The concept of One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a OPC is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership. Similar to a Company, a OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is easy to incorporate.
Though a One Person Entity allows a lone Entrepreneur to run a business with Limited Liability protection, a OPC does have a few limitations. For instance, every OPC must nominate a nominee Director in the MOA or AOA who will become the owner of the OPC in case the promoter Director is disabled. Also, a OPC must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year. Therefore, it is important for the Entrepreneur to carefully consider the features of a OPC prior to incorporation. CivilIndia can help incorporate a One Person Company (OPC) in India.
OPC Incorporation Process
Step 1: OPC Incorporation
You can incorporate a One Person Company in 14 to 20 days, subject to ROC processing time.
Step 2 : Obtaining DSC & DIN
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Director of the OPC. DIN and DSC can be obtained for the proposed Director within 5 to 7 days.
Step 3 : Name Approval
A minimum of one and a maximum of six proposed names must be submitted to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 5 to 7 working days.
Step 4 : OPC Incorporation
Incorporation documents can be submitted to the MCA along with an application for incorporation. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Frequently Ask Questions (FAQs)
|1||How long is the incorporation of the Company valid for?|
|Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years.|
|2||What is a Digital Signature Certificate?|
|A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company.|
|3||What is Director Identification Number (DIN)?|
|Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.|
|4||What is authorized capital fee?|
|Authorized capital of a Company is the amount of shares a company can issue to it shareholders. Companies have to pay the Government an authorized capital fee to issue shares in a Company. Companies have to pay authorized capital fee for a minimum of Rs.1 lakh.|
|5||How many people are required to incorporate a One Person Company?|
|To incorporate a One Person Company, a Director and a nominee is required. A nominee member is one, who shall, in the event of promoter member’s death or incapacitation become a member of the Company.|
|6||What are the requirements to be a Director or Nominee in a OPC?|
|Only a natural person who is an Indian citizen and a resident in India is eligible to incorporate a One Person Company or be a nominee member. The Director or Nominee must also be over 18 years of age. A person can incorporate up to five One Person Companies.|
|7||What is the capital required to start a One Person Company?|
|One Person Company can be started with any amount of capital. However, fee must be paid to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the incorporation of the OPC. There is no requirement to show proof of capital invested during the incorporation process.|
|8||Is an office required for starting a One Person Company?|
|An address in India where the registered office of the One Person Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.|
|9||Do I have to be present in person to incorporate a One Person Company?|
|No, you will not have to be present at our office or appear at any office for the incorporation of a One Person Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.|
|10||What are the documents required for incorporation?|
|Identity proof and address proof is mandatory for all the proposed Director and Nominee of the One Person Company. PAN Card is mandatory. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.|
|11||How long will it take to incorporate a One Person Company?|
|You can incorporate a One Person Company in 7-15 days. The time taken for incorporation will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy incorporation, please choose a unique name for your Company and ensure you have all the required documents prior to starting the incorporation process.|
|12||What do I need to quickly incorporate my One Person Company?|
|To incorporate a One Person Company quickly, make sure the proposed name of the Company is very unique. Names that are similar to an existing company / limited liability partnership / trademark can be rejected and additional time will be required for resubmission of names.|
Advantages Of One Person Company
Separate Legal Entity:
A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited.
Capacity to sue and be sued:
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.
In the company form of organization it is possible for a company to make a valid and effective contract with any of tis members. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.
- Making a Company ,
- One Person Company (OPC)