPC is a separate legal entity, it functions independently from the status of its members. It offers protection to its single shareholder by limiting his liabilities to the shares. The single shareholder is not personally liable for any losses that the OPC incurs during the course of its operations. While the OPC can be sued, this does not hold true for the single shareholder as they function independent of each other.
    2. Perpetual Succession – Despite having one single shareholder, an OPC enjoys the benefit of perpetual succession. At the time of incorporation, the single member appoints a nominee, who, in case of the member’s death or incapacitation, takes over the charge of running the company in his place. 
    1. Fund Raising Made Easy – OPC is a legal and fully functional private company entitled to raise funds for its operations. OPCs explore various fundraising alternatives such as venture capitals, angel investors, and incubators etc. Since banks and other financial institutions prefer companies over proprietors in lending, it is easy for OPCs to raise funds from them as well.
    1. Fewer Compliances – According to The Companies Act, 2013, OPCs have fewer compliances to meet during their incorporation. They are exempt from making cash flow statements. They are also exempt from getting the books of accounts and annual returns signed by the company secretary. Instead, the director of the OPC is eligible to do that.
    1. Easy to Manage – Since only one person establishes an OPC, managing its operations is easy because decision-making lies with that single shareholder. It is easy to pass the ordinary and special resolutions by simply entering them into the minute book. The entry requires to be signed by a single member. Therefore, all company matters can be dealt without any conflict of interest and opinions.
    Eligibility Criteria for One Person Company (OPC) Registration

    To successfully register a One Person Company (OPC) in India, it is essential to meet certain eligibility criteria. These criteria encompass the following:

     

    •  An One Person Company (OPC) can only be established by a natural person who is both an Indian citizen and a resident of India. Non-Resident Indians (NRIs) are now permitted to register an OPC in the country.
    • The formation of an OPC is restricted to natural persons; no other legal entities or companies are authorized to create a new OPC. The individual wishing to incorporate an OPC must be at least 18 years old, as this age requirement is mandatory.
    • Given that an OPC is established by a single individual, it is limited to one shareholder and one director. It is essential for the individual forming the OPC to designate a nominee, who must be a distinct person and cannot also be the shareholder.
    • Like the shareholder, the nominee must be an Indian citizen and resident. The nominee will assume control of the OPC’s operations in the event of the shareholder’s death or incapacity.
    • The shareholder must not be disqualified under the Companies Act of 2013. Not all types of businesses qualify for registration as an OPC in India; specifically, non-profit organizations, banking and financial institutions, as well as businesses engaged in securities investment, are ineligible.
    • This structure is particularly suited for small-scale enterprises with an annual turnover not exceeding INR 2 Crore.

     

    Documents Required for One Person Company Registration

    1. Memorandum of Association (MOA): An MOA is a document that highlights the objectives for which the company has been incorporated.
    1. Articles of Association (AOA) – The AOA is the legal document outlining the company’s internal rules, regulations and by-laws.
    2. Nominee Appointment – The OPC is registered by a single shareholder and member; therefore, it is mandatory to appoint a nominee who takes charge in case of a shareholder’s incapacitation or death. Along with the nominee’s name, his consent with PAN card and Aadhaar card must also be submitted through Form INC-3.
    1. Address Proof of Registered Office – It is mandatory to submit the address proof of the registered office along with ownership proof, and a No Objection Certificate (NOC) from the owner in case the property is rented. The shareholder of the OPC has the option to register the residential address if he does not own a commercial space.
    2. Declaration and Consent – It is mandatory to submit the declaration from the proposed director via Form INC-9 and consent via Form DIR-2.
    3. Compliance Certificate- It is a document signed by a qualified professional, usually a Company Secretary, stating that the OPC has fulfilled all compliance and regulatory requirements as mandated by the Companies Act, 2013.
    4. Identity and Address Proof of Directors – The directors have to furnish the following-

    Procedure for One Person Company (OPC) Registration

    Step 1 :The initial phase of the OPC registration process entails the completion and approval of the company name. Following this, the subsequent step requires the application for the proposed director’s Director Identification Number (DIN) and Permanent Account Number (PAN).

    Part 2- The next step requires furnishing incorporation details such as the registered office address for the OPC, share capital information, and details about the director and the shareholder.

