One Person Company (OPC)
A One Person Company (OPC), introduced under Section 2(62) of the Companies Act 2013, is a company with only one person as its member. It’s a separate legal entity, offering limited liability protection to its sole shareholder, business continuity, and ease of incorporation.
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An OPC must convert to a Private Limited Company if its annual turnover exceeds Rs. 2 crores. Like all companies, it must file audited financial statements with the Ministry of Corporate Affairs annually. However, an OPC cannot be incorporated as or converted into a Section 8 company (charitable objects) or conduct non-banking financial activities, including investing in other corporate securities.
Only an Indian resident (having stayed in India for at least 182 days during the preceding financial year) can incorporate an OPC. No individual can form more than one OPC.
Key Features of an OPC
Single Member
An OPC has only one member/shareholder who makes all company decisions.
Limited Liability
The member's personal assets are protected from business debts or legal issues.
Separate Legal Entity
An OPC is a distinct legal entity, separate from its owner. It can enter contracts, acquire assets, and incur liabilities in its own name.
Nominee Director
An OPC must have a nominee director, named in its constitution, who takes charge if the original member becomes incapacitated or deceased.
Conversion to Private Limited Company
The member's personal assets are protected from business debts or legal issues.
No Perpetual Succession
Unlike other companies, an OPC does not have perpetual succession. The death of the sole member necessitates the nominee director deciding whether to become the new member.
Advantages of an OPC
Separate Legal Entity
An OPC, as a separate legal entity, can conduct business activities like any other company.
Easy Funding
OPCs can raise funds through venture capital, financial institutions, and angel investors, facilitating growth into a private limited company.
More Opportunities, Limited Liability
Limited liability encourages calculated business risks without jeopardizing personal assets, beneficial for startups.
Benefits
OPCs can access benefits available to Small Scale Industries, such as lower interest rates on loans, easier funding, and advantages under foreign trade policies.
Taxation
Director remuneration is deductible under income tax law, unlike proprietorships. Presumptive taxation benefits are also available.
Credit Rating
An OPC can obtain loans even with a less-than-perfect credit rating.
Minimum Requirements
- Minimum 1 Shareholder
- Minimum 1 Director (can be the same person as the shareholder)
- Minimum 1 Nominee
- The letters "OPC" must be suffixed to the company name.
- Copy of PAN Card
- Passport-sized Photograph
- Copy of Aadhar Card or Voter ID (Address proof)
- Copy of Utility Bill (Registered office address proof)
- No Objection Certificate (NOC) from landlord (if rented property)
- Digital Signature Certificate (DSC)
- Name Reservation Documents
- Registered Office Proof (Rent agreement and NOC for rented property, electricity bill or other address proof for self-owned property. Documents must be valid and not more than two months old.)
Registration Process
Name Approval Application
Apply for name approval through the RUN process on the MCA portal. Approved names are valid for 20 days (new company) or 60 days (existing company name change). A fee of Rs. 1000 is payable. Alternatively, the name can be applied through the integrated SPICE application (INC-32) with two resubmission chances.
DSC (Digital Signature)
Obtain DSCs for subscribers and directors.
Apply For DIN (Director Identification Number)
Apply for DINs for proposed directors.
FORM SPICE (INC-32), MOA (INC-33), AOA (INC-34), AGILE
File Form INC-32 (SPICE) with supporting documents (director/subscriber details, affidavits, identity/address proof, MoA, AoA). The MCA’s Central Processing Centre processes the form. Upon approval, the company is registered, a CIN is allocated, and DINs are issued. Maximum three directors can apply for DINs through SPICE. Non-individual foreign subscribers must attach apostilled MoA and AoA PDFs. SPICe AoA (INC-34) allows adding/modifying/deleting articles. DSC is mandatory for subscribers and witnesses in eMoA (INC-33) and eAoA (INC-34) if subscribers are less than 7. Otherwise, MoA and AoA can be attached manually without mandatory DSC. Two resubmissions are allowed for the e-form. SPICe eMoA and eAoA must be uploaded as linked forms to SPICe (INC-32). Form AGILE is used for GSTIN, ESIC, and EPFO registration. Filing INC-35 with SPICe is mandatory for GSTIN application. Applying for PAN and TAN with SPICe is mandatory.
Certificate Of Incorporation
The incorporation certificate is generated with CIN, PAN, and TAN. Stamp duty is payable (state matter).
PAN and TAN Application
Apply for PAN and TAN if not already done with INC-32.
Commencement of Business (INC-20A)
File eForm INC-20A within 180 days of incorporation, declaring that subscribers have paid their share value.
Frequently Asked Questions
Q. Eligibility to be a Member
Only an Indian citizen and resident (stayed in India for at least 182 days during the preceding financial year) can be a member and nominee of an OPC.
Q. Number of OPCs a Person Can Be a Member Of
One person can be a member of only one OPC.
Q. Tax Advantages
Consult a tax professional for specific tax advantages.
Q. Mandatory Conversion Threshold
An OPC must convert to a private or public company if its annual turnover exceeds Rs. 2 crores.
Q. Mandatory Compliances
Consult a legal professional for the mandatory compliances an OPC must observe.
Q. Who Cannot Form an OPC
Generally, any individual who is an Indian citizen and resident can form an OPC, unless otherwise restricted by law.
Q. Converting an OPC to a Private Limited Company
The process involves filing necessary documents with the regulatory authorities. Consult a legal professional for guidance.
