The introduction of One Person Company (OPC) in India has helped in encouraging corporatization of micro businesses and entrepreneurship with a simpler legal regime. Smaller entrepreneurs are not compelled to devote considerable time, energy and resources on complex legal compliances to start their business and can start a business with features of both a Private Limited Company and Sole Proprietorship.
With the implementation of the Companies Act, 2013, a single person can constitute a Company. This has not only enabled individual capabilities to contribute to economic growth but also generated employment opportunities. OPCs have been provided with concessional/relaxed requirements under the Companies Act, 2013.
What is One Person Company (OPC)?
As per Section 2 (62) of the Companies Act, 2013 OPC is a company that has one person as a member. Chapter II of the Companies Act, 2013 Section 3 allows one person to form a company for any lawful purpose. It also mentions that the memorandum shall indicate the name of the other person, with his/her prior consent, who will in the event of the subscriber’s death or incapacity to contract become the member of the company and the same consent in written shall be filed with the registrar of companies at the time of incorporation of the company along with the memorandum and articles.
Types of One Person Company in India
The different kinds of one person company in India are as follows:
- A company limited by shares
- A company limited by guarantee
- An unlimited company.
Process of One Person Company (OPC) Registration
The following process must be followed to register a One Person Company in India
- Apply for DSC: The first step is to obtain a Digital Signature Certificate (DSC) of the said Director which requires the following documents:
- Address Proof
- Aadhar card
- PAN card
- Email Id
- Phone Number
- Apply for DIN: Once the Digital Signature Certificate (DSC) is completed, the next step is to apply for the Director Identification Number (DIN) of the said director in Simplified Proforma for Incorporating Company Electronically (SPICe) form along with the name and the address proof of the director. Form DIR-3 (KYC of directors) is the option only available for existing companies. Now DIN can be applied within the SPICe form for up to three directors.
- Name Approval Application: The name of the Company will be in the form of “XYZ (OPC) Private Limited”. There are two ways through which the proposed name can be approved, by making an application in Form SPICe 32 or by using RUN Web service of MCA by giving only 1 preferred name along with the significance of keeping that particular name. However, with effect from March 23, 2018, Ministry has decided to permit two proposed Names and one re-submission (RSUB) while reserving Unique Names (RUN Service) for the Companies.
- Other Documents Required: One has to prepare the following documents which are required to be submitted to the Registrar of Companies (ROC):
- 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) which lays down the by-laws on which the company will operate.
- Proof of the registered office of the proposed Company along with the proof of ownership and a NOC from the owner.
- Affidavit and Consent of the proposed Director in Form INC -9 and DIR – 2 respectively.
- A declaration by a professional (anyone) certifying that all compliances have been made.
- Filing of forms with MCA: All these documents will be attached to SPICe Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be uploaded to the site Ministry of Corporate Affairs (MCA) for approval. After uploading, form 49A and 49B will be generated for the PAN and TAN generation of the company which has to be uploaded to the MCA website after affixing the DSC of the proposed Director.
- Issue of the certificate of Incorporation: On verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and one can commence his/her business.
Documents Required For OPC Registration In India
To be given by OPC Director:
- Scanned copy of Passport (Foreign Nationals & NRIs) or PAN Card;
- Scanned copy of Passport, Voter’s ID or Driving License;
- Scanned copy of Current Bank Account Statement (Passbook)/Phone or Mobile Invoice/Electricity or Gas Invoice;
- Scanned passport-sized photo;
- Specimen signature or impression (blank document with signature).
Note: The OPC director as a mandate should self-attest the first three documents. In the case of an NRI or a foreign national, all the document sheets should be notarized (if at present in India or a non-Commonwealth nation) or apostilled (that is, living in a Commonwealth country).
Documents necessary for the registered office:
- Scanned copy of Current Bank Account Statement (Passbook)/Phone or Mobile Invoice/Gas or Electricity Invoice;
- Scanned copy of Rental Agreement written in the English language;
- Scanned copy of No Objection Certificate (NOC) from the concerned property landowner;
- Scanned copy of Property or Sale Deed (if the property is owned).
The concept of One Person Company is advantageous both for the regulators and the market players. The conferment of the status of a private limited company on a One Person company will not only limit the liability of sole entrepreneurs but also provide access to market players to various credit and loan facilities and hence would encourage entrepreneurship. Though the concept might have certain grey areas, overall the Indian version of One Person Company is very sound and complete.
Freedom should always be regulated and hence the procedural requirements in incorporation and operation of a One Person Company are mere to check the abuse of liberty and immunity given to single person business entities. Hence, this concept, if implemented properly, will act as a big incentive for small entrepreneurs and thereby will boost the economic growth of the country.
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