One Person Company (OPC) was introduced to encourage entrepreneurs who are capable of starting a venture on their own but are deterred by the requirement of having at least two members, as mandated for a private limited company. OPC, as the name suggests, allows a single individual to establish and run a company, thereby providing a distinct legal identity and limited liability protection. Governed by the Companies Act, 2013, OPCs offer a simplified framework for solo entrepreneurs to operate within the corporate structure.
Definition of One Person Company (OPC):
An OPC is a type of company established by a single individual, who acts as both the shareholder and the director. This individual enjoys the benefits of limited liability, wherein their personal assets are protected from the liabilities of the company. OPCs are recognized as separate legal entities, distinct from their owners, which enables them to enter into contracts, acquire assets, incur debts, and sue or be sued in their own name.
Key Features of an OPC
- Single Person Entity: An OPC allows an individual to operate their business independently, eliminating the need for multiple directors or shareholders. This simplifies decision-making and streamlines management processes.
- Limited Liability: The liability of the member is limited to the extent of their investment in the company. Personal assets of the member are not at risk in case of company debts or liabilities.
- Conversion: An OPC can be converted into a private or public company if it exceeds certain thresholds regarding turnover or paid-up capital, offering scalability and growth opportunities.
- Separate Legal Entity: Despite having a single member, an OPC is recognized as a distinct legal entity from its sole director. This grants the company the ability to enter into contracts, own property, and incur liabilities in its own name.
Eligibility Criteria
It’s important to understand the specific eligibility criteria that govern its formation. The Companies Act, 2013 sets out requirements that must be met for the incorporation of OPC-
- Natural Person and Indian Citizen: The person must be natural person. This factor means that only individuals can form an OPC. The individual must be an Indian citizen. Thus other legal entities like LLP or companies cannot create an OPC.
- Resident in India: The promoter must be a resident in India, meaning they should have lived in India for at least 182 days during the previous calendar year.
- Minimum Authorized Share Capital:– The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company’s capital clause during the registration.
- Appointment of Nominee- The promoter must appoint a nominee during the OPC’s incorporation. This nominee would become a member of the OPC in the event of the promoter’s death or incapacity.
- Restrictions on Certain Businesses: Businesses involved in financial activities such as banking, insurance, or investments cannot be established as OPCs.
Documents required for registration:
- PAN Card of Director.
- Identity proof of Director.
- Director’s Address Proof.
- Passport size photograph of Director.
- Business’ Address Proof.
- NOC from owner of property.
- MOA and AoA of the OPC.
- Rent agreement between the owner and the company to be formed.
OPC Registration Process in India:
The formation of an OPC involves several steps, including:
Reserve a Name: The applicant can propose a name for their OPC through the SPICe+ form (Simplified Proforma for Incorporating Company Electronically Plus) on the MCA portal. The MCA will review the name for availability and compliance with legal guidelines.
Obtain Digital Signature Certificate (DSC): A DSC acts as a digital signature for the applicant, ensuring the authenticity of electronically filed documents. Both the proposed director and nominee (if any) need to obtain a DSC.
Drafting and Filing of Documents: Once the name is approved, the necessary incorporation documents including Memorandum of Association (MOA), Articles of Association (AOA), and consent of the nominee director must be drafted and filed with the MCA.
Payment of Fees: Pay the requisite fees online for the registration process.
Verification and Approval: The ROC will review the documents and, if found in order, will issue the Certificate of Incorporation, completing the registration process.
In conclusion, One Person Company (OPC) is a unique corporate structure designed to facilitate entrepreneurship while providing limited liability protection to the sole member. With its simplified compliance requirements and online registration process, OPCs serve as an attractive option for solo entrepreneurs looking to establish their own businesses in India.
Eazybahi Solutions provides you expert guidance from name reservation to filing of documents and getting approval from government. We guide you through out the process of incorporation.
After successful incorporation of OPC our experts are ready to assist you in fulfilling your compliance formalities so that your Company remains fully legally compliant Company.