One Person Company registration is essentially a one-man show. In accordance with the Companies Act, 2013, a company can be incorporated and run by a single person. An OPC has features of a company with the advantages of a sole proprietorship. OPC registration is easier than that of a private company and comprises lesser compliances. As per Section 2 (62) of the Companies Act, a one person company registration can be done with only one director and one member. Please note that the director and the member can essentially be the same individual.
One Person Company registration is a company run by a single person wherein he/she may or may not be the director and the member. An OPC registration was formed as a refinement of the structure of a sole proprietorship firm. The director in an OPC has liability limited to his/her extent of investment in the firm whereas he/she is the sole shareholder.
If a One Person Company has an annual turnover of Rs 20 crores (w.e.f. 2021-22 passed in the Union Budget, 2021). three times in a row or it acquires a paid-up fund of Rs two crores and above, it has to be converted into a private or a public limited company within a period of six months.
Given below are a few advantages of one person company registration:
In a one person company registration, the liability of the director is limited to the extent of the amount invested by him in the firm. In case of accumulation of debts, he/she is not liable to sell his/her personal property to pay it off.
Under the Companies Act, 2013, there is no need for a Company Secretary to audit and sign the books of accounts. It can be signed by the director himself/herself.
It is easy to incorporate and do a One Person Company registration as compared to other forms of the entity since only one member and one nominee are required for the incorporation. The member can also be the Director. The minimum paid-up capital to do a one person company registration in Mumbai is Rs. one lakh.
While sole proprietorships come to an end on the death of the proprietor, after an OPC registration, the company turns into a separate legal entity. An individual is required to be appointed as the nominee director. On the death of the member, the nominee will run the company in the member's place.
In an OPC registration, the company needs to have its books audited every year. This makes it more credible among vendors, financial institutions and customers than a private company.
Let us see how to register one person company:
The first step in the OPC registration is to obtain the Digital Signature Certificate of the proposed Director. This process requires the following documents:
Aadhar Card
Address proof
PAN Card
Passport size photograph
E-mail ID
Phone number
The Director is then required to obtain a Director Identification Number in the SPICe Form.
According to Section 3(1)(c) of the Companies Act, the words ‘One Person Company’ must be mentioned below the name of the company in bracket wherever it appears. The chosen name can be approved in the Form SPICe+32 application.
The Memorandum of Association is a document comprising of the objectives that are to be followed by the company. The MOA states the nature and category of the business for which the company is being incorporated. The Articles of Association lay down the laws on which the company will operate. These documents have to be submitted to the Registrar of Companies. The Registrar of Companies will then issue a Certificate of Incorporation after due verification of all the documents.
In an OPC registration, the company needs to have its books audited every year. This makes it more credible among vendors, financial institutions and customers than a private company.
The basic mandatory compliance for one person company registration comprises the following:
A one person company registration must include one person as ‘Nominee’ in the event of death, incapacity, etc. who will do the following-
(a) become a member and Director of OPC;
(b) be entitled to all shares of the OPC, and
(c) bear all liabilities of OPC.
However, written consent of the individual to act as the nominee must be obtained and filed with the Registrar of Companies at the time of incorporation along with MoA and AoA to commence the business effectively.
Please note that a nominee may withdraw his/her consent by giving a notice in writing to the member of the OPC. The member then nominates another person within 15 days of the receipt of the notice of withdrawal.
In case of an individual, being a member in One Person Company becomes a member in another OPC registration by virtue of his/her being a nominee in that OPC, he/she shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days as prescribed in the Companies Act.
If an OPC infringes the provisions of Companies Rules, 2014, such contravening party will be liable to pay a fine up to Rs. 10,000. This may further extend by Rs. 1000 every day during which such contravention continues.
All OPC registration needs to do Annual Compliance every year
The Due Date for filling of Annual Return one person company registration is within 180 days from the end of the FY.
There are multiple Forms required to be filled. For more details contact us.
Statutory Audit under Companies Act 2013 is mandatory for OPC Annual Compliance.
Every OPC is required to do Statutory Audit irrespective of Turnover, Share Capital, etc.
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