One Person Company (OPC) Registration in India: A Comprehensive Guide

1.     Introduction to One Person Company (OPC)

The Companies Act, 2013, a landmark legislation governing corporate entities in India, introduced the innovative concept of a One Person Company (OPC). This structure empowers a single individual to establish and operate a company, enjoying the benefits and protections of a corporate legal framework while simplifying many of the traditional compliance burdens. An OPC is governed by the same Companies Act, 2013, as other companies, but with specific provisions designed for single-member entities, making it a unique and accessible option for solo entrepreneurs.

2.     What is an OPC?

An OPC is a distinct type of private company where only one person can be the sole member and director. It effectively merges the operational control of a sole proprietorship with the legal safeguards and advantages of a limited liability company. This structure allows entrepreneurs to formalize their businesses, clearly separate their personal assets from business liabilities, and access funding opportunities that are often more readily available to incorporated entities.

3.     Eligibility Criteria for OPC Registration

To register an OPC, specific eligibility criteria must be met to ensure compliance with the Companies Act, 2013:

• Natural Person and Indian Citizen: The individual forming the OPC must be a natural person (not a legal entity like another company) and an Indian citizen.
• Resident in India: The individual must be a resident of India, meaning they have resided in India for at least 182 days during the financial year immediately preceding the year of incorporation.
• Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1,00,000. This is the amount of capital the company is authorized to raise by issuing shares.
• Nominee Appointment: The individual forming the OPC must appoint a nominee during the incorporation process. This nominee will become the member of the OPC in the unfortunate event of the original member’s death or incapacitation. This ensures the continuity of the business.
• Restrictions on Certain Businesses: Certain types of businesses, such as those involved in banking, insurance, and non-banking financial investments (like investing in the securities of other companies), are restricted from being registered as OPCs. These restrictions are in place due to the specific regulations governing these sectors.
• Conversion to Private Limited Company: While mandatory conversion is no longer required, an OPC can choose to convert to a private limited company if its paid-up share capital exceeds Rs. 50 lakhs or its average annual turnover surpasses Rs. 2 crores. This option allows for growth and expansion beyond the limitations of the OPC structure.

4.     Advantages of One Person Company (OPC)

• Separate Legal Entity: The OPC is a separate legal entity, distinct from its owner. This means the owner’s personal assets are protected from the company’s debts and liabilities. Creditors can only pursue the assets of the company, not the personal assets of the owner.
• Easy Fundraising: Compared to sole proprietorships, OPCs often find it easier to raise funds through venture capitalists, angel investors, and traditional banks. The corporate structure lends credibility and makes the business more attractive to investors.
• Reduced Compliance: OPCs enjoy certain exemptions from the compliance requirements that apply to other types of companies under the Companies Act, 2013. This simplifies administrative tasks and reduces the burden on the single owner. For example, OPCs have fewer requirements for board meetings and certain other filings.
• Simple Incorporation: The incorporation process for an OPC is relatively straightforward. It requires only one member and one nominee, with the member also serving as the director. There is no minimum paid-up capital requirement, further simplifying the process.  
• Efficient Management: With only one person making decisions, the management of an OPC is highly efficient. Decisions can be made quickly and implemented without the delays or conflicts that can arise in companies with multiple owners or directors.
• Perpetual Succession: The OPC has perpetual succession, meaning it continues to exist even if the sole member dies or becomes incapacitated. The appointed nominee takes over, ensuring the business’s continuity.

5.     Disadvantages of OPC

• Suitable for Small Businesses: The single-member limitation makes OPCs best suited for small-scale businesses. Raising significant capital for expansion can be challenging as the company cannot add more members or issue shares to the public.
• Restriction on Business Activities: As mentioned earlier, certain business activities are restricted for OPCs, limiting the types of businesses that can adopt this structure.
• Ownership and Management Overlap: The fact that the sole member is also the director can blur the lines between ownership and management. This can potentially lead to conflicts of interest or a lack of independent oversight.

