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A one-person company (OPC), as the name denotes, is a limited liability company with only one shareholder. One Person Company presents small-time traders, enterprises and service providers with the perfect milieu to expand their business opportunities with minimal compliances, limiting their liability thereby.
One Person Companies do not favour NRIs. Only an Indian citizen and resident can be the director and nominee of a One Person Company. The person who incorporates a One Person Company cannot register another One Person Company. For a One Person Company, director and nominee can be the same person, or two different people. If latter is the scenario, in the event of the shareholder’s death, the nominee will become the member of the One Person Company. Provisions applicable to private companies are pertinent to One Person Companies as well, but the compliance burden is much lesser.
One Person Company is often confused with Sole Proprietorship. In effect, there are many advantages that a One Person Company has over a sole proprietorship company. Proprietors do not have the privilege of limited liability. Doing business through One Person Company can invariably limit the proprietor’s liability, thus One Person Company allows an individual to take risks without risking his/her personal assets. The most important benefit of establishing One Person Company is that the owner is solely responsible for all the affairs. One Person Companies help secure the personal assets of the owner, if the business encounters crises. Banking provisions available for One Person Companies are plenty when compared to the same available for proprietorship firms. One Person Companies have the added advantage of perpetual succession, as well. One Person Companies are not required of any minimum share capital. However, when compared to sole proprietorship, there are a lot of procedural complexities and paper work associated with the incorporation of a One Person Company.
Eligibility
✓One Member
✓One nominee
✓Indian Citizen and Resident
Private Limited Company can be converted to One Person Company.
Similarly, One Person Company can be voluntarily converted into Private Limited Company, Public Limited Company.
Income of One Person Companies having turnover upto Rs. 400 Crores are taxable at 25% plus 4% Health and Education Cess as per section 115BA. There is a surcharge of 7% if the company’s income is above Rs.1 crore and but does not exceed 10 crores. If the income exceeds 10 crores, then the surcharge will be 12%.
A few conditions need to be kept in mind as for the choice of names. The name should be unique; it should not be a name already taken by other registered companies. There are names that are prohibited under the ‘Emblems and Names Act, 1950’. Those names cannot be proposed. Usually, the name will be approved in 3 to 5 working days.
The registration process is online. Digital signature is mandatory. Obtaining Director Identification Number (DIN) and Digital Signature Certificate (DSC) from government recognized certifying agencies is the next step to registering a One Person Company.
MoA stands for Memorandum of Association, which represents the charter of the company, and AoA stands for Article of Association, which details the internal rules and regulations of the company. These two required to be filed physically earlier. Now they can be filed online on the Ministry of Corporate Affairs (MCA) portal.
Once the aforesaid documents are filed and fee is paid, the certificate of Company Registration will be issued by the Registrar of Companies. Business can be commence once company files Business Commencement form.
For Directors/Shareholders:
(Mandatory For Indian Resident)
(any one)
(any one)
For Company in Registration:
A Utility Bill (Telephone bill, Electricity bill or Gas bill not older than two months) in owner’s name.
A couple of things need to be undertaken within 30 days from the date of incorporation
Also, the company shall obtain a certificate of commencement of business within 180 days from the date of incorporation.
Only a natural person who is an Indian citizen and resident can register a One Person Company.
A One Person Company can have 15 directors or more with the approval of member. There will be a nominee. Director and nominee can be the same person or two separate people.
Only one. A person cannot register more than one One Person Company.
Yes, the nominee can be a member of an another One Person Company (OPC). However, in the event of the first One Person Company’s shareholder becoming incapacitated, the nominee becomes the member of the first One Person Company by default. In this scenario, the nominee must withdraw his/her membership from one of the companies.
One Person Companies cannot carry out Non-Banking Financial Investment activities.
OPCs are not required of any minimum share capital.
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