    Step 1 – Acquisition of a Digital Signature Certificate (DSC)

    The initial step entails acquiring a Digital Signature Certificate (DSC) for the proposed director. This certificate is essential for electronically signing all documents pertinent to the incorporation of the One Person Company (OPC).

    Step 2 – Securing a Director Identification Number (DIN)

    The subsequent step requires obtaining a Director Identification Number (DIN) for the proposed director. This can be accomplished by submitting the SPICe+ form through the Ministry of Corporate Affairs (MCA).

    • Step 3 – Name Reservation for the OPC

      The following step involves reserving a name for the OPC. This process can also be executed via the SPICe+ form on the Ministry of Corporate Affairs (MCA) portal. It is crucial to select a unique name that does not infringe upon any existing company or trademark.

      Step 4 – Drafting the MOA and AOA

      The next phase consists of preparing the Memorandum of Association (MOA) and Articles of Association (AOA) for the OPC. These documents delineate the company’s objectives, structure, regulations, and internal governance.

    Step 5 – Submission of Registration Forms

    The subsequent step involves submitting the completed forms for OPC registration through the Ministry of Corporate Affairs (MCA) portal. The applicant must ensure that all relevant documents are attached to the SPICe+ form, including the MOA, AOA, declarations, proof of the registered office address, nominee appointment, and any other documents required by the MCA.

    Step 6 – Issuance of Certificate of Incorporation

    Upon approval from the Registrar of Companies (ROC) and verification of compliance with the necessary requirements, the ROC issues the Certificate of Incorporation. This certificate signifies the successful completion of the OPC registration process. Additionally, the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are automatically generated during this process, thereby streamlining the application for these documents and conserving the applicant’s time and effort.

    Legalixo Support in transitioning a One Person Company Registration in India

    • Purchase a Plan for Expert Assistance
    • Add Queries Regarding the conversion
    • Provide Documents to Legalixo Expert
    • Complete all other required Actions
    • Get your work done!

    Benefits of One Person Company Registration

    1. Simple Incorporation Process – The process to incorporate an OPC is simple and hassle free. It requires just one member and one nominee, and the member can also become the director. However, the OPC needs INR 1 Lakh as the minimum authorised capital, but at the same time, it does not need a minimum paid-up capital.
    2. Separate Legal Entity – The OPC is a fully functional separate legal entity. It is entitled to operate its business and conduct operations within the legal and regulatory frameworks. The OPC gives immunity to the person who incorporates it in terms of limiting their liabilities.
    1. Limited Liability – Since the OPC is a separate legal entity, it functions independently from the status of its members. It offers protection to its single shareholder by limiting his liabilities to the shares. The single shareholder is not personally liable for any losses that the OPC incurs during the course of its operations. While the OPC can be sued, this does not hold true for the single shareholder as they function independent of each other.
    2. Perpetual Succession – Despite having one single shareholder, an OPC enjoys the benefit of perpetual succession. At the time of incorporation, the single member appoints a nominee, who, in case of the member’s death or incapacitation, takes over the charge of running the company in his place. 
    1. Fund Raising Made Easy – OPC is a legal and fully functional private company entitled to raise funds for its operations. OPCs explore various fundraising alternatives such as venture capitals, angel investors, and incubators etc. Since banks and other financial institutions prefer companies over proprietors in lending, it is easy for OPCs to raise funds from them as well.
    1. Fewer Compliances – According to The Companies Act, 2013, OPCs have fewer compliances to meet during their incorporation. They are exempt from making cash flow statements. They are also exempt from getting the books of accounts and annual returns signed by the company secretary. Instead, the director of the OPC is eligible to do that.
    1. Easy to Manage – Since only one person establishes an OPC, managing its operations is easy because decision-making lies with that single shareholder. It is easy to pass the ordinary and special resolutions by simply entering them into the minute book. The entry requires to be signed by a single member. Therefore, all company matters can be dealt without any conflict of interest and opinions.
    Eligibility Criteria for One Person Company (OPC) Registration

    To successfully register a One Person Company (OPC) in India, it is essential to meet certain eligibility criteria. These criteria encompass the following:

     

