One Person Company
The Companies Act, 2013 introduced the new concept of One Person Company (OPC). As the name suggests, an OPC is a company established by a single person. A single individual establishes and manages the company with one single member and one director. An OPC has all the features of a company, such as perpetual succession, limited liability and a separate legal entity. Thus, one person company means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship
Advantages of One Person Company
- Easy incorporation: It is easy to incorporate OPC as only one member and one nominee is required for its incorporation. The member can be the director also. The minimum authorised capital for incorporating OPC is Rs.1 lakh but there is no minimum paid-up capital requirement. Thus, it is easy to incorporate as compared to the other forms of company.
- Easy to manage: Since a single person can establish and run the OPC, it becomes easy to manage its affairs. It is easy to make decisions, and the decision-making process is quick. The ordinary and special resolutions can be passed by the member easily by entering them into the minute book and signed by the sole member. Thus, running and managing the company is easy as there won’t be any conflict or delay within the company.
- Perpetual succession: The OPC has the feature of perpetual succession even when there is only one member. While incorporating the OPC, the single-member needs to appoint a nominee. Upon the member’s death, the nominee will run the company in the member’s place.
- Legal status: The OPC receives a separate legal entity status from the member. The separate legal entity of the OPC gives protection to the single individual who has incorporated it. The liability of the member is limited to his/her shares, and he/she is not personally liable for the loss of the company. Thus, the creditors can sue the OPC and not the member or director.
- Easy to obtain funds: Since OPC is a private company, it is easy to go for fundraising through venture capitals, angel investors, incubators etc. The Banks and the Financial Institutions prefer to grant loans to a company rather than a proprietorship firm. Thus, it becomes easy to obtain funds.
- Less compliance: The Companies Act, 2013 provides certain exemptions to the OPC with relation to compliances. The OPC need not prepare the cash flow statement. The company secretary need not sign the books of accounts and annual returns and be signed only by the director.
Required Documents for Registering an One Person Company
- For Registering One Person Company:
- Minimum and maximum of one member.
- A nominee should be appointed before incorporation.
- Consent of the nominee should be obtained in Form INC-3.
- The name of the OPC must be selected as per the provisions of the Companies (Incorporation Rules) 2014.
- Minimum authorised capital of Rs.1 lakh.
- DSC of the proposed director.
- Registration Process:
- Proof of Identity (PAN, Aadhaar card, Voter’s card)
- Self-attested address Proof of Director/ Member
- Proof of Registered Office (Electricity bill/ Bank Statement)
- Passport size photograph
- DIN and DSC of the director
- The Memorandum of Association (MoA) which are the objects to be followed by the Company or stating the business for which the company is going to be incorporated.
- The Articles of the Association (AoA) lays down the by-laws on which the company will operate.
Timelines for OPC Registration
The DSC and DIN of the proposed directors can be obtained in 1 day. The Certificate of Incorporation of an OPC is obtained in 3-5 days. The whole incorporation processes of an OPC takes approximately 10 days, subject to departmental approval and revert from the respective department.