ONE PERSON COMPANY (OPC) REGISTRATION

Company is the most sought-after form of the business organization after the exponential boom in the startup culture in the country as they are more friendly to investments. There is no other form of business organization that can be scaled as much as a company. However, there are persons who wish to lead business as solopreneur and do not want to dilute his/her shares. OPC is the best of business structure for them as they can onboard as many as 15 directors like a normal private limited company and still the shares are lying only with the promoter, and he has no fear of dilution of shares.

Cherry on the Cake for OPC Founder

Although, an one person company (OPC) registration have only one shareholder who has 100% shareholding with him/her yet in the times to come, the OPC can be converted to a normal private limited company. What is more pleasing to hear is that now MCA has done away with the requirements of continuing OPC for minimum of 2 years before it can be converted to a normal private limited company. This means that as an OPC owner, if you have any potential investor, you can convert the OPC to Private Limited Company to attract investment in your company.

Now let’s just understand what a company is.

Under the Companies Act, 2013

(20) “company” means a company incorporated under this Act or under any previous company law;

However, this does not suffice as an explanation of what exactly the company is, and to explain it further, here are some of the features of the company.

• Limited Liability – Where the members have fully Paid-Up the amount concerning Share Capital, the liability of such members gets restricted to the Paid-Up amount, and thereafter they cannot be compelled to bring more money into the company under any circumstances.

However, there are also companies wherein the liability of their members is not restricted to the Paid-Up amount, such companies are called Unlimited Company

• Perpetual Succession – In cases of Partnership or Sole-Proprietorship, the business ceases to exist as and when the proprietor/owner or one of the partners dies. While in the case of companies it goes on and on irrespective of the death of the owner.

 

• Separation of Ownership and Management – The ownership and management of the companies are different from each other. Ownership of the company lies with the shareholder whereas, the management of the company is with the directors of the company. Directors with the previous sanctions of the Owners carry out the management of the company.

 

There are various types of companies such as Public Company, Private Company, One Person Company, Section 8 Company Nidhi Company, Producer Company, etc., but to understand the One Person Company as a form of a business organization let’s just go through the definition provided under the section 2(62) of the Companies Act, 2013

OPC or ‘one person company’ is defined as a company that has only one person as a member. According to section 2(68) of the Act, it is the sub-domain of a private company.

Who Can Incorporate OPC?

According to Rule 3 of the Companies (Incorporation) Rules 2014, only a Natural Person ⁽¹⁾ who is a citizen of India, whether or not a resident of India ⁽²⁾ can Incorporate a One-Person Company and shall also nominate a person as a nominee ⁽³⁾ for the sole member of the company.

1. A natural person can become a member of only a single One Person Company at any point of time and the said person cannot also be a nominee of more than a One Person Company at any point.

 

1. For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and twenty days during the immediately preceding financial year.

 

3. Where a person becomes a member of One Person Company by being a nominee, such a person shall within a period of one hundred and eighty days meet the eligibility criteria as specified in clause (1)

Features

• After the enactment of the Companies Act, 2013, Just like any other company, there is no minimum capital requirement for a One Person Company as well.
• OPC can either be a company limited by share/company limited by guarantee or an unlimited company.
• The words ‘One Person Company’ in abbreviation need to be mentioned in brackets along with the name of such company. For example - ABC (OPC) PRIVATE LIMITED
• One Person Company should mention the name of the nominee in the memorandum of association, whose prior written consent shall be taken in Form INC-3, and the same should be filed with the registrar at the time of incorporation.
• There is a restriction on the number of Members only, the limit of the Number of Directorships shall be applicable as specified in section 149(1) of the Act.
• One Person Company can neither carry out Non-Banking Financial Activities nor can invest in securities of other body corporates.
• One Person Company is not required to hold AGM (Annual General Meeting) and only entering into the minutes book will suffice the purpose of the Act.

Procedure for Incorporation of OPC

1. Deciding the Main Objects - The process of incorporation begins with deciding the Main Objects of the Company. The main objects are of utmost importance as they decide the activities which will be carried out by such a company. Proper Due Diligence must be there while deciding on the objects as any activity outside the purview of the main objects becomes null and void.

2. Name Reservation of the Company - The second step involves the sole shareholder filing the application for the name reservation of the company. It becomes the most important stage for any business to decide the name for its business as it will be known by that name only for a prolonged period and becomes a brand thereafter.

Hence, once the name has been decided, one has to proceed with the filing of SPICe+ Part A for reservation of the name of the company along with a fee of Rs. 1000/-

Prerequisites for filing of Name Reservation

• Type of Company to be incorporated
• NIC Code (Industrial Activity Code)
• Main Objects of the Company
• Name of the Company with which the company wishes to get itself registered.

Once the name has been approved by the MCA, the same shall be available for a period of 20 days from the date of approval subject to the filing of an extension for name reservation.

Extension Durations –

Further 20 Days Rs. 1000/- (40 days in total)

For Additional 20 Days Rs. 2000/- (60 days in total)

It is pertinent to note that the name reservation is not a mandatory process and the entire incorporation process can be made in a single go.

3. Incorporation - Form SPICe+ (Simplified Proforma for Incorporation of Companies Electronically) is the form for incorporation of ‘One Person Company’ which has to be submitted to the registrar along with the following forms –

• SPICe+ MOA in Form INC-33 – Memorandum of Association
• SPICe+ AOA in Form INC-34 – Articles of Association
• AGILE-PRO-S – Application for GSTIN, ESIC Registration plus EPFO Registration, Profession Tax Registration, and Opening of Bank Account and Shops and Establishment Registration)
• INC9 – Affidavit from the Subscriber and First Director to the Memorandum

Documents required for the Incorporation of One Person Company

1. 1. A copy of the PAN Card of the Member and Nominee.
   2. Proof of Identity in the form of Voter ID/Passport/Driving License of the member and the nominee.
   3. Residential Proof in the form of Bank Statement/Mobile Bill/Telephone Bill of the member and the nominee.
   4. Color Photo of Member and the Nominee.
   5. Consent from Nominee to become a member in the event of death or incapacity to contract of the subscriber in Form INC-3.
   6. Specimen Signature of Authorized Signatory for ESIC/EPFO Registration.
   7. Utility Bill (Not older than 2 months) along with Rent Agreement (if required) as a Proof of Registered Office Address.
   8. In case the property of the Registered Office address is owned by a third party, a No Objection Certificate shall also be required to be attached.
   9. Consent from the directors to act as director and their interest in other entities in Form DIR-2 and DIR-8.
   10. Optional attachments.

4. Payments – Once the forms have been filed along with the above-mentioned documents and attachments, the company has to make a payment of Rs. 131/- for the PAN and TAN and Stamp Duty on SPICe+, MOA, and AOA which is subject to State.

5. Final Incorporation Certificate – After completion of all the formalities, the forms so filed get scrutinized by Central Registration Center (MCA), and after its satisfaction the forms gets approved, and Certificate of Incorporation is issued.

If you are thinking to get yourself registered as One Person Company, at Compliance Calendar LLP we have a team of skilled professional who can help you throughout the registration process, feel free to contact us at [email protected] or connect at 9988424211.