One Person Company: Features, Registration, and Many More

The Companies Act 2013 introduced many novel elements into Indian corporate law that had not been there before. One of the significant shifts was the advent of the One Person Company in India.

To take advantage of the freedom that a legal organization such as a corporation provides, a new approach to business formation became apparent. It also offered the benefit of restricted liability, which is absent in partnerships and sole proprietorships.

The Companies Act of 2013 introduced several novel business concepts in India, drastically altering the landscape. A single individual and one of the novel concepts. In contrast to the common practice of having at least two members, an OPC is a business created with only one member.

It’s an acknowledgment of a one-person economic organization that makes it easier for new small enterprises and service providers to get their feet wet by opening up corporation ownership chances.

Meaning Of One Person Company

A “one-person company” is a business with only one member, as defined by subsection (62) of section 2 of the Companies Act, 2013.

Since the shareholders or subscribers to a company’s memorandum of association are considered members of the firm, a “One Person Company” (OPC) is essentially just a corporation consisting of a single shareholder.

One-person Companies (OPCs) are typically established when there is only one owner or promoter of the company.

As a result of the many benefits associated with forming an OPC, they are increasingly favored by entrepreneurs whose enterprises are still in the start-up phase.

Characteristics Of One Person Company

The Characteristics of a Business Managed by One Person are as follows:

A One Person Company can only be formed by, and have its sole member be, a natural person who is both an Indian citizen and an Indian resident. If you’ve spent at least 183 consecutive nights in India in the past calendar year, you’re considered a “resident” of India.

One-Person Companies are unique because the lone member must name a nominee throughout the registration process. No individual shall be permitted to form or serve as a nominee of more than one OPC.

The OPC’s rules provide that no one under the age of majority can be a member or candidate or hold shares in which they have a beneficial interest.

As per the Act’s Section 8, OPC is not allowed to become a corporation.

Investing in corporate securities is a form of non-banking financial investment activity, which One Person Company in India is not allowed to engage in.

Unless the paid-up capital is increased beyond 50 lakh Rupees or the average annual turnover during the relevant period exceeds two crore Rupees, an OPC is prohibited from voluntarily converting into any other type of company until two years have passed from the date of incorporation of the OPC.

If a natural person already a member of one OPC becomes a member of another OPC because he is a nominee in that OPC, then within 180 days, he must choose which OPC to leave his membership with.

Incorporation of One Person Company

It is a single-member, closely held corporation that has been officially registered. So, the corporation can still be formed even if there is just one person involved.

One-Person Company’s primary goal was to promote solo ventures’ formalization. In 2005, the JJ Irani Expert Committee suggested opening OPC in India. Like a private limited corporation, it is a distinct legal entity that can shield its owners’ assets from business debts and continue indefinitely if its owners want.

A business with a single founder or promoter is more likely to become an OPC. Those just starting in business often choose OPCs over sole proprietorships because of their many advantages.

One Person Company Advantages 

The member gives the OPC the status of a corporation. The OPC has separate legal status, which shields the sole incorporator. The member’s liability for the company’s loss is capped at the value of their shares rather than being unlimited. That’s why creditors can only sue the OPC, not the member or Director.

• An Availability of Funding that is Simple to Acquire

The private nature of an Indian business that employs one person makes it attractive to venture capitalists, angel investors, and incubators. It’s now easy to get a loan.

• Different By Same At The Business Operation Level

The concept of OPC is exempt from several provisions of the Companies Act of 2013, which it must follow. The cash flow statement can be made without the OPC’s involvement. Neither annual reports nor financial records must be submitted or kept by the company secretary.

• Simple Incorporation, No Difficult Available

Furthermore, a single-person corporation in India can be incorporated under the law with little to no difficulty. Integrating should be approved by a member who is also a director. No minimal amount of paid-in capital is required.

