One Person Companies (OPC) are a type of Private Limited Company in India that can be formed by a single person. This blogs deals with the requirements of One Person Company. Overall, OPC are a good option for entrepreneurs who are looking to start their own businesses with limited liability protection and the benefits of a separate legal entity.
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What is OPC under Companies Act of 2013?
OPC or One Person Company was introduced in India to encourage entrepreneurship and to make it easier for individuals to start their own businesses. OPC have a number of advantages over other types of business structures, such as Sole Proprietorships and partnerships. OPC offer limited liability protection to the owner, which means that the owner’s personal assets are not at risk in case the company runs into financial trouble.
OPC are also separate legal entities from their owners, which means that they can enter into contracts, borrow money, and sue and be sued in their own name. In addition, OPC are relatively easy to set up and maintain. The requirements for incorporating an OPC are simple and the compliance requirements are less stringent than those for other types of companies.
What are the requirements of One Person Company in India?
There are variours requirements of One Person Company to incorportate in India. Major ones are listed here.
- Eligibility
- Only a natural person who is an Indian citizen and resident in India can incorporate an OPC.
- The person must be at least 18 years of age and must not be disqualified from being a director under the Companies Act, 2013.
- Minimum authorized Capital
- The minimum authorized capital for an OPC is INR 1 lakh.
- Nominee
- The OPC must appoint a nominee, who will become the member of the company in the event of the death or incapacity of the sole member.
- The nominee must be a natural person who is an Indian citizen and resident in India.
Which are the provision of law governing OPC?
OPC are governed by the Companies Act of 2013. Some of the key provisions relating to OPC are as follows:
- Section 2(62) of the Companies Act defines an OPC as a company which has only one person as a member.
- Section 3 of the Companies Act states that an OPC is also a Private Limited Company. This means that OPC are subject to all the provisions of the Companies Act that apply to Private Limited companies, except for those provisions that are specifically exempted for OPC.
- Section 138 of the Companies Act exempts OPC from the requirement to have a minimum of two directors. However, the OPC must appoint a nominee, who will become a director of the company in the event of the death or incapacity of the sole director.
- Section 149(6) of the Companies Act exempts OPC from the requirement to have an annual general meeting. However, the OPC must hold a board meeting at least once in a calendar year.
What are the documents required to form OPC?
1. Documents needed from Director or shareholder or Nominee
- Identity Proof of the applying person
- Permanent Account Number (PAN) card of the person
- Aadhaar Card
- Passport size Photo
- Driving License
- Voter Identity Card
- Telephone Bill
- Electricity Bill
- Bank Statement of the person (applicant) with latest transactions
(Ensure that the bills and statements are within a 2 month time frame. All this documents must be self tested by the applicant)
2. Documents to be signed by the director of OPC
- Consent requires to Act as Director, Form the DIR-2
- Details required for DIN
- After the DIN has allotted, the declaration of DIN is required
(This all must be signed by director of OPC)
3. Documents that are to be signed by Shareholder
- Application of Digital Signature Certificate (DSC)
- Affidavit by director and subscriber as per INC-9
4. Documents to be signed by shareholder’s nominee
- Details and information of the nominee shareholder
- From the INC-3 consent must be received by the nomination of shareholder
5. Documents required from Company or LLP or Trademark Owner
- Formal authorisation required for the use of Name of the OPC or Trademark of OPC.
6. Registered Office Address
- No-Objection letter must be provided by the Owner of Address for the purpose of using address as the Registered Office of the One Person Company.
- Address Proof should be in the name of the owner of OPC.
- Utility Bills like electricity bill, gas bill, water bill and telephone bill must be submitted. These bills should not be older than 2 months.
More about the documents required for OPC.
Other requirements
- In addition to the above requirements,
- OPC are also required to comply with all other applicable laws and regulations, such as the Income Tax Act, 1961 and the Goods and Services Tax Act, 2017.
Conclusion
In conclusion, OPCs in India offer a streamlined and advantageous business structure for solo entrepreneurs, providing limited liability protection and the benefits of a separate legal entity. Minimal requirements of One Person Company, such as a minimum authorized capital, eligibility criteria for the sole member, and the appointment of a nominee.
OPCs are designed to encourage entrepreneurship and ease of establishment. While governed, OPC must also adhere to other applicable laws and regulations, making them a viable option for individuals seeking a simplified and protected avenue for starting and managing their businesses.
FAQs
1. What are the requirements for OPC compliance?
File annual returns, financial statements, appoint an auditor, hold a board meeting, and maintain books of accounts.
2. What documents are required for OPC formation?
PAN and Aadhaar card of the sole member and nominee, registered office address proof, and proof of authorized capital.
3. Can a person who is already a director of another company incorporate an OPC?
Yes, a person who is already a director of another company can incorporate an OPC.
4. What are the consequences of not appointing a nominee for an OPC?
OPC will become a proprietorship firm upon the death or incapacity of the sole member.
