One Person Company Registration

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ABOUT ONE PERSON COMPANY

Under section 2(62) of companies act 2013 a new concept was introduced and that was one person company which has only one person as a member. One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.

One Person Company must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. But, OPC cannot be incorporated or converted into Section 8 Company (i.e. company with charitable objects, etc.) or carry out non-banking financial activities, including investment in securities of any body corporate.

An Indian resident (i.e. have stayed in India for at least 182 days during the immediately preceding FY) can incorporate OPC. However, one of such person cannot form more than one OPC.

ADVANTAGES

SEPERATE LEGAL ENTITY

OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.

MORE OPPORTUNITIES

One of the advantages of One Person Company is that it has more opportunities, limited liability since the liability of the OPC is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative start-ups.

TAXATION

Any remuneration paid to the director will be allowed as deduction as per income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.

SINGLE OWNER

You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.

EASY FUNDING

OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.

BENEFITS

An OPC can avail the various benefits provided to Small Scale Industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.

CREDIT RATING

The OPC with bad credit rating may even get the loan. The credit rating of OPC will not be material if the rating of OPC is as per norms.

 

MINIMUM REQUIREMENTS

  • Minimum 1 Shareholders.
  • Minimum 1 Directors.
  • The director and shareholder can be the same person
  • Minimum 1 Nominee

DOCUMENTS REQUIRED FOR REGISTRATION

IDENTITY AND ADDRESS PROOF

 Aadhar Card, Aadhar number is now a necessity for applying for any registration in India.

 Income tax return can only be filed if the person has linked his PAN card with Aadhar number.

 For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted.

 Residence proof documents like bank statement or electricity bill should not be more than 2 months old.

 All documents submitted must be valid

REGISTERED OFFICE PROOF

  • Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
  • Documents submitted must be valid and not more than 2 month old.

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.

A person can be a member of only one OPC.

There is no specific tax advantage to an OPC over any other form. The tax rate is flat 30%, other tax provisions like MAT & Dividend Distribution Tax applies as they apply to any other form of company.

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 a private or public company.

The basic mandatory compliance are:-

  • Atleast one Board Meeting in each half of calendar year and time gap between the two Board Meetings should not be less than 90 days.
  • Maintenance of proper books of accounts.
  • Statutory audit of Financial Statements.
  • Filing of business income tax return every year before 30th September .
  • Filing of Financial Statements in Form AOC-4 and ROC Annual return in Form MGT 7.

A minor shall not eligible becoming a member

  • Foreign citizen
  • Non Resident
  • Any person incapacitated by contract.
  • Mandatory Conversion of One Person Company (OPC) to Private Limited Company (PLC) is required in case a One Person Company meets certain parameters, like:
  • Effective date of increase in the paid-up share capital of a One Person Capital beyond rupees fifty lakhs, AND
  • An increase of average annual turnover during the period of immediately preceding three consecutive financial years is beyond rupees two crores.
  • In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public company Within a Period of Six Months. In this article, we also look at the procedure for conversion of one Person Company into a private limited company or limited company.
  • Voluntary Conversion of OPC to Private Limited Company:
  • When a One Person Company gets incorporated, it cannot convert itself to Private or Public company before two years from the date of incorporation.
    • If the time period has elapsed and two years time period is over, a One Person Company can apply for converting itself to Private Limited Company or Public limited company.
    • The Conversion process should be done as per the rules and regulations laid down by the Companies Act, 2013 under Section 18, and Rule 7(4) of the Companies (Incorporation) Rules, 2014.