One Person Company
The One Person Company (OPC) gives a single promoter full control over the company while limiting his/her liability to contributions to the business. This person will be the only director and shareholder (there is a nominee director, but with no power until the original director is incapable of entering into contract). With OPC type Company, raising equity funding or offering employee stock options is not available. Additionally, if an OPC hits an average three-year turnover of over Rs. 2 crore or has a paid-up capital of over Rs. 50 lakh, it must be turned into a private limited company or public limited company within six months.
Registration of OPC Minimum requirements
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Scanned passport-sized photograph
- Specimen signature (blank document with signature)
- OPC registration process: Estimated Registration Time Frame 4-6 weeks
One Person Company Features
One Shareholder: An Indian citizen and resident in India is eligible to incorporate One Person Company. The term “Resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.
Nomination facility: The Shareholder can nominate another person who shall become the shareholder in case of death/incapacity of the original shareholder. Only an Indian citizen and resident in India can be a nominee.
One Director: Minimum One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.
Only Indian residents can register a OPCs, and that, too, only one at a time, as per the specifications of the Ministry of Corporate Affairs.
An OPC is a good alternative to running a sole proprietorship, largely because it gives limited liability to the business owner. This means that your liability is limited to the amount you’ve invested in the business; business debts cannot be recovered from personal possessions. Also, a sole proprietorship ceases to exist on the death of its promoter. In the case of an OPC, the nominee director takes over and the entity continues to exist. Single entrepreneurs who do not have another partner to start a private limited company may also consider it.
Businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.
It needs an authorized capital of Rs. 1 lakh to begin with, but not actually needs to be paid-up capital. This means that you don’t really need to invest any money into the business.
Tax is to be paid at flat rate of 30% on profits, Dividend Distribution Tax applies, as does Minimum Alternate Tax…
OPCs can be converted into private limited or public limited companies on crossing a certain revenue number. Currently, in case of an average turnover of Rs. 2 crore or more for the three consecutive years or a paid-up capital of over Rs. 50 lakh, the OPC must mandatorily be converted into an OPC.
An OPC has certain limitations. The person starting the business is its only director and shareholder. There is also a nominee director, but this person has no power whatsoever for raising equity funds or offer employee stock options. The nominee exists only to take over in case of the death or incapacitation of the director. The nominee is chosen by the director, and can be anyone, such as your spouse, parents or siblings. The nominee will need to provide identity proof during registration.