One Person Company Registration

Meaning

One person company (OPC) is a new business structure that permits a single entrepreneur to manage a business entity with limited liability.

This concept was introduced to motivate entrepreneurs who are capable of starting a venture on their own by permitting them to create a single person economic entity. It allows a single promoter full control over the company while limiting his liability to contributions to the business. This single promoter will be the only director and shareholder in the company, though there is another director (a nominee director nominated in the MOA and AOA of the company) with no power until the original director becomes incapable of entering into a contract.

There is no equity fund raising or offering employee stock options in a OPC.

It is mandatory for a One Person Company to be converted into a Private Limited Company or Public Limited Company within six months if it has a paid-up capital of over Rs. 50 lakh or crosses an average three-year turnover of over Rs. 2 crore, It must thus, file audited financial statements with the MCA like all Companies. Hence, it is significant to carefully consider the features of a OPC prior to incorporation.

SOLE DIRECTOR

One Person Company is the only business venture that can be started, managed and operated by a single director/promoter with limited liability.

LIMITED LIABILITY

The directors’ personal assets are always safe irrespective of the debts of the business.

PERPETUAL EXISTENCE

Sole Proprietorships dissolve only with the death of the director. But, OPC being a separate legal entity, would continue to exist due to the nominee director.

CREDIBILITY

OPC must have its books audited annually. The Credibility among vendors and lending institutions is greater because Banks and Financial Institutions prefer providing funding to a company than partnership firms.

    SALIENT FEATURES

    * Annual General Meeting is not required.
    * Preparation of the cash flow statement is not required.
    * One board meeting must be conducted in each half of the calendar year with a minimum of 90 days between two board meetings.
    * OPC can be incorporated as a private limited company only.
Section 98, Sections 100 to 111 (inclusive), shall not apply to a One Person Company and is thus, exempted from the following
    * Power of Tribunal to call meetings of members. [Section 98].
    * Calling of extraordinary general meeting. [Section 100].
    * Notice of meeting. [Section 101].
    * Statement to be annexed to notice. [Section 102].
    * Quorum for meetings. [Section 103].
    * Chairman of meetings. [Section 104].
    * [Section 105].
    * Restriction on voting rights. [Section 106].
    * Voting by show of hands. [Section 107].
    * Voting through electronic means. [Section 108].
    * Demand for poll. [Section 109].
    * Postal ballot. [Section 110]. 
    * Circulation of members’ resolution. [Section 111].

CONVERSIONS

A One Person Company can convert itself into a Private Limited Company under two situations;

VOLUNTARY CONVERSION TO PRIVATE LIMITED

A One Person Company when incorporated cannot convert itself to a Private Limited company or Public company from the date of incorporation for a period of not less than two years.

The Conversion process is done as per the rules and regulations laid down under Section 18, and Rule 7(4) of the Companies (Incorporation) Rules, 2014 in the Companies Act, 2013.

COMPULSORY CONVERSION TO PRIVATE LIMITED

A OPC having a paid-up capital equal to or above Rs. 50 lakhs or the Annual turnover exceeds Rs. 2 crore for the concerned financial year, then in such cases, the company has to mandatorily convert into Private Limited Company or Public Limited Company according to the Rule 7(4) of the Companies (Incorporation) Rules, 2014

DOCUMENTS REQUIRED

FOR THE DIRECTORS
    * Copy Of PAN OR Passport (For NRIs)
    * Copy Of Voter’s ID OR Passport OR Driver’s License
    * Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
    * Passport sized photographs
    * Specimen Signatures.

FOR REGISTERED OFFICE
    * Copy Of PAN OR Passport (For NRIs)
    * Copy Of Voter’s ID OR Passport OR Driver’s License
    * Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
    * Passport sized photographs
    * Specimen Signatures.

REGISTRATION PROCEDURE
1. DSC (Digital/E-signature) & DPIN (Director’s PIN) application for filing issued by the MCA.
2. Chosen name of the company by the director with scanned documents will be used to fill the form INC-32 under SPICE and the Memorandum of Association (MOA) and Articles of Association (AOA). The Certificate of Incorporation will be approved at the end of this process. The Certificate of Incorporation serves as a proof of existence of the company.
3. Every OPC requires a registered Permanent Account Number (PAN) and Tax Account Number (TAN).PAN and TAN will then be couriered to the registered office address in 21 working days.