One Person Company

INTRODUCTION

The Ministry of Corporate Affairs, vide a G.S.R. Notification No. 250(E), dated 31st March, 2014, notified the Companies (Incorporation) Rules, 2014 under the Companies Act, 2013, which provides for formation of One Person Company (OPC).
 
As its name indicates, OPC is a one man company and a single natural Indian person can constitute this company.
 
The idea behind the introduction of this OPC concept was to encourage corporatization of micro businesses and entrepreneurship with a simpler legal regime.
 

DEFINITION

As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member.

WHY INCORPORATE AN OPC?

  • An OPC has a benefit of dual entity i.e., sole proprietorship and limited liability which guards the individual against any pitfalls of liabilities. 
  • Ease of incorporation as compared to the incorporation of a private limited or public limited company.
  • An OPC need not bother too much about compliances, such as holding of Annual General Meeting, preparation of Cash Flow Statement, etc.
  • Easy to manage
  • Tax Savings and Flexibility
  • Easy Funding
  • An OPC can operate with 1 one Director and 1 one member, and the ownership and control remains with the individual.

PROCESS OF INCORPORATION OF AN OPC

  1. Obtain Digital Signature Certificate ([DSC)] for the proposed Director director(s): First of all, the basic requirement to incorporate a company is having a DSC as all the filings to the Registrar of Companies are made through an online application system which is appended with a valid DSC.
  2. Obtain Director Identification Number [(DIN)] for the proposed director(s):DIN is a unique director identification number allotted by the Central Government to any person intending to be a director of a company.
  3. Select suitable Company company Name name and make an application to the Ministry of Corporate Affairs for availability of name: The name of an OPC shall end with the words '(OPC) Private Limited' and the proposed company name shall comply with the Company Name Availability Guidelines under Companies Act 2013.
  4. Capital Requirements requirements: There is no minimum capital (authorised or paid up capital) requirement for registering an OPC. However, the maximum authorised capital of an OPC shall not exceed INR 50 Lakhs at any point of time. 
  5. Registered office: It is the principal place of business of the proposed company from where it can control its operations.
  6. Documentation Filling filing: Documents, such as Memorandum of Association (MoA) and Articles of Association (AoA),  need to be drafted, signed and filed electronically, along with the fees applicable. 
  7. Certificate of Incorporation: After scrutiny, the Central Registration Centre (CRC) issues a Certificate of Incorporation.

TIME REQUIRED

Generally, it takes 6-7 days from the date of application to get the Certificate of Incorporation from CRC.

ADDITIONAL REQUIREMENTS

  • The words, “One Person Company”, shall be mentioned in brackets below the name.
  • All copies of the documents must be self-attested by the document holder.
  • Telephone bill / mobile bill/ electricity bill / bank account statement must be in the name of applicant and should not be older than 2 months.
  • In case of documents that are in languages other than English, it should be translated to English with the help of a professional translator, carrying his details (name, signature, address, and seal).