Empower your solo venture with a corporate structure that offers limited liability, a separate legal identity, and full ownership control with OPC Registration!
The Companies Act, 2013, brought about the concept of a One Person Company (OPC), enabling an individual to single-handedly establish and operate a company. An OPC shares key characteristics with other company structures, including perpetual succession, limited liability, and a separate legal entity.
Prior to the Companies Act 2013, it was not possible for a single person to incorporate a company. Individuals seeking to establish a business alone were limited to forming a sole proprietorship, as the Companies Act then required a minimum of two directors and two members to establish any company.
Advantages of OPC
- Simplified Incorporation: Incorporating an OPC is straightforward, requiring only one member and one nominee. The member can also serve as the director. While a minimum authorized capital of Rs. 1 lakh is required, there is no minimum paid-up capital.
- Reduced Compliance Burden: The Companies Act, 2013 grants certain exemptions to OPCs regarding compliance requirements.
- Separate Legal Status: An OPC (One Person Company) is a separate legal entity from its sole member, which safeguards the individual who incorporated it. The member's liability is limited to their shares, meaning they are not personally responsible for the company's debts. Consequently, creditors can only pursue the OPC, not the individual member or director, for financial recovery.
- Easier Access to Funding: As a private company, an OPC can more readily raise capital from sources like venture capitalists, angel investors, and incubators. Banks and financial institutions generally prefer lending to companies over proprietorship firms, making it simpler for an OPC to secure funding.
- Ease of Management: Simplified management is a key benefit of an OPC, as a single individual is responsible for its establishment and operation. Decision-making is quick and efficient, as there are no conflicts or delays. Further, the sole member can easily pass ordinary and special resolutions by simply recording and signing them in the minute book.
- Perpetual Succession: An OPC offers perpetual succession even with a single member. This is achieved by requiring the appointment of a nominee during the incorporation process. Should the original member pass away or become incapacitated, this appointed nominee will then assume management of the company.
Checklist / Documents required for registration of One Person Company (OPC)
- Sole Member Requirement: The company must have exactly one member at all times.
- Company Name Compliance: The proposed name for the OPC must comply with the provisions outlined.
- Director's DSC: The proposed director must possess a Digital Signature Certificate (DSC).
- Nominee Appointment: A nominee must be appointed prior to incorporation.
- Authorized Capital: A minimum authorized capital of Rs. 1 lakh is required.
- Registered Office Proof: Provide valid proof of the OPC's registered office address.
A One Person Company is a corporate structure that enables a single individual to establish and manage a company while enjoying limited liability and a distinct legal identity.
Key benefits include:
- The owner’s liability is limited to the amount they’ve invested in the company.
- The company is recognized as a separate legal entity
- Option to raise capital through issuance of shares
- Improved market reputation and trust
- Easier compliance than other company types
Any Indian citizen can register an OPC, provided they hold a valid PAN card and fulfill the prescribed eligibility conditions. Note: Minors cannot form an OPC.
Common documents include:
- PAN card of the sole owner
- Address proof (residential) of the owner
- Identity proof (such as Aadhaar, Passport, etc.)
- Digital Signature Certificate (DSC) of the owner
- Memorandum of Association (MoA) and Articles of Association (AoA)
Starting a One Person Company (OPC) does not require a minimum paid-up capital
Yes, an OPC can be converted into another type of company, such as a Private Limited Company, by following the applicable legal procedures.
OPCs are treated as separate taxable entities. The company pays corporate tax on its income.
Essential compliance tasks include:
- Filing annual returns with the Registrar
- Conducting an Annual General Meeting (if applicable)
- Maintaining statutory registers and records
- Adhering to income tax and other regulatory laws etc
Yes, the sole owner must designate a nominee who will assume ownership of the company in the event of the owner’s death or incapacitation.