One Person Company Registration is a really important one in India. As the name suggests, a company owned and operated by only 1 person under the Companies Act 2013 is known as One Person Company (OPC) in India. He / she is the director and shareholder of the company. The Government of India has introduced the concept of OPC Registration to support entrepreneurs who want to run and manage their business on their own. An individual company is considered a separate legal entity from its promoter. This type of company provides limited liability protection to its sole shareholder while at the same time managing the business and the continuation of its operations.
Features of One Person Company registration
Private Company: Section 3 (1) (c) of the Companies Act discusses OPCs as private companies. An individual can set up a company for any legal purpose and is therefore considered a private company.
Single Member: Unlike other private companies, OPCs have only one member or shareholder.
Nominee: Taking you to nomination registration, OPC Registration get a unique feature that sets them apart from other types of companies.
No permanent inheritance: Although you have the power to appoint a nominee, in the event of death the nominee is selected or rejected as its sole member.
Minimum One Director: One Person Company registration refers to an individual company and, therefore, he / she is a director. So, a director can be a minimum and a maximum of 15 directors.
No Minimum Pay-Up Share Capital: OPC is free in case of any capital accumulation and formation. The Companies Act, 2013 does not specify any amount as minimum payment capital for OPCs.
Documents required for the OPC registration
- Identity proof of the nominees
- Residential proof of the nominee
- Copy of the PAN card
- INC 3
- INC 9
- Specimen signature in INC 10
- Directors consent
- Registered office address
Steps in OPC registration
1 ) Applicants should obtain a Digital Signature Certificate (DSC) for the proposed Director (s).
2 ) : The applicant should get the Director Identification Number (DIN) for the proposed Director (s)
3 ) : The next step is to select the appropriate company name, and submit an application to the Ministry of Corporate Affairs (MCA) for the availability of the suggested name.
4 ) : Next, the applicant must create a Memorandum of Association (MoA) and Articles of Association (AoA).
5 ) : The MoA and AoA applicant will be required to electronically sign with the Registrar of Companies (RoC)
6 ): The applicant has to pay the defined fees and stamp duty to the Ministry of Corporate Affairs (MCA).
7 ) : Comprehensive inspection of documents submitted by the Registrar of Companies (ROSI)
8 ): After checking and verifying all the documents and approving the ROC, the applicant should receive the Certificate of Registration / Incorporation Receipt.
Benefits of One Person Company registration
A one-person company is defined as a “private limited company” under Section 2 (68) of the Companies Act, 2013. Therefore, OPC is required to comply with the regulations applicable to private companies. However, OPCs are given a number of exceptions and therefore have a lower compliance related burden.
Organized Sector of Proprietorship Company:
OPC registration brings the proprietary unorganized sector into the organized version of a private limited company. Only small and medium-sized companies, doing business as sole proprietors, can enter the corporate domain. The organized version of the OPC registration opens the way for more convenient banking facilities. Owners always have unlimited responsibility. If such an owner does business through OPC, then the member’s liability is limited.
Easy to maintain:
There is no need to hold Annual or Additional General Plenary Meetings: The resolution shall be communicated only by the member of the organization and shall be recorded in the minute’s book and signed by the member and such date shall be deemed to be the date of the meeting.
Meeting Board Meeting: An individual may hold at least one meeting of the Board of Directors of the Company during each half of a calendar year and the interval between two meetings should not be lesser in ninety days.
Quorum: The provisions of Section 174 (Quorum for Board Meetings) do not apply to a One Person Company, which has only one Director on the Board of Directors.
Minutes: Where the company has a single director, all businesses present at the board’s transaction meeting are recorded in the minute’s book maintained under section 118. In this case there is no need to hold a board meeting
In case of death / disability of a single person another person should be provided by appointment as a nominee director. After the death of the original director, the nominee director manages the affairs of the company until the date of transfer of the shares to the legal heirs of the deceased member.
Getting a loan from banks is easy
Banking and financial institutions prefer to lend to a company rather than owned companies. In many cases, banks are urging entrepreneurs to turn their company into a private limited company before granting funds. So it is better to register your startup as One Person Pvt Ltd rather than as proprietary company.
At the surface level OPC registration is simple and attractive, but still deals with its imperfections such as imposition and limitations. Therefore, small entrepreneurs may realize that this is indirectly discouraging, leading to slow progress or even the inclusion of OPC.
To maximize the merger of OPCs, certain reliefs and exemptions should be available to OPCs (and its member), for example (i) allow companies (whether Indian or foreign) to include OPCs (which act as their wholly owned subsidiary); (ii) if the turnover exceeds any limit, do not force OPC to be converted into a private or public company; (iii) Allow an individual to have more than one OPC – because he/she may want to run different businesses under different companies for prudent management, profitability and cash flow; (iv) Provide reasonable tax slabs.