How many people are required to Incorporate an OPC?
To Incorporate a One Person Company, a Director and a nominee is required.
How much Capital is required to Incorporate an OPC?
An OPC can be Incorporated with any amount of Capital. However, for issuing minimum shares worth Rs. 1 lakh fees must be paid to the Government (Authorized Capital fee) during the incorporation of an OPC.
How long it will take to incorporate an OPC?
With IndiaFilings you can incorporate an OPC easily in 7-15 days. Also, note that the time taken for Incorporation will depend on the submission of the relevant documents by the client and also approval from the Government authorities.
Is it necessary to have an office to start an OPC?
Address of the registered office of the OPC will be required as the premises will receive the communication from MCA.
What is the validity of the Incorporation?
After incorporation, the Company will be active as long as the annual Compliances are met regularly.
Who is Eligible for OPC Company?
An individual who is an Indian citizen and resident in India is eligible to act as a member and nominee of an OPC.
What are the Benefits of Incorporating an OPC?
OPCs have the following benefits
Dr. Jamshed. J. Irani in his report on Company Law dated 31st May 2005 introduced the concept of One Person Company in India.
In the report, Dr. Irani recommended that with the ever-increasing use of Information Technology and the emergence of a strong service sector in India it was bound for the government to empower the entrepreneurs who are capable of creating innovative ideas and participating in the marketplace.
Dr. Irani suggested that innovative entrepreneurs must not be made to do through an association of persons and should be able to create a single person economic entity in the form of One Person Company.
Further, such an entity may be provided with a simple regime through exemptions so that a single entrepreneur is not compelled to dissipate his energy and resources on procedural matters.
Hence, the concept of ‘One Person Company’ was introduced in the Companies Bill 2013, with the approval from Lok sabha on 18th December 2012 and in Rajya Sabha on 8tH of August 2013.
Finally, after obtaining the assent of the President of India on 29th of August 2013, it has become the Companies Act, 2013.
Here are some major advantages of One Person Company:
Before understanding the Registration process for an OPC let us quickly go through the various types of companies that can be formed. A company can be established for the lawful purpose by the following number of people
An OPC has certain restrictions when it comes to incorporation, unlike a Private Limited Company. Hence, before beginning with the OPC registrations it is essential to understand the limits to ensure the promoter is eligible as per the Companies Act to register an OPC.
A person however cannot incorporate more than one OPC. Also, an OPC is prohibited for having a minor as its member.
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* Incorporations from Maharashtra state will also receive complimentary Professional Tax Registration.
Nominee in an OPC is the person designated by the sole promoter of the company to be his successor. In case of death or incapacitation, the Nominee will take over. The nominee must be an Indian Citizen and a resident who is not a minor. While incorporating a One Person Company, a Nominee Consent Form must be filed with the MCA
Withdrawal of Consent: The Nominee can withdraw his/her consent, in this case, the sole member is required to nominate another member as a legal heir within 15 days of the notice of the withdrawal. The Nomination of the new personnel must be intimated to the company through a written consent in Form INC 3. In turn, the Company is required to file the notice of withdrawal of consent along with the intimation of the new nominee with the Registrar in Form INC 4.
Change in Nominee: The Sole member of the One Person Company can change the Nominee by providing notice in writing to the company. The new nominee must consent to the nomination form in INC 3. The Company must file the notice of the change and the consent of the nominee with the registrar with the applicable fee, within 30 days of receiving the intimation of change.
Nominee Appointment: In case if the nominee becomes in charge of the company due to cessation of the original member's term owing to the death or incapacity of the latter, the new member must appoint a new nominee as a replacement
Penalty: If a One Person Company or an officer of any such company is not compliant with the mentioned regulations the entity might incur penalties as high as Rs.10,000. Further, for each day of default, the penalty will be increased by a fine of Rs,1000.
Here, we have simplified the process for Incorporating an OPC into 4 steps
The identity proof and address proof will be required for obtaining the DSC.
Simultaneously, to obtain the name approval it is necessary to submit an application for name registration to the MCA. The applications are processed by MCA in 24-72 hours. The name suggested should end or include the word OPC.
On obtaining the name approval, the incorporation application can be filed with the MCA with a signed MOA and AOA. The identity proof, address proof, and residence proof of the members, as well as the nominee, would be required. In addition to this other incorporation documents like affidavits and declarations of the sole promoter must be submitted. The consent of the Nominee Director must be attached in Form INC 3.
