Overview

Since the Inception of Companies Act, 2013 concept of one person company was launched in India. As compared to the Private Limited and Limited Companies minimum 3/2 directors are required to form the company, although only single person is eligible to form an OPC (One Person Company). Section 262 of the companies Act, 2013 legalize the registration of One Person Company. It requires only one person as a member (subscriber to the Memorandum of Association) and director for registration of the company. Very lesser compliances are required in OPC as compared to other types of companies. OPC enables a micro and small businesses to enjoy all the benefits of corporatization by devoting their small/ lesser time, money, resources and compliances as compared to other forms of companies and produce the optimum growth in economy and can generate employment by utilization of their optimum resources.

What is a One Person Company (OPC)?

As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member. It means now company can also be registered by a single member/ shareholder. The benefits of One Person Company are mentioned as under:–


  • Minimal paperwork and lesser number of compliances;
  • Simple Taxes and Accounting;
  • Limited liability of the member;
  • Ability to form a separate legal entity with just one member;
  • Provision for conversion to other types of legal entities by the introduction of more members and amendments in the Memorandum of Association;

The regime of One Person Company (OPC) has been proved as a blessing for small traders, entrepreneurs, artisans, other service providers with low risk-taking capacity. The OPC would act as a launchpad for such entrepreneurs to explore their capabilities in the global arena. The foreign joint venture capitalists are going to find it quite feasible to deal with a sole entrepreneur rather than having to even it out with numerous shareholders/directors leading to chances of discrepancy in ideas, concepts, and understanding of the business. my business pandit has a top score of registering thousands of One Person Company in India. We are working round the clock to serve our clients and providing best consultancy and legal services.

ADVANTAGES

One Person Company has numberless advantages, why you should go for One Person Company registration. Let’s find out what they are:


  • OPC enables a person, freedom to adopt the business of his choice.
  • Personality driven passion and implementation of a business plan.
  • The desire of the entrepreneurial person to take an extra risk and willingness to take additional responsibility.
  • Personal commitment to the business which is the sole idea of the person and close to his heart.
  • It is run by individuals yet OPCs are a separate legal entity similar to that of any registered corporate.
  • A-One Person Company is incorporated as a private limited company.
  • Unlike a private limited or public limited company (listed or unlisted), OPCs need not bother too much about compliances.

Types of One Person Company

  1. A company limited by shares or;
  2. A company limited by guarantee or;
  3. An unlimited company.

Minimum Requirements for registering an OPC in India

  1. Minimum One Director
  2. One Nominee is compulsory
  3. One Member
  4. One shareholder

Documents/Details required for OPC Registration

  • Fromproposed Director/Subscriber and Nominee

    1. Copy of PAN card
    2. Copy of Identity proof (Aadhaar Card/Passport/Driving License/Voter Card)
    3. Copy of Address Proof (Latest Bank statement/Electricity Bill/Telephone bill/Postpaid Mobile Bill)
    4. Passport Size photograph
    5. Mobile No. and Email ID.
    6. Educational Qualification
    7. Shareholding Details

  • For Registered office proof of the company

    1. Utility Bill such as electricity bill/telephone bill/Postpaid Mobile Bill/Gass Bill for proposed Registered office address of company.
    2. NOC/Rent Agreement

FREQUENTLY ASKED QUESTIONS

WHO IS ELIGIBLE TO ACT AS A MEMBER OF AN OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one financial year.

A PERSON CAN BE MEMBER IN HOW MANY OPCS?

A person can be a member of only one OPC.

IS THERE ANY TAX ADVANTAGE ON FORMING AN OPC?

There is no specific tax advantage to an OPC over any other form. The tax rate is flat 30%, other tax provisions like MAT & Dividend Distribution Tax applies as they apply to any other form of company.

IS THERE ANY THRESHOLD LIMITS FOR AN OPC TO MANDATORILY GET CONVERTED INTO EITHER PRIVATE OR PUBLIC COMPANY?

In case the paid-up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into a private or public company.

WHAT IS THE MANDATORY COMPLIANCE THAT AN OPC NEEDS TO OBSERVE?

The basic mandatory compliance are:-

  • Atleast one Board Meeting in each half of calendar year and time gap between the two Board Meetings should not be less than 90 days.
  • Maintenance of proper books of accounts.
  • Statutory audit of Financial Statements.
  • Filing of business income tax return every year before 30th September.
  • Filing of Financial Statements in Form AOC-4 and ROC Annual return in Form MGT 7.

WHO CANNOT FORM A ONE PERSON COMPANY?

A minor shall not eligible becoming a member

  • Foreign citizen
  • Non Resident
  • Any person incapacitated by contract.

HOW DO I CONVERT AN OPC TO A PRIVATE LIMITED COMPANY?

Mandatory Conversion of One Person Company (OPC) to Private Limited Company (PLC) is required in case a One Person Company meets certain parameters, like:

  • Effective date of increase in the paid-up share capital of a One Person Capital beyond rupees fifty lakhs, AND
  • An increase of average annual turnover during the period of immediately preceding three consecutive financial years is beyond rupees two crores.
  • In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public company Within a Period of Six Months. In this article, we also look at the procedure for conversion of one Person Company into a private limited company or limited company.
  • Voluntary Conversion of OPC to Private Limited Company:
  • When a One Person Company gets incorporated, it cannot convert itself to Private or Public company before two years from the date of incorporation.
  • If the time period has elapsed and two years time period is over, a One Person Company can apply for converting itself to Private Limited Company or Public limited company.
  • The Conversion process should be done as per the rules and regulations laid down by the Companies Act, 2013 under Section 18, and Rule 7(4) of the Companies (Incorporation) Rules, 2014.