• Easily Controlled Under Single Person Ownership

Administration can be simplified by having a single person responsible for locating and directing the OPC. Determination-making is straightforward and rapid. The member can easily pass ordinary and exceptional resolutions by simply writing them down in the minute’s book and obtaining another member to sign them. Managing the business will be easy because of internal disagreements or holdups.

• Persistent Restatement With Endless Succession

Even with only one member, the OPC can be a source of endless succession. When forming an OPC, a single-member entity must select a nominee. In the event of a member’s untimely demise, the applicant will step into the CEO role and run the business.

One Person Company Registration in India

A single person may establish a business in India with the help of the Companies Act of 2013.

It controls the creation and operation of single-member companies in India. Unlike a private or public company, which requires a minimum of three persons to form, private companies can start with as few as one person and as few as two.

A corporation could formerly be created solely by a conglomerate of individuals. One-person companies in India are businesses that a single individual owns.

Before the Companies Act of 2013, a business could be formed by no more than two people.

Section 262 of the Companies Act of 2013 makes it possible to form and register a single-person business in India legally.

A single director and a single member must write a “one-person corporation” in India. Unlike private corporations, there are hardly any regulations that a limited liability company must follow.

Documents Required For One Person Company Registration

• ID card or Passport
• Photographic ID
• Signature on a specimen
• Formal Receipt of No Objection
• Lease Contract
• Identifying where directorships can be verified

Confirmation of Board Members’ Identities: Those not citizens of the United States or its territories must have a passport to travel internationally.

• Identification for Voting
• Driving Permit
• Newly minted utility receipts
• Bills for mobile and landline phones, as well as bank statements

Required Paperwork to Form an OPC

• Latest bank statement in PDF format
• Expenses related to using electricity, gas, or a cell phone
• Electronic transcription of an English rental agreement
• Certificate of No Objection from Property Owner in Digital Form
• Scanned copies of English language property or sale deeds (if the property is owned).

One Person Company Registration Process in India

• See if you qualify and make sure you have the proper paperwork.
• Obtain DSCs and DINs for all board members.
• Please fill out this Name Reservation Form and submit it. The Spice+ Way to Form a Corporation
• Apply for a PAN and TAN to start a business.
• PAN and TAN are included on the certificate of incorporation issued by RoC.
• Get your firm off the ground by opening a bank account.

Important Note…

The entire procedure of forming a One Person Company can be finished in 20 days. You need to get in touch with the most effective platform, and the rest will take care of itself.

General Guideline for the Formation of OPC Company

• Constraints on the number of participants’ maximum and minimum ages must be met.
• Before formal incorporation, a candidate must be appointed.
• To solicit the nominee’s signature, submit Form INC-3.
• The choice of the OPC name is required by the Companies (Incorporation Rules) 2014.
• The prospective board member must have a DSC of at least 1 Lakh.
• You are proving the location of the OPC’s headquarters.

Concept of One Person Company

The Companies Act 2013 specifies that a single individual can form an OPC by signing his name to the Memorandum of Association and meeting the other requirements.

Suppose the original member dies or becomes legally unable to join into contracts. In that case, the MoA must also reveal all the details of a nominee who will become the company’s sole member.

A copy of the MoA and the nominee’s approval of his nomination must be included with the application for registration filed to the Registrar of Companies.

At any moment, with the proper application to the Registrar, the nominee may withdraw his name from consideration. The member may withdraw his nomination at a later time.

One Person Company vs. Sole Proprietorships: Finding a Difference

There is a common misunderstanding that an OPC and a sole proprietorship are the same simply because they both feature a single individual as the business’s owner. The primary distinction between the two is the responsibilities each assumes.

Since OPC is a distinct legal entity from its promoter, it is responsible for its debts and owns its property. It is impossible to sue the promoter for personal obligations of the company.

In contrast, a sole proprietorship doesn’t have a separate owner from the person running the business. Therefore, the promoter’s assets are attached and sold by the law in the event of non-fulfillment of the business’s liabilities.