One Person Company or OPC is a new form of business entity introduced in India by the Ministry of Corporate Affairs in 2020. An OPC allows an individual to set up a company as a separate legal entity with limited liability. In this blog post, we will discuss all the important aspects of setting up an opc one person company registration in India including eligibility, registration process, compliance requirements and more.
What is an OPC?
An OPC is a company with only one member or promoter. It provides an individual with all the benefits of doing business in corporate form such as limited liability, perpetual succession, easy transfer of ownership etc. but with relatively low compliance requirements as compared to a private limited company. The key feature of an OPC is that it can be formed by only one individual without any other person.
To set up an OPC, the individual promoter needs to be a resident of India and above 18 years of age. There are no restrictions on the nationality. Any individual including NRIs can set up an OPC in India.
Eligibility for OPC registration
As mentioned earlier, the key eligibility criteria to form an OPC is that it must have only one member. This member can be an individual who is a resident of India and above 18 years of age.
Some other eligibility conditions are:
- The individual should not be a minor i.e. below 18 years of age.
- He/She should not be of unsound mind and has not applied to be adjudicated as an insolvent or is an undischarged insolvent.
- The individual should not be a convicted person.
Documents required for registration
To register an OPC, the promoter needs to file certain documents with the Registrar of Companies (ROC). The key documents required are:
- DIN (Director Identification Number) of the promoter if he/she wants to be the director.
- Name availability letter issued by the ROC.
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Declaration of eligibility by the promoter.
- Proof of address and identity documents.
Payment of registration fees.
The documents need to be filed online through the MCA portal in the prescribed e-forms along with digital signatures. Usually, the process of OPC registration takes around 14 days from the date of filing.
Name of the OPC
The name proposed for the OPC should be distinctive and not resemble the name of any other existing company. It must end with the suffix ‘Private Limited’ (OPC Pvt Ltd). The name needs clearance from the ROC before adoption and use.
Some key points regarding the name:
- It should not be identical to an existing company.
- Should not be misleading or contain any objectionable word.
- Name reservation is valid for 60 days from the date of approval.
- Name can be changed later by passing a special resolution and filing the requisite forms.
So the promoter needs to do a thorough name search and get clearance before finalizing the name for the OPC.
Authorized capital of an OPC
The maximum authorized capital that can be specified for an OPC at the time of registration is ₹50 lakhs only. This capital can be increased later as per business needs by following the process of alteration of MOA.
The minimum paid-up capital for an OPC is ₹1 lakh. This capital needs to be subscribed by the promoter at the time of incorporation. It can be in the form of cash or other assets. No further capital is required to be issued or allotted subsequently.
Directors of an OPC
As per the Companies Act, 2013, an OPC must have at least one director who is appointed by the member. The member has the flexibility to become the director himself or appoint any other eligible individual.
Some key points about directors in an OPC:
- The member can act as the director himself. There is no requirement of separate director.
- A maximum of 15 directors including nominee directors are allowed in an OPC.
- The directors are not required to hold qualification shares.
- Minimum one board meeting needs to be conducted each year.
So, the member has full flexibility to become the director or appoint any other person as long as the eligibility criteria are met.
Annual compliance requirements
Like any other company, an OPC is also required to comply with certain annual filings and compliances. Some of the key compliances are:
- File annual financial statements and annual return.
- Appoint an auditor if annual turnover exceeds ₹40 lakhs or ₹20 lakhs capital.
- Hold one board meeting and prepare minutes.
- File form DIR-12 for changes in directors/KMP if any.
- Maintain statutory registers like register of members and minutes.
Pay annual filing fees to ROC
The compliances are relatively less onerous as compared to private limited companies. Late filing attracts penalties.
Conversion of OPC
An OPC has the flexibility to convert into any other type of company as per business needs. It can convert into a private limited company or public limited company by following the applicable process.
Some key points regarding conversion:
- Board resolution and special resolution by member is required.
- File e-form INC-22 along with alteration fees.
- Comply with requirements of target company on conversion like minimum number of members etc.
- Fresh certificate of incorporation issued on conversion.
So an OPC provides the flexibility to grow and convert into any other form as the business scales up over a period of time.
Benefits of OPC
Some key benefits of incorporating a business as an OPC are:
- Separate legal entity with perpetual succession.
- Easy formation with only one member and low compliance burden.
- Limited liability protects personal assets.
- Flexibility to induct professionals later as directors.
- Grow into any other form like private or public limited company.
- Avail tax benefits available to companies.
- Attract more investors and customers with formal structure.
- Continuity of business even if promoter is not around.
So an OPC provides the advantages of both sole proprietorship as well as private limited company.
Conclusion
An opc company registration is a beneficial business structure for individuals to start their ventures with limited investment and compliance. It provides flexibility to scale up over a period of time. Proper documentation and compliance with annual filings is important. Overall, an OPC is a simple and effective way for individuals to incorporate their business ideas.
