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One Person Company ( OPC ) Registration in India
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Starting a One Person Company (OPC) in India
A One Person Company (OPC) is a unique business structure that allows a single entrepreneur to operate a legally recognized company with limited liability. It requires only one director and one shareholder, both of whom can be the same person. The company must be registered under the Ministry of Corporate Affairs (MCA), and a nominee must be appointed in case of unforeseen circumstances.
Key Features of One Person Company
- • An OPC is owned and managed by a single individual who acts as both the shareholder and the director. This structure allows full control over decision-making while still enjoying the benefits of a corporate entity.
- • Unlike sole proprietorships, where the owner’s personal assets are at risk, an OPC provides limited liability, meaning the owner is only liable for the company's debts up to the amount invested, safeguarding personal wealth.
- • The OPC continues to exist even if the original owner is unable to manage it. A nominee director must be appointed during incorporation, ensuring smooth transition and continuity in case of the owner’s death or incapacity.
What Is A One Person Company?
A One Person Company (OPC) is a business structure in India that allows a single individual to own and operate a company with limited liability. It combines the benefits of a sole proprietorship and a private limited company, providing legal recognition, separate legal identity, and protection of personal assets. The owner acts as both the shareholder and director, and a nominee must be appointed to take over in case of unforeseen circumstances.
Eligibility Criteria for OPC Registration in India
- ✔ Only One Shareholder The company can have only one individual as the owner and shareholder.
- ✔ Resident Indian Owner The shareholder must be an Indian citizen and resident, meaning they must have lived in India for at least 182 days in the previous financial year.
- ✔ Nominee Appointment A nominee must be designated at the time of incorporation to take over the company in case of the owner's death or incapacity.
- ✔ Limited Business Activities An OPC cannot engage in non-banking financial activities, investment in securities, or any other financial services.
- ✔ Conversion Restrictions An OPC must be converted into a Private Limited Company if its paid-up capital exceeds ₹50 lakh or annual turnover exceeds ₹2 crore for three consecutive years.
- ✔ No Multiple OPCs A person can register only one OPC and cannot be a nominee for more than one OPC at a time.
- ✔ Conversion Restrictions An OPC must be converted into a Private Limited Company if its paid-up capital exceeds ₹50 lakh or annual turnover exceeds ₹2 crore for three consecutive years.
Post-Incorporation Formalities for OPC
After incorporating a One Person Company (OPC) in India, several post-incorporation formalities must be completed to ensure legal compliance. The company must open a current bank account in its registered name for financial transactions. A share certificate must be issued to the sole shareholder within 60 days of incorporation. Additionally, an auditor must be appointed within 30 days to handle financial auditing. If the OPC’s turnover exceeds ₹20 lakh (₹10 lakh for special category states) or involves inter-state transactions, GST registration is mandatory. The company must also file annual returns (MGT-7A) and financial statements (AOC-4) with the Ministry of Corporate Affairs (MCA). Lastly, it must comply with income tax regulations (ITR-6), TDS, and other statutory requirements to avoid penalties.
Silent Features
Single Owner
Limited Liability
Separate Legal Entity
Nominee Requirement
Perpetual Succession
Conversion Restrictions
Advantages of a One Person Company (OPC)
A One Person Company is a widely preferred business structure in India due to its numerous benefits. Here’s an overview:
- Limited Liability Protection : The owner's personal assets are protected, and liability is limited to the capital invested.
- Separate Legal Entity : The OPC is legally distinct from its owner, allowing it to own assets and enter into contracts independently.
- Full Control : The single owner has complete decision-making authority without interference from other shareholders or directors.
- Ease of Compliance : Compared to private limited companies, OPCs have fewer regulatory and compliance requirements.
- Perpetual Succession : The company continues to exist even if the owner changes, ensuring business continuity.
- Better Market Credibility :As a registered company, an OPC gains more trust and credibility compared to a sole proprietorship.
Disadvantages of a One Person Company (OPC)
While a One Person Company offers several benefits, it also comes with certain challenges:
- Limited Business Activities : OPCs cannot engage in non-banking financial services or investment activities.
- Higher Tax Rates : OPCs are taxed at a flat 25% corporate tax rate, which may be higher than individual income tax slabs.
- Nominee Requirement : A nominee must be appointed at incorporation, adding a layer of legal formality.
- Restrictions on Expansion : If an OPC’s turnover exceeds ₹2 crore or paid-up capital crosses ₹50 lakh, it must be converted into a private limited company.
- Single Ownership Limitation : A person can own only one OPC and cannot be a nominee in another OPC.
- Compliance Burden :Despite fewer regulations, OPCs still need to file annual returns, maintain financial records, and appoint an auditor, which can increase administrative work.
Documents Required
PAN details of the sole director and nominee.
Aadhaar Card, Voter ID, or Driving License of the sole director and nominee.
Utility bills (electricity, telephone, or gas bill, not older than 2 months).
Rental agreement (if applicable) and No Objection Certificate (NOC) from the property owner..
Memorandum of Association (MoA) & Articles of Association (AoA) Required for defining company objectives and rules.
Nominee Consent Form (INC-3) Mandatory for appointing a nominee in case of incapacity or death of the sole director etc..
Step-by-Step Guide For The Process
Here are 5 steps to complete your process
Step 1
Obtain a Digital Signature Certificate (DSC)
Step 2
Director Identification Number (DIN)
Step 3
Name Reservation (SPICe+ Part A)
Step 4
Submission of Company Details (SPICe+ Part B)
Step 5
Preparation & Submission of Incorporation Formst
MCA Compliance Requirements for One Person Company (OPC)
Every One Person Company (OPC) must adhere to compliance requirements at the end of each financial year. These obligations generally include auditing financial records, filing income tax returns, and submitting annual forms to the Ministry of Corporate Affairs (MCA). Failure to comply can result in significant penalties, late fees, or other legal consequences.
| Form | Compliance Requirement | Due Date | Penalty |
|---|---|---|---|
| INC-20A | Certificate for Commencement of Business | Within 180 days of incorporation | ₹50,000 for non-compliance |
| DIR-3 eKYC | KYC verification for Director Identification Number (DIN) | On or before 30th September every year | Deactivation of DIN, ₹5,000 late fee |
| ADT-1 | Auditor appointment (mandatory even if no transactions) | Within 15 days of auditor’s appointment | Late fees apply |
| AOC-4 | Filing of financial statements | Within 180 days of financial year-end | ₹100 per day after due date till the filings is done |
| Annual return filing for OPC | Filing LLP’s Income Tax Return | Within 60 days of financial year-end | Late fees apply |
| Form MGT-7 | Filing of annual returns | Within 60 days of the AGM | ₹100 per day after due date till the filings is done |
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