6.     Documents Required for OPC Registration Online

The following documents are required for OPC registration:

• Memorandum of Association (MoA): This document defines the company’s objectives and the scope of its activities. It essentially outlines what the company is set up to do.
• Articles of Association (AoA): This document outlines the company’s internal rules and regulations, governing how the company will be managed and operated.
• Nominee Consent (Form INC-3): This form contains the consent of the appointed nominee, along with their PAN and Aadhaar card for identification purposes.
• Proof of Registered Office: Documents proving the registered office address of the OPC. This could be a rental agreement, a utility bill, or other proof of occupancy.
• Director’s Declaration (Form INC-9) and Consent (Form DIR-2): These forms include declarations and consent from the proposed director, confirming their eligibility and willingness to serve as a director.
• Professional’s Declaration: A declaration from a qualified professional (like a chartered accountant or company secretary) certifying that all necessary legal compliances have been adhered to during the incorporation process.

7.     Registration of One Person Company (OPC) in India

OPC registration in India is primarily facilitated through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form available on the Ministry of Corporate Affairs (MCA) portal. This online form has streamlined the incorporation process.

The SPICe+ form is divided into two parts:

• Part A (SPICe+): This part focuses on name reservation for the proposed OPC and applications for the Director Identification Number (DIN) for the proposed director, as well as the Permanent Account Number (PAN) for the company.
• Part B (SPICe+): This part deals with the actual incorporation details, including the registered office address of the OPC, details about the share capital, particulars of the director, and information about the shareholder (who is the same person).

8.     Steps for OPC Registration Online

• Step 1: Obtain a Digital Signature Certificate (DSC): The proposed director of the OPC needs a DSC to digitally sign the application forms and other related documents.
• Step 2: Obtain Director Identification Number (DIN): The proposed director must obtain a DIN from the MCA. This is a unique identification number for individuals serving as directors of companies in India.
• Step 3: Name Reservation: Apply for name reservation through the MCA portal using SPICe+ (Part A). Ensure the chosen name is unique and complies with the naming guidelines.
• Step 4: Prepare MOA, AoA, and Other Documents: Prepare the MoA, AoA, nominee consent (INC-3), proof of registered office, director declarations (INC-9 and DIR-2), and the professional’s declaration.
• Step 5: File the Forms: Upload the completed SPICe+ form (Parts A and B), along with the MoA, AoA, and all other supporting documents, to the MCA portal. The forms are digitally signed using the DSC of the director and the professional.
• Step 6: Certificate of Incorporation: Upon successful verification by the Registrar of Companies (RoC), the MCA will issue a Certificate of Incorporation. This certificate officially recognizes the existence of the OPC. The PAN and TAN for the OPC are usually generated automatically during this process.

9.     Why Choose Return Filings for OPC Registration?

Return Filings offers comprehensive assistance and expert guidance throughout the OPC registration process. Their services typically include help with name reservation, document preparation, online form filing, and compliance requirements. They aim to simplify the process for entrepreneurs and ensure all legal formalities are met. For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091.

10.                        Checklist for OPC Registration

• Only one member (minimum and maximum).
• Nominee appointed before incorporation.
• Nominee consent obtained (Form INC-3).
• Name selected as per Companies (Incorporation) Rules, 2014.
• Minimum authorized capital of Rs. 1 lakh.
• DSC for the proposed director.
• Proof of registered office.

11.                        Documents Required for OPC Registration (Detailed)

• PAN Card: A copy of the PAN card of the individual forming the OPC.
• Passport (if applicable): If the individual holds a passport, a copy may be required.
• Voter’s Identity Card: A copy of the individual’s voter ID card.
• Ration Card (if applicable): A copy of the ration card if available.
• Driving License (if applicable): A copy of the individual’s driving license.

• Aadhaar Card: A copy of the individual’s Aadhaar card.
• MOA Subscriber Sheet: A document confirming the individual’s subscription to the Memorandum of Association.
• AOA Subscriber Sheet: A document confirming the individual’s subscription to the Articles of Association.
• Passport Size Photo: A recent passport-sized photograph of the individual.
• Recent Utility Bill (Business Place): A recent utility bill (electricity, water, telephone) for the registered office address of the OPC.
• Specimen Copy of NOC from Landlord (if rented): If the registered office is rented, a No Objection Certificate (NOC) from the landlord allowing the OPC to use the premises as its registered office.
• Name Significance Letter: A brief explanation of the meaning and significance of the chosen name for the OPC.

