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.

Benefits of One Person Company Registration

The One Person Company (OPC) provides numerous advantages for individual entrepreneurs within the Indian business environment. Notably, it has streamlined the process of company ownership for a sole proprietor. Below, we will examine the benefits of OPC in greater detail.

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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

Eligibility Criteria for One Person Company (OPC) Registration

Documents Required for One Person Company Registration

Procedure for One Person Company (OPC) Registration

Any person who wishes to register One Person Company (OPC) has to submit the duly filled SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which replaced the SPICe form to streamline the incorporation process. OPC registration comprises two phases:

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-By-Step Procedure to Register the One Person Company Includes:

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.

Canjain Assistance in converting a One Person Company