One Person Company(OPC), if this term, is entirely new to you and you wish to get some worthy and reliable information on the topic, then you are scrolling the right page!! This blog will apprise you about One Person Company, its need, benefit, and the process of registration. I hope, going through the blog will help you to get some useful stuff related to One Person Company.
What is One Person Company?
Among the many revolutions which were introduced to the corporate laws in India, One Person Company is a significant one.
According to Section 2 (62)of the Companies Act, 2013, One Person Company can be defined as a company formed with only one person as a member. This is different from the traditional manner of having at least two members. OPC is a company that has only one shareholder as its member.
We can also call OPC a Single director company. OPC can be incorporated with just one director and one member.
The director and the member may be the same person. Apart from these, there is also the importance of nominees in OPC. One person must be mentioned as ‘Nominee’ in the event of death or incapacity of the single-member (director). In such an event, this nominee will become a member of OPC, he will be entitled to all shares of the OPC and he will also bear all the liabilities of the company.
Who is eligible to act as a member of an OPC?
As per the information given on the official website of the Ministry of Corporate Affairs, under the Indian
Government, Only a natural person who is a citizen of India and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one financial year.
Need for OPC
Person Companies are generally formed when there is only one founder or promoter for business. The budding entrepreneurs whose businesses lie in the initial phase prefer to create OPCs because of the benefits it unlocks.
OPC paves the way for small traders, service providers to venture into business and explore their full potential. OPC is a refined version of a sole proprietorship with comparatively more benefits.
Benefits of One Person Company
In OPC, the liability to repay the availed loan is limited to the OPC only. It is different from a sole proprietorship, which is not a separate legal entity. This makes the sole proprietor personally liable for any loan or credit facility was taken.
Easier to obtain funds
As compared to sole proprietorship, OPC as an incorporated company gets an upper hand while availing loan facilities. The RBI by its master circular issued in July 2013 has provided for all Scheduled Commercial Banks (excluding RRBs) to promote the financing of the priority sector. This includes agricultural and small-scale industries. OPCs have ventured into various sectors like construction, electricity, mining and quarrying, transport, trading, and manufacturing of textiles, food, etc. The loans are provided at a lower rate of interest to OPCs.
The advantage with OPC is that in this form there is relaxation from stringent legal compliances like conducting board meetings, general meetings or quorums, mandatory rotation of an auditor. An OPC also doesn’t require to necessarily appoint a company secretary. The annual return of One Person Company can be signed by its director also if the company secretary is not available. The financial statement of OPCs need not include cash flow statements.
In a sole proprietorship, the end is imminent with the death of the proprietor. But in OPC ownership passes on to the nominee director and thus it continues to exist.
There is more scope for credibility in One Person Company owing to the reasons like greater autonomy and transparency. The decision-making process is usually not delayed in this form of corporate entity.
One Person Company Registration
How to register One Person Company? Like other services, we, the competent professionals, at Legalitecan make this process simpler for you. Let’s understand the registration of OPC in some simple steps:
- Thoroughly check the Eligibility conditions and know about the documents required
- Apply for DSC (Digital Signature Certificate) and DIN(Digital Identification Number) of the director
- Apply for the approval or reservation of name
- File Spice + form for OPC incorporation
- Apply PAN(Permanent Account Number) and TAN(Tax Deduction and Collection Account Number) for your new One Person Company
- RoC(Registrars of Companies) issues a certificate of incorporation of One Person Company with a PAN and TAN
- Open a bank account with the respective bank
- Start your operation smoothly