    •  An One Person Company (OPC) can only be established by a natural person who is both an Indian citizen and a resident of India. Non-Resident Indians (NRIs) are now permitted to register an OPC in the country.
    • The formation of an OPC is restricted to natural persons; no other legal entities or companies are authorized to create a new OPC. The individual wishing to incorporate an OPC must be at least 18 years old, as this age requirement is mandatory.
    • Given that an OPC is established by a single individual, it is limited to one shareholder and one director. It is essential for the individual forming the OPC to designate a nominee, who must be a distinct person and cannot also be the shareholder.
    • Like the shareholder, the nominee must be an Indian citizen and resident. The nominee will assume control of the OPC’s operations in the event of the shareholder’s death or incapacity.
    • The shareholder must not be disqualified under the Companies Act of 2013. Not all types of businesses qualify for registration as an OPC in India; specifically, non-profit organizations, banking and financial institutions, as well as businesses engaged in securities investment, are ineligible.
    • This structure is particularly suited for small-scale enterprises with an annual turnover not exceeding INR 2 Crore.

     

    Documents Required for One Person Company Registration

    1. Memorandum of Association (MOA): An MOA is a document that highlights the objectives for which the company has been incorporated.
    1. Articles of Association (AOA) – The AOA is the legal document outlining the company’s internal rules, regulations and by-laws.
    2. Nominee Appointment – The OPC is registered by a single shareholder and member; therefore, it is mandatory to appoint a nominee who takes charge in case of a shareholder’s incapacitation or death. Along with the nominee’s name, his consent with PAN card and Aadhaar card must also be submitted through Form INC-3.
    1. Address Proof of Registered Office – It is mandatory to submit the address proof of the registered office along with ownership proof, and a No Objection Certificate (NOC) from the owner in case the property is rented. The shareholder of the OPC has the option to register the residential address if he does not own a commercial space.
    2. Declaration and Consent – It is mandatory to submit the declaration from the proposed director via Form INC-9 and consent via Form DIR-2.
    3. Compliance Certificate- It is a document signed by a qualified professional, usually a Company Secretary, stating that the OPC has fulfilled all compliance and regulatory requirements as mandated by the Companies Act, 2013.
    4. Identity and Address Proof of Directors – The directors have to furnish the following-

    Procedure for One Person Company (OPC) Registration

    Step 1 :The initial phase of the OPC registration process entails the completion and approval of the company name. Following this, the subsequent step requires the application for the proposed director’s Director Identification Number (DIN) and Permanent Account Number (PAN).

    Part 2- The next step requires furnishing incorporation details such as the registered office address for the OPC, share capital information, and details about the director and the shareholder.

    Step 1 – Acquisition of a Digital Signature Certificate (DSC)

    The initial step entails acquiring a Digital Signature Certificate (DSC) for the proposed director. This certificate is essential for electronically signing all documents pertinent to the incorporation of the One Person Company (OPC).

    Step 2 – Securing a Director Identification Number (DIN)

    The subsequent step requires obtaining a Director Identification Number (DIN) for the proposed director. This can be accomplished by submitting the SPICe+ form through the Ministry of Corporate Affairs (MCA).

    • Step 3 – Name Reservation for the OPC

      The following step involves reserving a name for the OPC. This process can also be executed via the SPICe+ form on the Ministry of Corporate Affairs (MCA) portal. It is crucial to select a unique name that does not infringe upon any existing company or trademark.

      Step 4 – Drafting the MOA and AOA

      The next phase consists of preparing the Memorandum of Association (MOA) and Articles of Association (AOA) for the OPC. These documents delineate the company’s objectives, structure, regulations, and internal governance.

    Step 5 – Submission of Registration Forms

    The subsequent step involves submitting the completed forms for OPC registration through the Ministry of Corporate Affairs (MCA) portal. The applicant must ensure that all relevant documents are attached to the SPICe+ form, including the MOA, AOA, declarations, proof of the registered office address, nominee appointment, and any other documents required by the MCA.

    Step 6 – Issuance of Certificate of Incorporation

    Upon approval from the Registrar of Companies (ROC) and verification of compliance with the necessary requirements, the ROC issues the Certificate of Incorporation. This certificate signifies the successful completion of the OPC registration process. Additionally, the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are automatically generated during this process, thereby streamlining the application for these documents and conserving the applicant’s time and effort.

    Legalixo Support in transitioning a One Person Company Registration in India

    • Purchase a Plan for Expert Assistance
    • Add Queries Regarding the conversion
    • Provide Documents to Legalixo Expert
    • Complete all other required Actions
    • Get your work done!

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