Incorporation of One Person Company (OPC)

Introduction

India introduced the concept of a One Person Company (OPC) in the Companies Act, 2013, to help individual entrepreneurs form a company with limited risk and the freedom to work. At one time, starting a new company required more than one person to do so. After introducing OPC, the Indian government made its corporate law match international standards, so a person now has the option to be the only promoter in a private limited company.

Legal Framework for OPC Incorporation

• Governing Law: Under the Companies Act, 2013

• Relevant Rules: Companies (Incorporation) Rules, Year 2014

• Applicable Form for Registration: Registration is best done using SPICe+ which is the new electronic form created by the government.

• Regulatory Authority: In this case, the Ministry of Corporate Affairs oversees the regulatory authority.

Key Features of One Person Company

• Single Shareholder

• Limited Liability Protection

• Separate Legal Entity

• Perpetual Succession

• No Minimum Paid-up Capital Requirement

• Compulsory Nominee Appointment

• Cannot carry out Non-Banking Financial Investment Activities

Eligibility Criteria to Incorporate an OPC

Note: A person can incorporate only one OPC at a time and cannot be a nominee in more than one OPC.

Step-by-Step Process for Incorporating an OPC

• Step 1: Obtain Digital Signature Certificate (DSC)

1. Required for the proposed director and nominee
2. A Certifying Authority (CA) in India issues them.
3. Documents: PAN Card, Aadhar Card, photo, email, mobile, address proof

• Step 2: Apply Director Identification Number (DIN)

1. Can be applied along with SPICe+ form
2. Not needed separately if applying for incorporation through SPICe+

• Step 3: Hold Name of Company (SPICe+ Part A)

1. Apply through SPICe+ Part A
2. Two name options can be proposed
3. Name needs to be distinctive and have to conclude with "(OPC) Private Limited"

• Step 4: Fill and Submit SPICe+ Part B

The information concerning all the issues related to that of registering a company is included under part B under SPICe+.

1. Registered office address
2. Capital structure
3. Details of the director and nominee
4. Object of the company

• Step 5: File MOA & AOA

1. MOA (Memorandum of Association): The MOA of any given organization is one which opens the most important goals of an organization.
2. AOA (Articles of Association): presents the manner in which the organisation will be operating.

• Step 6: File AGILE-PRO-S Form

1. GST Registration (optional)
2. EPFO & ESIC registration
3. Bank Account Opening
4. Professional Tax Registration (if applicable)
5. Shops and Establishment License (if applicable)

• Step 7: Upload and Submit Forms

1. All forms must be digitally signed using DSC
2. Uploaded on the MCA portal

• Step 8: Issuance of Certificate of Incorporation (COI)

1. Once all needs for documents are met, MCA will issue the Certificate of Incorporation.
2. Contains details related to the CIN, PAN and TAN

Documents Required for OPC Registration

• From the Director and Nominee:

1. PAN Card

2. Aadhar Card

3. Address proof (Bank statement, Utility bill)

4. Passport-size photo

5. Email ID and mobile number

• For Registered Office:

1. Official documents (a utility bill, not older than 2 months)

2. NOC document signed by the owner

3. Rent Agreement/Ownership paper

• For Company:

1. MOA & AOA

2. Declaration by the subscriber and nominee

3. Consent of nominee in Form INC-3

Timeline for OPC Incorporation

Post-Incorporation Compliance for OPC

After incorporation, the OPC must bear in mind the compliance requirements it must meet.

1. Ecclesiastical leaders and council members should maintain the Books of Accounts.

2. You have 30 days after incorporation to select your auditor.

3. Annual return filing is done using Form MGT-7A

4. Submission of Financial Statements (using Form AOC-4)

5. Filing out the tax return is a necessary process

6. Conduct Board Meetings

• At least one board meeting should take place each six months.

• No meeting should be held within the previous 90 days of another.

Benefits of Incorporating an OPC

• Limited liability to the owner

• Complete control over decision-making

• Less compliance than a private limited company

• Better credibility compared to a sole proprietorship

• The opportunity to borrow through venture capital or from a bank

Conclusion

Establishing a One Person Company is wise for individual entrepreneurs and small business owners seeking to secure limited liability, enhance their legal standing, and facilitate smoother business operations. With the simpler SPICe+ form and the Ministry of Corporate Affairs functioning digitally, registering an OPC has become considerably faster and more seamless. However, it is essential to adhere to annual submission requirements and regulations post-incorporation to avoid penalties.

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