ONE PERSON COMPANY (OPC)

OPCs are ideal for solo entrepreneurs, freelancers, and small business owners who want to maintain control while enjoying limited liability protection.

REGISTRATION OF ONE PERSON COMPANY (OPC) IN INDIA

WHAT IS AN OPC?

Section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member.
OPC is a type of business entity that allows a single individual to operate a company with limited liability protection.

WHAT ARE THE FEATURES OF OPC?

1. Single owner: Only one person can own and manage the company.
2. Limited liability: The owner's personal assets are protected in case of business debts or liabilities.
3. Separate legal entity: The company has its own legal identity, separate from the owner.
4. Compliance requirements: OPCs must comply with relevant laws and regulations, such as filing annual returns and tax returns.
5. Name: The company name must include "OPC" or "One Person Company" to indicate its status.

WHAT IS THE PROCESS OF SETTING UP AN OPC?

1. Reservation of name by filing SPICe+ Part A form: : SPICe+ Part A form is an online application for registering a new company in India. Ensure that the selected name is unique and includes "OPC" or "One Person Company".

2. Obtain DSC (Digital Signature Certificate): Required for filing documents online.

3. Filing SPICe+ forms: Spice+ form is an online application for incorporation, which is to be filed after name approval and it is consists of SPICe+ Part B, INC-33 (e-MOA), INC- 34 (e-AOA), Agile pro and INC-9, along with necessary attachments.

Incorporation usually takes 7-10 working days.

4. Certificate of incorporation: MCA after proper verification of documents submitted with the SPICe+ forms and upon approval, issues the Certificate of Incorporation (COI) as proof of company registration.

Documents required:

1. ID proof (Aadhaar, PAN, etc.)
2. Address proof (utility bills, etc.)
3. Passport-sized photographs
4. Rent agreement or property documents (for registered office)
5. NOC (No Objection Certificate) from the landlord (if applicable)

WHAT ARE THE BENEFITS OF OPC?

1. Limited liability: Protects personal assets from business risks.
2. Sole control: Single owner has complete control over the company.
3. Easy to manage: Simple compliance requirements and fewer regulatory formalities.
4. Credibility: OPCs are considered more credible than sole proprietorships.
5. Business continuity: OPCs can continue to operate even if the owner is unable to manage the business.

WHAT ARE THE LIMITATIONS OF OPC?

1. Limited Fundraising: OPCs cannot raise funds from multiple investors or venture capitalists.
2. No Investment in Other Companies: OPCs cannot invest in other companies.
3. Limited Business Activities: OPCs can only engage in specified business activities.
4. No Change in Ownership: The ownership cannot be transferred or changed.
5. Limited Size: OPCs are suitable for small businesses, not large-scale operations.

WHY OPC IS BETTER THAN PRIVATE COMPANY?

1. Simplified Compliance: OPCs have fewer compliance requirements compared to private companies.
2. Single Ownership: OPCs allow for single ownership, giving the owner complete control.
3. Limited Liability: OPCs offer limited liability protection, safeguarding personal assets.
4. Easy to Manage: OPCs are simpler to manage, with fewer formalities and paperwork.
5. No Need for Board Meetings: OPCs are exempt from holding board meetings.
6. Less Stringent Accounting Requirements: OPCs have less stringent accounting and auditing requirements.

FAQ’s

Q1: What is a One Person Company (OPC)?
A1: An OPC is a type of private company with only one shareholder and director.
Q2: Who can form an OPC?
A2: Any individual, including professionals and entrepreneurs, can form an OPC.
Q3: What are the benefits of an OPC?
A3: Benefits include limited liability, single ownership, simplified compliance, and tax benefits.
Q4: Can an OPC have more than one director?
A4: No, an OPC can only have one director, who is also the shareholder.
Q5: Can an OPC raise funds from investors?
A5: No, OPCs cannot raise funds from multiple investors or venture capitalists.
Q6: Can an OPC convert to a private company?
A6: Yes, an OPC can convert to a private company after two years.
Q7: What is the minimum authorized capital for an OPC?
A7: There is no minimum authorized capital requirement for an OPC.
Q8: Can a foreign national form an OPC?
A8: No, only Indian citizens and residents can form an OPC.
Q9: Can an OPC own property?
A9: Yes, an OPC can own property in its own name.
Q10: What are the compliance requirements for an OPC?
A10: OPCs must file annual returns, tax returns, and other necessary documents with the Registrar of Companies (ROC).
Q11: Can an OPC be dissolved?
A11: Yes, an OPC can be dissolved voluntarily or by the ROC in case of non-compliance.