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Yes, One Person Company (OPC) Registration is one of the important document process required to fulfill for operating a company on Indian lands. It is a part of business process registration and is governed by the companies Act,2013. It is mandatory to obtain legal status and benefits associated with a corporate entity. It is a relatively new concept and is mainly adopted by small business and single entrepreneurs to ensure legal safety of their company.
- Why is One Person Company Registration Required?
- Legal Recognition: Registering an One Person Company gives your business a separate legal identity. This means the company can own property, incur liabilities, and enter contracts independently from its owner.
- Limited Liability Protection: The owner of an OPC enjoys limited liability, meaning personal assets are protected in case the company faces financial or legal trouble. The owner's liability is limited to the extent of the capital they have invested.
- Tax and Compliance Benefits: Registered OPCs enjoy certain tax benefits that sole proprietorships do not, such as lower corporate tax rates. Additionally, compliance procedures for OPCs are simpler compared to other company structures.
- Ease of Operations: A registered OPC allows an individual to manage a business as a corporate entity without the need for a second director or shareholder.
- Eligibility Criteria for One Person Company Formation
- Single Shareholder: Only one person can form an One Person Company, and that person must be a resident of India.
- Nominee Requirement: A nominee must be appointed while incorporating the company, and the nominee must also be a resident of India.
- Restrictions on Membership: Only natural persons (not corporations or companies) can form an OPC. The same person cannot incorporate more than one OPC.
- Documents Required for One Person Company Registration
- Identity proof: PAN card, Aadhaar card, voter ID, or passport of the sole shareholder and nominee.
- Address proof: Utility bills or bank statement (not older than two months) of the shareholder and nominee.
- Registered Office Address Proof: Rent agreement or ownership proof, along with a NOC from the property owner.
- When is One Person Company Registration Required?
OPC registration is required when:- You are a Single Entrepreneur: If you are an individual who wants to start a business on your own without partners or co-founders but still want the benefits of a company structure, you must register an OPC.
- You Need a Legal Framework: If you need a formal corporate structure to enter into contracts, obtain bank loans, or deal with larger clients, One Person Company registration is necessary.
- You Want to Limit Personal Liability: By registering an OPC, you limit your personal liability to the amount you’ve invested in the business, making it essential for businesses dealing with significant risks or investments.
- Mandatory Compliance: Registration is required as part of compliance with the Companies Act, 2013, to operate legally as an OPC in India.
- Key Benefits of Registering an One Person Company
- Continuity and Succession: The OPC continues to exist even if the original owner dies or becomes incapacitated, thanks to the requirement of appointing a nominee.
- Eligibility for Loans and Credit: Banks and financial institutions are more likely to lend to registered entities like OPCs compared to unregistered sole proprietorships.
- Brand and Trust: Having a registered One Person Company builds credibility and trust among clients, vendors, and investors.
- Steps for One Person Company Registration
- Obtain Digital Signature Certificate (DSC): The sole shareholder and nominee must have a DSC for signing documents electronically.
- Apply for Director Identification Number (DIN): A DIN must be obtained for the director.
- Name Approval: The company’s name must be approved by the Ministry of Corporate Affairs (MCA) through the SPICe+ form.
- Submission of SPICe+ Form: Submit the SPICe+ (Simplified Proforma for Incorporating Company Electronically) form along with the necessary documents to the MCA.
- Memorandum and Articles of Association: Prepare and file the Memorandum of Association (MOA) and Articles of Association (AOA).
- Incorporation Certificate: After successful verification, the ROC (Registrar of Companies) issues a Certificate of Incorporation (COI).
- PAN and TAN Application: These are automatically generated at the time of registration.
- Restrictions of One Person Company
- Conversion: An OPC must be converted into a private or public limited company if its paid-up capital exceeds ₹50 lakh or its turnover exceeds ₹2 crore in a financial year.
- Cannot Engage in Certain Activities: OPCs cannot engage in non-banking financial investment activities or operate a section 8 company (non-profit organization).
OPC is an ideal structure for individuals looking forward to ensure the proper legal functioning of your business, protect your personal liability while combining the advantages of a company while still retaining control over the business. Without registration, you would not be able to avail corporate advantages, particularly in terms of conversion and restrictions on growth.
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