One Person Company is a fairly recent business concept in India and was brought into the legal scenario by The Companies Act, 2013. The idea was to allow entrepreneurs currently functioning as sole proprietors to enter into the corporate world.
OPC has a unique structure with the best parts of sole proprietorship and company structures incorporated into it. Essentially, it is a mix of company and sole proprietorship business forms with relaxed requirements.
How To Create A One Person Company?
To understand how an OPC is created, we first need to understand the various features of it. A One Person Company is a business form with the following features.
One Shareholder: As suggested by the name, an OPC will have only one shareholder at any point of time. This shareholder must be an Indian National who is a citizen and resident of India.
Nominee: Every OPC will have a Nominee for the Shareholder. The Nominee for the Shareholder is a person who becomes the shareholder should the current shareholder die/ fail to perform his duties and responsibilities.
A person nominated to be this must provide his consent for the same while the current shareholder remains in office. The Nominee too must be a citizen and resident of India.
Director(s): A One Person Company should have a minimum of one Director and a maximum of fifteen (15) Directors. The shareholder himself can be one of the directors.
Requirements Of An OPC
In addition to the terms discussed above, there are some other requirements that must be considered. OPC has its own set of operational rules that one needs to adhere to.
An individual cannot incorporate more than one OPC in his name nor shall he be a nominee for more than one OPC.
OPCs are not allowed to carry out Non-Banking Financial Investment activities.
OPCs cannot be incorporated and then later voluntarily converted into any other kind of company unless two (2) years have gone by since the date of incorporation unless the capital has crossed fifty (50) lakhs or the annual turnover crosses two (2) crores.
How To Register And Make It Legally Valid?
To register an OPC and make it legally valid, there are less than ten steps. The process may seem confusing to some, which is why we actively encourage you to contact us so that we can help you ace through the whole procedure. Our legal experts will be more than happy to guide you and prepare the required documents.
The initial steps in the registration process resembles closely with the typical company registration process. In detail, here are the steps-
Step1 – DSC & DIN
The first step in registration process for most business forms is the same, applying for Director Identification No. (DIN) & Digital Signature Certificate (DSC) for proposed directors. The application for the same must be submitted to The Ministry of Corporate Affairs (MCA).
Step 2 – Picking a name
What follows the DSC and DIN is the picking of a name for your company. Simply selecting a name won’t do, you need to seek the approval of MCA to ensure that there is no other company operating under the same name. You need to submit the proposed name to the MCA officials following which you will be informed about its availability.
Step 3 – MOA & AOA
After receiving an approval for the name you picked, start with drafting the Memorandum of Association(MOA) and Articles of Association (AOA). These documents then need to be signed and filed with the Registrar of Companies electronically.
Step 4 – Payment of Fees
Once the MOA and the AOA have been electronically filed, the requisite fee for registration and stamp duty must be paid to the MCA. Once the fee is paid, submit your documents for scrutiny to the Registrar of Companies.
Step 5 – Incorporate!
Once the fee is paid and the documents are scrutinized, collect your receipt of incorporation/ certificate of registration from the Registrar of Companies.
Frequently Asked Questions
Can a registered Pvt Ltd Company be converted to an OPC?
As of now, there is no provision for that under the Companies Act, 2013. Companies registered under the Companies Act 1956 cannot be converted into an OPC.
However, if an OPC crosses a certain threshold in the capital or annual turnover, it must be converted to either a Private Limited Company or a Public Limited Company within a span of six (6) months.
Is it necessary to have a registered office address proof to incorporate an OPC?
Nope. In the initial stages of registration, one needs to submit an address for correspondence alone. But once the registration is done, you will need to set up an office and provide the address of the same within 30 days of incorporation.
Register Your Business Today!
Aspiring to have an OPC in your name? Contact us today and allow us to guide you through the whole thing. We will help you register your company!