The Registrar of Companies (ROC) approves filing for incorporation. In case of discrepancies, the application can be resubmitted.
Once the Incorporation Certificate is obtained the OPC would initiate the process for bank account opening. IndiaFilings can help you open a current bank account. Post incorporation the director is required to deposit the paid-up capital he has mentioned in the MOA.
After the equity capital is infused in the current bank account, the company can file for commencement of business certificate with the MCA. The Business commencement certificate must be obtained within 180 days of incorporation to avoid penalty.
In case during the process of incorporation, if the notice of situation related to the office is not filed, it must be filed after incorporation but within 30 days. Here's the document required for filling INC 22 are :
An OPC can be converted into a Private Limited Company either voluntarily or mandatory. Take a look at the detailed explanation of both the type of Conversions.
An OPC can be converted into a Private Limited Company before it satisfies the criteria mentioned below
A-One Person Company can be converted into a Private Limited
Mandatory conversion is required in case a One Person Company meets the parameters mentioned below:
Thus, in either of the cases, a One Person Company needs to get converted into a Private Limited Company within six months.
The conversion is done by passing a special resolution in the General Meeting. A NOC is required from the creditors and the other members before the resolution is passed
In case an OPC does not take steps for conversions within the prescribed time when it is mandatory, the OPC or any officer of the OPC is punishable with a fine of five thousand rupees. Which can be further extended to an Rs. 500 for each day with such inaction.
It is necessary to intimate the concerned Registrar of Companies that the company is now required to convert itself into a Private Limited Company by the virtue of its paid-up capital or the annual average turnover, having exceeded the threshold limit.
A general meeting must be held by the shareholders to pass the relevant resolution for increasing the paid-up capital, number of shareholders, appointment of directors to meet the requirement of a Private Limited Company. It should be ensured that there are at least two shareholders and two Directors.
In addition to this, a board resolution must also be passed by the shareholders to approve the alteration of the Memorandum of Association and Articles of Association of the OPC to confirm the requirement of a Private Limited Company
Once the above steps are completed, the OPC can make an application in the prescribed format to the Registrar of Companies. The Company has to file a special resolution passed by the shareholders and Form MGT -14 must be filed within 30 days of passing a special resolution with the concerned Registrar of Companies.
The Registrar will then verify and approve the application and associated documents. By this, a Registrar would issue a fresh Incorporation Certificate thereby converting a One Person Company into a Private Limited Company.
At IndiaFilings we are committed to helping entrepreneurs and small business owners to start and manage their own business at a very affordable price. We aim to educate the Entrepreneur on legal and regulatory requirements by being a partner throughout the business cycle. We offer a plethora of services right from incorporation to post-incorporation Compliances at a very affordable rate.
A nominee is an individual who becomes a member of the company in case of the promoter's death or incapacitation.
Authorized Capital of a Company is the number of shares a company can issue to the shareholders. A Company is required to pay the Government an authorized capital fee to issue shares.
Ensure that the name you choose is unique and you have all the required documents before the process of incorporation for speedy incorporation.
If the annual compliances are not met with the becomes a Dormant Company and can be struck off after some time. A Struck company can be revived for a period of up to 20 years.
The DSC establishes the identity of the sender or the signee electronically while filing the document online.
The MCA mandates that the Directors sign some of the application documents using their Digital Signature.
It is the Unique Identification Number that is assigned to all existing and proposed Directors of a Company.
All proposed Directors must have Director Identification Number.
The DIN never expires and a person can have only one DIN.
OPC is a Company that has a separate existence and is owned by one single member. One person happens to be a mixture of proprietorship and company form of business.
For an OPC statutory audit is mandatory. A company needs to appoint a CA as the auditor of the Company.
The auditor needs to verify the books of accounts and issue a Statutory Audit report.
GST registration for a Person Company is necessary if the supply of goods or services is in another state irrespective of annual turnover.
An OPC can raise funds through venture capital, financial institutions.
An OPC can also raise funds by converting into a Private Limited Company.
In a Person Company, a single person runs a company limited by shares whereas a Sole Proprietorship means an entity that is run by one individual, and the owner and business are considered as the same entity.
Except for OPCs, all entities are required to conduct an Annual General Meeting every year.
Last updated: Feb 25, 2021