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One Person Company

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Definition

Section 2(62) of Companies Act defines a one-person company as a company that has only one person as to its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

Such companies are generally created when there is only one founder/promoter for the business. Entrepreneurs whose businesses lie in early stages prefer to create OPCs instead of sole proprietorship business because of the several advantages that OPCs offer.

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Features of a One Person Company

Here are some general features of a one-person company:

  1. Private company: Section 3(1)(c) of the Companies Act says that a single person can form a company for any lawful purpose. It further describes OPCs as private companies.

  2. Single-member: OPCs can have only one member or shareholder, unlike other private companies.

  3. Nominee: A unique feature of OPCs that separates it from other kinds of companies is that the sole member of the company has to mention a nominee while registering the company.

  4. No perpetual succession: Since there is only one member in an OPC, his death will result in the nominee choosing or rejecting to become its sole member. This does not happen in other companies as they follow the concept of perpetual succession.

  5. Minimum one director: OPCs need to have minimum one person (the member) as director. They can have a maximum of 15 directors.

  6. No minimum paid-up share capital: Companies Act, 2013 has not prescribed any amount as minimum paid-up capital for OPCs.

 

Privileges of One Person Companies

 

One-Person Companies benefit from the following privileges and exemptions under the Companies Act:

  • OPCs don’t have to conduct annual general meetings.

  • Cash flow statements need not be included in their financial statements.

  • Directors could sign the annual returns too; a company secretary is not mandatorily required.

  • Provisions in regards to the independent directors are not applied to OPCs.

  • Directors can take home more remuneration as compared to other companies. 

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Membership in One Person Companies

Only natural persons who are Indian citizens and residents are eligible to form a one-person company in India. The same condition applies to nominees of OPCs. Further, such a natural person cannot be a member or nominee of more than one OPC at any point in time.

It is important to note that only natural persons can become members of OPCs. This does not happen in the case of companies wherein companies themselves can own shares and be members. Further, the law prohibits minors from being members or nominees of OPCs.

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Documents Required for OPC Registration

 

  • PAN card or passport

  • Passport, for NRIs and foreign nationals

  • Scanned transcript of driver's license or voter’s ID

  • Updated gas or electricity invoice/bank account statement/mobile or landline phone invoice

  • Specimen signature or impression

  • Passport-size photo.

Please Note: The OPC director must self-attest to the first three documents. All paperwork for a foreign citizen or NRI must be notarised (if they are currently residing in India or a non-commonwealth country) or apostilled (if living in a commonwealth country at present).

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Documents Necessary for the Registered Office

  • Scanned transcript of current bank account statement/phone or mobile invoice/gas or electricity invoice

  • Scanned transcript of rental agreement written in the English language

  • Scanned transcript of a no-objection certificate from the concerned property landowner

  • Scanned transcript of property or sale deed printed in English (if the property is owned).

Note: Your registered office space needs to be a commercial premises; however, it can be the sole director’s place of residence as well.

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One Person Company (OPC) Registration Process

 

Step 1: Apply for DSCs

The first step is to obtain the Digital signature certificate (DSC) of the proposed Director which required the following documents:

  • Address proof

  • Aadhaar card

  • PAN card

  • Photo

  • Email Id

  • Phone number

Step 2: Apply for DIN

Once the Digital Signature Certificate (DSC) is made, the next step is to apply for the director identification number(DIN) of the proposed Director in SPICe Form along with the name and the address proof of the director. Form DIR-3 is the option only available for existing companies. It means with effect from January 2018, the applicant need not file Form DIR-3 separately. Now DIN can be applied within the SPICe form for up to three directors.

Step 3: Name Approval Application

The next step while incorporating an OPC is to decide on the name of the Company. The name of the Company will be in the form of “ABC (OPC) Private Limited”.

The name can be approved in the Form SPICe+ 32 application. Only one preferred name along with the significance of keeping that name can be given in the Form SPICe+ 32 application. If the name gets rejected, another name can be submitted by applying another Form SPICe+ 32 application.

Once the name is approved by the MCA we move on to the next step.  

Step 4: Documents Required

We have to prepare the following documents which are required to be submitted to the ROC:

  • The memorandum of association (MoA) which are the objects to be followed by the Company or stating the business for which the company is going to be incorporated.

  • The article of association (AoA) lays down the by-laws on which the company will operate.

  • Since there are only 1 Director and a member, a nominee on behalf of such a person has to be appointed because in case he becomes incapacitated or dies and cannot perform his duties the nominee will perform on behalf of the director and take his place. His consent in Form INC – 3 will be taken along with his PAN card and Aadhar Card.

  • Proof of the Registered office of the proposed Company along with the proof of ownership and a NOC from the owner.

  • Declaration and Consent of the proposed Director of Form INC -9 and DIR – 2 respectively.

  • A declaration by the professional certifying that all compliances have been made.

Step 5: Filing of Forms With MCA

All these documents will be attached to the SPICe Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be uploaded to the MCA site for approval. The Pan Number and TAN is generated automatically at the time of incorporation of the Company. There is no need to file separate applications for obtaining PAN Number and TAN.

Step 6: Issue of the Certificate of Incorporation

On verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and we can commence our business.

 

DISCLAIMER- These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the author and are not individual legal advice.

It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information

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