The One-Person Company (OPC) is a new business structure introduced in India through the Companies Act 2013. This will give an opportunity to budding entrepreneurs to start their businesses and get registered. An OPC can be managed and controlled by a single individual. As it is owned by a single person it is easier to manage. If you are an entrepreneur then you can register as an OPC in India. The OPC registration will offer many advantages over the sole proprietorship.
If you decide to register your company as an OPC then the following are the requirements:
- The company should have at least 1 director. The director must be an Indian citizen and a resident of India. NRI and foreign nationals cannot register for OPCs in India.
- The company should have at least 1 shareholder. The director and the shareholder can be the same. The shareholder should be an Indian resident.
- The company can have only one nominee. The nominee should be an Indian resident.
- The minimum authorised share capital is Rs 1, Lac.
- All the directors of the company should have a DIN (Director Identification Number). At least 1 promoter and 1 witness should have a DSC (Digital Signature Certificate).
Getting a DIN and a DSC is a mandatory requirement for registering a company in India. These can be obtained online from the Ministry of Corporate Affairs (MCA) website.
The other requirement is that to register an OPC the proprietor must be 21 years of age. Your company must be distinct and unique. Minors are not allowed to function as members of the company. The name of your company should not match with any of the registered Indian companies or Trademarks. You can check for the availability of your chosen name on the MCA website.
Once your OPC gets registered successfully you will get a Certificate of Incorporation from the Registrar of Companies. The certificate is proof that your OPC is a legal entity in India.
If you want to register an OPC you can approach service providers. Some companies offer one person company registration services online. You can fill up their form online and their experts will connect with you and complete all the legalities. You can get your company incorporated within 15 days.
Benefits of OPC registration
The following are the benefits of an OPC registration:
- In India OPC is a private limited company which is a popular and known business structure. The corporate customers, vendors and government agencies prefer to deal with a private limited company rather than a proprietor.
- Sometimes businesses need to borrow money and take credit. In case the business is not able to repay the money only the investment in the business will be lost. The personal assets of the directors will be safe.
- An OPC is one of the easiest forms of corporate entities and can be managed easily. There is no need to conduct an Annual General Meeting (AGM) and other compliances. Very few filings have to be done with the ROC.
- An OPC allows entrepreneurs to easily test their business model and when a product is developed they can approach investors and capitalists for funding. They can easily convert their OPC into a multi-shareholder private limited company.
- As an OPC has one owner the decision-making process and the execution are faster. However, the OPC can appoint up to 15 directors for administrative functions.
- An OPC is easy to sell as it requires less documentation and involves less cost.
The other benefit is that in case of the death of the owner, the ownership can be easily transferred to a nominee. When you register an OPC your business name is protected and cannot be replicated by others. The income tax rate for an OPC is lower than that of a sole proprietorship. Involvement from a third party is not allowed. The liability of the director is limited.
Banks and financial institutions favour dealing with an OPC as it has a lawful and permanent succession provision. Having a single owner is beneficial because there is no outside interference. An OPC can raise money and transform into a private business.
Registration process
The registration process for an OPC is as follows:
- Get the DIN and the DSC for your OPC.
- Choose a unique name for your OPC.
- Prepare and file for the various documents required for incorporation. This will include the MOA (Memorandum of Association) and the AOA (Article of Association) of the company.
- Once your documents are verified you have to pay the registration fees.
- After successful registration, you will get the Certificate of Incorporation from the Registrar of Companies.
- You will have to apply for a PAN and a TAN for your OPC. Permanent account number (PAN) and Tax Deduction and Collection Account Number (TAN) can be obtained through the NSDL website.
Also read: How Do I Get a GST Registration Number for a New Business
