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OPC

Simply put a rather generous parting gift to the Companies Act, 1956, on the occasion of its retirement. An OPC is a hybrid structure, wherein it combines most of the benefits of a sole proprietorship and a company form of business. It has only one person as a member who will act in the capacity of a director as well as a shareholder.

Thus, it does away with the hassles of finding the right kind of co-partner/s for starting a business as registered entity. The best part is, legal and financial liability is limited to the Company and not the member. Hence, you do not need to share your piece of cake in the name of partnership. You have an idea...You own it! Start your own OPC.

The concept of One Person Company [OPC] is a new vehicle/form of business, introduced by The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework.

One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with concessional/relaxed requirements under the Act.

OPC and its Formation

An OPC is incorporated as a private limited company, where there is only one member and prohibition in regard to invitation to the public for subscription of the securities of the company.

Steps to Incorporate One Person Company (OPC)
  • Obtain Digital Signature Certificate [DSC] for the proposed Director(s).
  • Obtain Director Identification Number [DIN] for the proposed director(s).
  • Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name.
  • Draft Memorandum of Association and Articles of Association [MOA & AOA].
  • Sign and file various documents including MOA & AOA with the Registrar of Companies electronically.
  • Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty.
  • Scrutiny of documents at Registrar of Companies [ROC].
  • Receipt of Certificate of Registration/Incorporation from ROC.
Documents Required for OPC Registration

TO BE SUBMITTED BY DIRECTOR

  • Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
  • Scanned copy of Voter's ID/Passport/Driver's License
  • Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
  • Scanned passport-sized photograph Specimen signature (blank document with signature)
FOR THE REGISTERED OFFICE
  • Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
  • Scanned copy of Notarised Rental Agreement in English
  • Scanned copy of No-objection Certificate from property owner
  • Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Advantages of One Person Company (OPC)

1. Only One Shareholder:

Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company. Explanation: The term "Resident in India" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

2. Nominee for the Shareholder:

The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder. Only a natural person, who is an Indian citizen and resident in India shall be a nominee for the sole member of a One Person Company.

3. Director:

Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.

The Salient features of an OPC include the following:

• An OPC can be formed under any of below categories :

  • I. Company limited by guarantee.
  • II. Company limited by shares

• An OPC limited by shares shall comply with following requirements :

  • I. Shall have minimum [paid up capital of INR 1 Lac
  • II. Restricts the right to transfer its shares
  • III. Prohibits any invitations to public to subscribe for the securities of the company.

• An OPC is required to give a legal identity by specifying a name under which the activities of the business could be carried on. The words 'One Person Company' should be mentioned below the name of the company, wherever the name is affixed, used or engraved.

• The member of an OPC has to nominate a nominee with the nominee’s written consent, and file it with the Registrar of Companies (RoC). This nominee in the event of death or in event of any other incapacity shall become a member of an OPC. The member of an OPC at any time can change the name of the nominee providing a notice to the RoC in such manner as prescribed. On account of Death of a member, the nominee is automatically entitled for all shares and liabilities of OPC.

Exemptions available to one person company – legal provisions.

An OPC has certain privileges and exemptions which are not available to private companies. Such exemptions are enlisted for your ready reference:

Signatures on Annual Returns – Section 92 of the Companies Act, 2013:

It is provided in section 92 of The Companies Act, 2013, that the annual returns in the case of One Person Company shall be signed by the company secretary or where there is no company secretary, then by the director of the company.

Holding Annual General Meetings – Section 122 of the Companies Act, 2013:

Section 122(1) of The Companies Act,2013, provides that the provisions of S.98, S.100 to S.111(both inclusive) are not applicable to One Person Company. Therefore, provisions relating to General Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are not applicable to One Person Company. However, for fulfilling the purposes of S.114 of the Companies Act,2013, where any business is required to be transacted at an Annual General Meeting, or other General Meeting of the company by means of an ordinary or special resolution, it shall be sufficient if the resolution is communicated by the member of the company and entered in the minutes book which is required to be maintained U/s 118 and signed and dated by the member and such date shall be deemed to be the date of meeting under the purposes of Companies Act,2013.

Board Meetings and Directors – Section149, 152 & 173 of the Act:

One Person Company needs to have one director. It can have maximum of 15 directors which can also be increased by passing a special resolution as in case of any other company. For the purposes of holding board meetings, in case of a OPC which has only One director, it shall be sufficient compliance if all resolutions required to be passed by such a company at a board meeting are entered in a minute book – signed and dated by the member and such date shall be deemed to have the date of the board meeting for all the purposes under Companies Act, 2013.

Signatures on Financial Statements - Section 134 and 137 of the Act.:

The OPC shall file with the RoC a copy of financial statements duly adopted by its members along with all the documents which are required to be attached to such financial statement, within 180 days from the closure of the financial year along with cash flow statements. The financial statement shall be signed by only one director and the annual return shall be signed by the company secretary and the director, and in case if there is no company secretary then only by the director.

Contracts by One Person Company – Section 193 of the Act.:

new Companies Act, 2013 gives special attention to the contracts which will be entered by One Person Company.

If the company fails to comply with the provisions as to providing the information to the RoC then it shall be liable for punishment of fine which will be not less than twenty thousand rupees and extend to one lakh rupees and the imprisonment for a term which may extend upto 6 months.

Legal Status of OPC

  • Section 2(62) defines OPC as a Company which has only one person as a member.
  • Incorporate your OPC
  • The process of incorporating the OPC is almost similar to that of a private limited company with minor differences.
  • OPC will be formed as a ‘Private Limited Company’. Hence, minimum paid up capital will be Rs. 1, 00,000.
  • It will have only one person as member.
  • Memorandum of Association of such a company will mandatorily prescribe the name of the person, who in the event of death or disability of the subscriber shall assume his position.
  • The member of the OPC will have the right to change the nominee at any time with due intimation to the Registrar.
  • OPC can be formed as company limited by share capital or limited by guarantee or unlimited company.
  • The words ‘One Person Company’ will have to be mentioned in brackets below the name of such company, wherever its name is printed, engraved or affixed.
  • One person can form only up to one (1) OPCs.
  • An OPC can be formed only by an Indian Resident and citizen.
  • Relaxations available to OPCs in comparison to general private limited companies
  • Provisions of Annual General Meeting (AGM) and Extra-Ordinary General Meetings do not apply to an OPC.
  • An OPC should have a minimum of one (1) director and a maximum of fifteen (15) directors. In case the Board consists of only one director, then the OPC is exempted from the requirement of conducting a Board Meeting as well.
  • It will be deemed to have complied with the provisions relating to Board meetings, if at least one meeting is conducted in each half of the calendar year. However, the gap between the two meetings should not be less than ninety (90) days.
  • There is no requirement of appointing a first director for the company. The sole member is deemed to be the first director.
  • The OPC is also exempt from provisions relating to notices of the meetings (Section 101), statement to be annexed to notice (Section 102), Quorum for Meetings (Section 103), Appointment of Chairman of Meeting (Section 104), Proxies (Section 105), Restriction on Voting Rights (Section 106), Voting by show of hands (Section 107), Voting by Electronic Means (Section 108), Demand for Poll (Section 109), Postal Ballot (Section 110) and Circulation of Member’s Resolution (Section111).

FAQs

The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.
The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in case of intimation of change in nominee by the member.
Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.
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