ONE PERSON COMPANY (OPC)
The concept of One Person Company 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 an One Person Company (OPC) is that there can be only one member in an OPC, while there is a requirement of minimum two persons for incorporating and maintaining a Private Limited Company or Liability Partnership (LLP) or partnership firm. Similar to a Company, an One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
Though an One Person Company allows a lone Entrepreneur to operate a corporate entity with limited liability protection, an OPC does have a few limitations. For instance, every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the company – who will become the owner of the OPC in case the sole Director is disabled. Also, a One Person Company 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 like other Companies. Therefore, it is important for the Entrepreneur to carefully consider the features of a One Person Company prior to incorporation.
The average time taken to complete an one person company registration is about 7 – 10 working days, subject to government processing time and client document submission. Get a free consultation for one person company registration and business setup in India by scheduling an appointment with our Advisor.
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REASONS TO REGISTER ONE PERSON COMPANY
- Single Promoter: One Person Company is the only type of corporate entity that can be started and operated by a single promoter with limited liability protection in India. A corporate form of legal entity in One Person Company ensures that the business has perpetual existence and easy ownership transferability.
- Uninterrupted Existence: A company has ‘perpetual succession’, meaning 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 and continues to be in existence irrespective of the changes in ownership.
- Borrowing Capacity: Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns. However, an one person company cannot issue different types of equity security, as it can only be owned by one person at all times.
- Easy Transferability: Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a one person company, the ownership can be transferred by altering the shareholding, directorship and nominee director information.
- Owning Property: A company being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., Further, the nominee director cannot claim any ownership of the company while serving as a nominee director.
- Copy of Pan card of directors and members/nominee: PAN Card for Indian Nationals and affidavit for not having pan for foreign nationals
- Identity Proof of directors and members/nominee: copy of Passport/ Driving License/ Aadhar Card/ Voter id card
- Address Proof of directors and members/nominee : Copy of Electricity Bill/ Water Bill/ Telephone Bill/ Bank Statement (Not older than 2 months)
- Proof of Registered Office: Copy of Electricity Bill/Telephone bill/ Water bill (Any of these documents shall not be more than 2 months old) and NOC from Land Owner to use premises as Registered Office. Rent agreement if rented.
- Digital Signatures of directors and members/nominee: Valid digital sign is required for every member/nominee and director.
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FREQUENTLY ASKED QUESTIONS
How many people are required to incorporate an One Person Company?
To incorporate an One Person Company, a minimum of two people are required. An One Person Company must have a minimum of One Member and One Nominee.
What are the requirements to be a Director?
There should be minimum one director in the company and age needs to be over 18 years. Director and shareholder must be resident of India.
What is the capital required to start a Limited Company?
You can start a Limited Company with any amount of capital.
Is an office required for starting a Limited Company?
An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
How long will it take to incorporate a Company?
We can incorporate an one person company in 7-10 working 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.
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.