12.                        Timelines for OPC Registration

• DSC and DIN: Approximately 1 day.
• Certificate of Incorporation: 3-5 days (subject to MCA processing).
• Total Incorporation Process: Around 10 days (subject to departmental approvals and responses).

13.                        Additional Resources

For further reading, explore:

·       OPC Annual Filing: Essential Guide for Hassle-Free Compliance

·       Import Export Code (IEC): Your Gateway to Global Trade – Easy Registration & Benefits

·       Shop and Establishment Registration: Simplified Guide for Business Compliance

·       OPC Strike Off: Step-by-Step Guide to Close Your One Person Company Legally

Frequently Asked Questions (FAQs) related to registration of One Person Company (OPC)

A. Eligibility and Membership

Q-1: Who is eligible to be a member of an OPC?

Answer: Only a natural person who is an Indian citizen and resident in India is eligible. The individual must have stayed in India for at least 182 days during the financial year immediately preceding the incorporation.

Q-2: Can a person be a member of more than one OPC?

Answer: No, a person can be a member of only one OPC at any given time.

Q-3: Who cannot form an OPC?

Answer: Minors, foreign citizens, Non-Resident Indians (NRIs), and individuals legally incapacitated (e.g., due to mental incapacity) cannot form an OPC.

Q-4: Can an OPC have a minor as its member?

Answer: No, a minor cannot be a member of an OPC.

B. OPC Operations and Management

Q-5: What is an OPC, and how does it differ from other business structures?

Answer: An OPC is a company with only one member and director, combining the benefits of a corporate structure (limited liability, separate legal entity) with the simplicity of a sole proprietorship. It differs from other business structures primarily in its single-member requirement and specific compliance exemptions.

Q-6: When was the concept of OPC introduced in India?

Answer: The Companies Act, 2013, introduced the concept of OPCs.

Q-7: What is the primary objective of OPC registration?

Answer: The primary objective is to encourage entrepreneurship and facilitate the formalization of small businesses, particularly those run by single individuals.

Q-8: What happens if the OPC’s paid-up share capital exceeds 50 lakhs or its annual turnover exceeds 2 Crores?

Answer: While mandatory conversion to a private limited company is no longer required, the OPC can choose to convert voluntarily if it meets these thresholds.

Q-9: How many OPCs can an individual establish?

Answer: An individual can be a member of only one OPC.

Q-10 How do I convert an OPC to a Private limited company?

Answer: Voluntary conversion to a private limited company is possible by passing a special resolution, increasing the number of members and directors to at least two, and obtaining a No Objection Certificate (NOC) from the creditors.

C. Legal and Compliance

Q-11: Is there any tax advantage on forming an OPC?

Answer: There are no specific tax advantages offered to OPCs compared to other types of companies. The same tax rates and provisions generally apply. It’s best to consult with a tax professional for specific advice.

Q-12: What are the advantages of registering an OPC?

Answer: The key advantages include limited liability protection, separate legal entity status, ease of fundraising compared to sole proprietorships, reduced compliance burden, simple incorporation process, efficient management, and perpetual succession.

Q-13: Are there any disadvantages to registering an OPC?

Answer: The main disadvantages include limitations on raising large capital due to the single-member restriction, restrictions on certain business activities, and the potential overlap between ownership and management, which can raise conflict-of-interest concerns.

Q-14: What is the registration process for an OPC in India?

Answer: The registration process involves obtaining DSC and DIN, reserving a name, preparing the MoA, AoA, and other documents, and then filing the SPICe+ form and related documents with the MCA. (See Section 7 and 8 for detailed steps.)

Q-15: What is the mandatory compliance that an OPC needs to observe?

Answer: Mandatory compliance includes holding at least one board meeting in each half of the calendar year (with a gap of at least 90 days between meetings), maintaining proper books of accounts, undergoing a statutory audit of financial statements, filing business income tax returns annually, and filing financial statements (Form AOC-4) and annual returns (Form MGT-7) with the RoC.

D. Other

Q-16: What is the significance of the nominee in an OPC?

Answer: The nominee is a crucial part of the OPC structure. They are appointed to ensure the continuity of the business in case of the sole member’s death or incapacitation. The nominee becomes the member of the OPC in such circumstances.