One Person Company Formation
One person company is a concept established in India by the Companies Act, 2013. Section 2(62) of the Companies Act 2013 defines register 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.
For OPC Company Registration, companies are generally created when there is only one founder/promoter for the business. Entrepreneurs whose businesses stand in the early stages prefer to create OPCs instead of sole proprietorship businesses because of the several advantages that OPCs offer.
Starting a business is one of the toughest decisions that a person can take in their life. There are so many things that need to be decided and even taken care of during the setting up process. If you want to begin your entrepreneurial journey, going for a Person Private Limited Company is the best choice. With time a person can easily scale up the company to see great results. Aplite advisors are experts in delivering reliable financial accounting advisory services.
In the past few years, there was no such provision to start a company for a single person. There was always a requirement for a group of people to collaborate and set up a company. Just to encourage and support the entrepreneurs, in the Companies Act 2013 under section 2(62), it is possible to set up a One Person Private Limited company. The act also stated the rules for OPC company registration.
OPC is very much similar to the Private Limited company as there is also a requirement of capital that can be introduced in two forms i.e., Authorized Share Capital and Paid-Up capital. The requirement of minimum authorized share capital is 1 lac INR. But there is no minimum capital required for paid-up capital.
There is a certain set of guidelines that need to be confined in the Memorandum of Association and Article of Association. Both these documents are the master of all the documents that have all the information about how the company will work.
MOA has 6 clauses which are stated below:
- Name clause: Under this clause, the name of the company is specified. The person needs to select the name as per the Companies Act, 2013. Just keep in mind the company name should not be identical to any of the existing companies.
- Registered Office Clause: This clause helps in determining the state of jurisdiction of the Registrar of Companies.
- Object clause: This clause clearly defines the object of the company. The object includes all the activities that will be carried out under the name of the company.
- Liability clause: An important clause that clearly states the liability of shareholders. Each member and the shareholder need to agree to the limit of liability.
- Capital clause: This clause defines the maximum number of shares the company can issue in the market.
- Article of Association (AOA): This defines the set of rules and regulations for the management team of the company. Every person related to the company has to follow the guidelines.
Interested in corporate payroll services or One Person Company Formation? Talk to our experts !!
Features of OPC
Section 3(1)(c) of the Companies Act says that a single person can form a company for any lawful purpose. It further describes OPC as Private Company.
OPC can have only one member or shareholder, unlike other private companies.
A unique feature of OPC 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.
OPC needs to have minimum one person (the member) as director. It can have a maximum of 15 directors.
Companies Act, 2013 has not prescribed any amount as minimum paid-up capital for OPCs.
OPCs enjoy several privileges and exemptions under the Companies Act that other kind of companies do not possess.
OPC can lose its OPC Status in case its paid-up share capital exceeds Rs. 50 lakh or average annual turnover of immediately preceding consecutive 3 years, exceeds Rs. 2 crore. In such a case, OPC shall mandatorily get converted into Private Limited or Public Limited Company.
Benefits:
- It is considered to be a separate legal entity from its directors or members.
- It enjoys advantage of limited liability as well which means that the personal assets of the member will not be used for paying debts of the business.
- Has perpetual existence
- An OPC that can sake, purchase, and even own property under its name.
- Gets easy funding from investors
- Very less compliance
- Eligible to get bank loans and credits
- No interference from the third person
Requirement for OPC registration
- The person who wants to set up an OPC must be an Indian citizen
- The entities like LLP or companies cannot be the director in an OPC.
- A nominee of the company must be appointed at the time of incorporation
- No financial activities can be carried out in OPC
Limitations of OPC Private Limited Company
There is a need to convert OPC into a Private Limited Company under two conditions stated below:
- If the paid-up share capital exceeds Rs. 50 lakhs
- If the turnover of the company crosses Rs. 2 crores.
Procedure of Incorporation of OPC
It is a very important step to have DSC before starting the company registration.
It is mandatory for every director of the company to have a DIN. For this, the DIN application is made in Form DIR-3.
The person needs to get the name of the company approved by the higher authorities. Go for the unique name that no other existing company has and follow the name guidelines under the Companies Act 2013.
In this step, the MOA and AOA are drafted under INC 33 and INC 34, respectively. Even the person can apply for ESI, GST, and EPF under the name of the company if required.
For the successful incorporation of OPC Private limited, it is important to upload form SPICe INC 32. This form is filled with the Registrar of the company.
The Final step is to get the approval on all the documents the person has submitted and get the Company Identification Number.
Checklist of documents:
- Copy of PAN card, Passport/ Voter-ID/Driving license of Director(s)
- Bank Statement of directors(s)/ Electricity bill
- Passport size photo of director(s) • NOC from owner of registered office and rent agreement or sale deed (if any)
- Signature specimen of director(s)
Aplite Advisors: For private limited company registration services in India
We are a team of experts that are providing services related to finance, accounting, and legal for many people. Our team is taking the help of the best techniques and technology that help them to boost the overall efficiency of working. Our team includes Chartered Accountants, GST Compliances experts for GST Consultancy and Advisory, Company Secretaries, Lawyers, Audit and Assurance team for Audit and assurance services, MBAs, and other professionals that are always there to help their clients with the best assistance. We also do private limited company registration and If you are planning to the registration of one-person company, just get our help for smooth processing.