One Person Company

3 Points You Must Know About OPC

1. Limited Liability:

The liability of the one person company shareholder is limited.

2. Compliances and Regulations:

Not many compliances need to be followed in OPC, but any default results in a penalty. So, you should comply with the rules and regulations strictly and within the due date.

3. Evaluation of Alternative Business Constitution:

Before deciding to start OPC, you must carefully evaluate the advantages and disadvantages of OPC. There are other options, such as proprietorship, private limited company, partnership, etc., so you should make an informed decision3

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FAQ`s Regarding OPC

As the name suggests, one person company has only one member. The formation process of one person company is more or less the same as in a private limited company. However, as in OPC, only one member is the shareholder; he must nominate someone in case of his death. The nominee must also give his consent in writing regarding the acceptance of the nomination. This acceptance is also required to be filed with the Registrar of the Companies.

Only a natural person who is also an Indian citizen and resident in India is eligible to act as a member of OPC.

Step 1: Apply for DSC

Step 2: Apply for DIN along with Spice form

Step 3: Apply for Name Approval in SPICe+ 32 Form

Step 4: Prepare the following documents to be submitted to ROC

i. MOA (Memorandum of Association)
ii AOA (Articles of Association)
iii Consent form INC-3
iv Proof of the registered office address
v Declaration and consent of the proposed Director of Form INC-9 and DIR-2
vi A declaration by the professional certifying that all compliances have been made.

Step 5: Upload all these documents along with SPICe Form, SPICe-MOA and SPICe-AOA to the MCA website for approval.

Step 6: The Registrar of Companies (ROC) will issue a Certificate of Incorporation, and it is
conclusive proof of the formation of the OPC.

The significant advantages of one person company are as follows:

1. Separate Legal Identity:
The One-person Company is a separate legal entity.

2. Limited Liability:
The liability of a shareholder of the OPC is limited. Unlike, proprietorship the liability is not unlimited, but he enjoys complete ownership and control.

3. Ownership of Asset:
The OPC, being a separate legal entity, holds assets in its own name. The shareholder does not have any insurable rights in the assets of the company.

4. Tax Benefits:
The director’s remuneration is a deductible expense in the case of OPC. Also, being a separate legal entity, it can enter into an agreement with its director. So, this director can charge interest on advance payment given to OPC or rent from the OPC. These rent and interest expenses are deductible from the profit of the OPC, thus saving the taxable income of the OPC.

5. Easy Decision Making:
OPC is wholly controlled and managed by the Single Owner. It makes decision-making quick and easy.

Basis of difference

Sole Proprietorship

One person company

1. Legal Status

No separate legal entity

It is a separate legal entity

2. Registration

Not compulsory

It must be registered.

3. Liability of the owner

Unlimited.

Limited

4. Setting-up

Easy and quick

Time-consuming and complex.

5. Formalities

No legal formalities

Formalities such as  board meetings, audits, etc. are compulsory

The government fee for registering a One Person Company (OPC)  depends upon the company’s nominal Share Capital.

The one person company features are as follows:

1. Like Private Limited Company:
OPC is like a private Limited company except that there is only one shareholder.

2. Single Shareholder:
In OPC, there is only one shareholder.

3. Nomination:
Nomination is compulsory in the case of an OPC.

4. No. of directors:
The number of directors in an OPC can be a minimum of one and a maximum of 15.

5. Paid-up share capital:
There is no prescribed minimum capital for OPC as per the Companies Act, 2013.

6. Special privileges:
OPCs have been given many special privileges and exemptions to comply with many provisions of the Companies Act, 2013.

The OPC turnover limit is 2 Crores. This turnover is calculated based on the average annual turnover of the last three preceding financial years.