Established under the Companies Act of 2013, One Person Companies have a single owner who is also the director and the sole shareholder. Thus, with One Person Company registration, businessmen can enjoy a simple company design where they are the sole decision-makers.
Further, this establishes the business as a separate legal entity, much like a private limited company. Hence, the One Person Company registration process combines the efficiency and reliability of a private limited company with the flexibility of a sole proprietorship.
What Makes One Person Company Registration a Good Choice
Often people just wish to start their business without the presence of other shareholders. With little incorporation requirements, the One Person Company Registration is a top choice for entrepreneurs who want to get a head start with their business plans.
As of August 2024, MCA data reflects that 60,084 OPCs were active in India. Further, these had a total paid-up capital of INR 795.69 Crore.
By opting for incorporating your business via the One Person Company Registration, entrepreneurs enjoy the following:
- Sole ownership of their business.
- A separate legal entity for their business.
- Limited liability protection is where the loss or debt does not transfer to the owner.
- Perpetual succession by having a nominee for the owner.
- Easy transfer of shares from one owner to another.
- Option to avail debt financing from banks.
- Boost the trust of clients in the company.
- Avail the facilities offered to MSMEs under the Udyam Registration.
- Quicker decision-making due to having a single person in charge.
Taking Up One Person Company (OPC) Registration
To get started with the One Person Company registration process, the below are essential:
- A director/owner/shareholder.
- INR 1 lakh as seed capital.
- A registered address for the company.
Further, the owner needs to be a legal adult (above 18), a natural person, and a resident of India who has spent a minimum of 182 days in the country in the previous year. To add, the owner cannot form more than one OPC.
To apply for the One Person Company Registration, you will need:
- PAN, Aadhaar, passport-sized photos, and address proof.
- A unique name for the company.
- A DSC (Digital Signature Certificate) and DIN (Director Identification Number).
- An AoA and MoA for the company.
Steps to Follow for One Person Company Registration
All businesses that go for the One Person Company Registration need to follow the rules laid down by the Companies Act of 2013.
1. Apply and obtain a DSC.
This is mandatory if you have to sign any document digitally during and after the application process.
2. Get a DIN from the Ministry of Corporate Affairs.
To get legal recognition as a Director, apply for DIN using the SPICe+ Form.
3. Select Your Company Name.
The name needs to be unique, not infringe on any trademarks, and be in line with the MCA guidelines. Further, it is important to check the availability using the MCA portal.
4. Draft an MoA and an AoA for your company.
Outlining the objectives and scope of the company, an appropriate MoA must be drafted Further, an AoA that lays down the rules of the company is also essential. It is important to note that while the AoA can be amended at a later stage, the MoA cannot. Both documents need to be signed by the owner/director.
5. File for Incorporation with the RoC (Registrar of Companies).
Using all documents mentioned above, apply for the One Person Company Registration.
6. Obtain your Certificate of Incorporation.
Once the verification is complete, the RoC will issue a Corporate Identification Number (CIN) and a Certificate of Incorporation for your company.
7. Apply for a PAN, TAN, and bank account for your company.
These will allow the business to facilitate transactions, file for taxes, reimburse service providers, and more.
Retaining the Registration: Annual Compliances for OPC
While receiving the One Person Company Registration may sound simple, it is important to know the post-incorporation steps. This not only includes business processes but also annual compliances for OPC.
As of August 2024, the MCA revealed that 24,859 companies were being removed from the MCA records. By ensuring annual compliance for OPC, you can stay one step ahead of your competitors.
To make sure that your registration is not cancelled by the RoC, be sure to meet the below annual compliances for OPC:
- File annual financial statements with the RoC within 30 days of the Annual General Meeting (AGM).
- Mandatory statutory audits to ensure adherence to legal and accounting standards.
- File annual returns within 60 days of the AGM with the MCA.
- Maintain tax compliance by filing for income tax, GST, and others.
Do OPCs Have Any Limitations?
Like every form of company incorporation, OPCs are also subject to a few limits and drawbacks. These include:
- No NBFC can be an OPC. Further, no OPC can take up an activity that serves as a Non-Banking Financial Investment.
- The management and the owner are the same; thus, there is no distinction.
- Since the business model cannot issue shares or enter into joint ventures, the scope for expansion tends to be limited for OPCs.
While these hurdles remain for any business that goes for the One Person Company Registration, entrepreneurs can still get started easily via this process.
To Conclude: Grow Your Business with OPC Registration
Catering to those who wish to establish a business on their own, the One Person Company Registration is an efficient process. Not only does this allow you to start your business with ease, but it also establishes a system where you can make decisions rapidly for quick growth.
One Person Companies are restricted from offering shares on the financial market. However, they can raise funding via private investors, banks, and other financial institutions.
Thus, register and maintain annual compliances for OPC to get started as an entrepreneur.
