The concept of OPC came with a combination of Sole Proprietorship firm and a Company having separate Legal entity which encourages a proprietor to start his company with only one member by playing a role of Director as well as the shareholder for the Company. The theory of the OPC is shaped under law to provide the support to every small businessman or entrepreneur who dreams of having his own business without sharing the holding or control of the company and enjoys the privileges linked with a Company as per mentioned in the Law
Alike Private Limited Company, the entity enjoys the benefits like having limited liability, perpetual succession, and appointment of the Directors and stress-free and easy transferability of ownership. However, appointment of a Nominee is must while Incorporation of the One Person Company by way of which the transferability of ownership can be easily processed in case the Single Owner of the Company become disabled.
What is One Person Company?
In the new Companies Act 2013, a new concept has been introduced of a new form of business. Such provisions encourage a businessman to move into the corporate world. The main intention here is business growth and exposure into the Corporate World. OPC’s legal nature is of a private company. One can call an OPC as a breed of the Private Company i.e. it is categorized as a Private Company only having distinctive characteristic of one member only.
As per the Companies Act, 2013 levies a limitation on turnover and capital introduced in an OPC. When the capital or turnover exceeds Rs. 50 lakhs or Rs 2 crore respectively during the applicable period, then a company ceases to enjoy the status of an OPC and the same shall be converted into Private Limited Company.
Who can be the Owner?
Any person who is born and is a resident of India or has lived in India for at least 182 days can form one person company.
Steps for Incorporation of One Person Company (OPC)
OPC can be incorporated for any business object but not in charitable objects or non-banking financial activities. It is just a 4 steps task involved in Incorporation of an OPC which takes at-least 10 to 15 working days to process. The same can be classified in following main heads:
Acquire DSC for the Subscriber and Director(s):
Acquisition of DSC (Digital Signature Certificate) for both subscriber to the MOA and Director(s) along with the nominee is very first step to initiate the process of Incorporation. This procurement of the DSC will allow the subscriber and Director(s) for making the application of DIN as well as filing of various e-forms linked with MCA.
Obtain DIN for Director(s)
Director Identification Number is called as DIN in usual term. Only an individual can apply for DIN and allocation of which signifies the person has been registered to act or hold the position as Director/ Designated Partner in LLP/ nominee in case of OPC. It is unique as PAN Card to any individual and which is applied and allotted once in the lifetime.
Name approval Application
The next step is to make an application for reservation of name for the proposed company. Form INC-1is to be filed for the same with the Ministry of Corporate Affairs in which the applicant can apply for maximum 6 names in order of the preference.
The applicant should be very careful in selecting the name of the proposed OPC as the same should not be registered with Central Government for example it should not be duplicate to the existing Company/ LLP/ Registered Trademark.
MCA generate a Name Approval Letter after approving the form filed and the same implies that the name is reserved for a period of 60 days, during which applicant shall apply for the Certificate of Incorporation, non-filing of which leads to the cancellation of the Name approved by the Ministry.
Application for Certificate of Incorporation
After the reservation of the name of the Company, the next step is to file the e-form SPICe for Certificate of Incorporation accompanied with SPICe_MOA and SPICe_AOA. The stamp duty (as applicable) is to be paid on the basis of auto generated challan for the Stamp Duty payment.
Form for application of PAN and TAN of the company is generated online, which shall be duly filed after affixing the DSC of the applicant with MCA.
- Formulation of MOA and AOA
Memorandum of Association (MOA) and Articles of Association (AOA) are two most important documents for any company.
MOA of company states the scope of main objects along with ancillary object of the company, whereas AOA states the rules and norms on how the company should carry the operations as laid down under the Act.
Once the MCA verifies the form, the concerned RoC may grant the Certificate of Incorporation (COI), which is a conclusive proof of existence of the company. The Certificate includes the following important information:
- Name of the Company
- Company Identification Number
- Date of Incorporation
- PAN of the Company
- Digital Signature of the Authorised officer
- Registered Office Address of the Company
One can avail all the major benefits of a Private limited Company without diluting the shareholding and control over the affairs of the business. The establishment enjoys independency, goodwill, creditability and exposure to future growth without any hindrance compared to Sole Proprietorship business. However, alike every entity OPC also inherent some limitations which shall be taken in consideration while adopting this type of organisation for business.