One Person companies can be registered as a private limited company along with the OPC registration documents. An OPC is a company that cannot have more than one shareholder, who must be a natural person, an Indian citizen, and a resident of India. A body corporate, whether resident or non-resident in India, cannot own a One Person Company.
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The concept of OPC did not exist in India prior to the introduction of Companies Act 2013, and sole proprietorships existed as the only form of single-owner business. As a new development in the corporate history of India, the One Person Company has enabled such sole proprietorship businesses to convert into a company of limited liability, along with the added advantages of a company.
Meaning of a One Person Company
A one person company is defined under section 2(62) of the Companies Act 2013 as a company which has only one person as its member. It combines the best features of a Sole Proprietorship and a registered company. An OPC can be registered as a company limited by shares, a company limited by guarantee, or as an unlimited company. However, section 3(1)(c) of the Companies Act states that an OPC shall, in essence, be considered as a private limited company and Section 4(1) of the act provides that the Memorandum of the OPC shall state its name ending with “Private Limited”, if the OPC offers limited liability to its single shareholder.
An OPC can be established only by a natural person or an individual who is a citizen and resident of India. A resident Indian is an individual who has resided in India for at least 182 days in the immediately preceding calendar year. An OPC cannot have more than one shareholder entitled to its ownership. However, the owner does not have the right to participate in the management of the company, for the purpose of which he must hire at least 1 and at most 15 directors. Unlike a sole proprietorship, an OPC does not die with the death of its owner. In fact, it can be perpetually succeeded by the nominee of each shareholder after his death or departure. Like a single shareholder, an OPC cannot have more than one nominee at a time.
Procedure for OPC Registration
An OPC is registered in the same way as that of a limited liability company. The registration of an OPC can be applied through the SPICe+ or INC 32 form available on the official website of Ministry of Corporate Affairs. The form is divided into two parts- PART A and PART B. The name of the OPC can be reserved using PART A of SPICe+, with a fixed application fee of Rs.1,000. The name of the company can also be reserved using the RUN application which charges the same fee as that of PART A of the application.
Part B of the SPICe+ application contains the form for registration along with 10 other related services. Once both parts of the application are filled, it has to be submitted to the Registrar of Companies along with the prescribed OPC registration documents. The ROC shall, after processing the application, issue a Certificate of Registration and allot a Corporate Identification Number to the OPC.
The SPICe+ application form has to be signed using a Class III DSC, the application for which can be filed to any of the Certifying agencies located in India. DSCs can be applied for a validity period of 1 year, 2years, and 3 years, respectively. The application fee for DSC depends on its class, duration of validity, and the authority issuing it, as different certifying authorities charge differently for the issuance of DSC.
Another significant prerequisite OPC registration documents is the requirement of DIN with all the current directors before filing the SPICe+ application. DIN can be obtained by applying through form DIR 3, along with the fixed application fee of Rs. 500. The documents of the applicant required to be submitted with DIR 3 includes the PAN card, Proof of Identity, and the Proof of registered address of the applicant.
Additionally, the owner of the OPC must choose his nominee and mention the particulars of the same in the SPICe+ application. Before registering the OPC, the consent of the nominee has to be acquired and the same must be intimidated to the Registrar of Companies in the SPICe+ application form. The name of the nominee must be mentioned in the MOA of the company as well.
OPC Registration Documents
The OPC registration documents can be categorised into the documents of the applicant director, documents of the company, documents of the nominee, and documents of the principal place of business. A list of the required OPC registration documents for OPC registration in India have been mentioned below.
- The PAN card, Proof of Identity, and Proof of Registered address of the applicant director
- DIN of all current directors
- MOA of the company with details filled in all 6 clauses, namely, the name clause, the Situation clause, the object clause, the liability clause, the capital clause, and the nominee clause.
- AoA of the company
- Personal KYC details and documents of the nominee (PAN card, Proof of Identity, Proof of registered address)
- Nominee consent form (INC 3)
- Declaration of first directors of the authenticity of details and documents furnished in the application (INC 9)
- Declaration of independently practicing CA/ CS/ High Court Advocate (INC 14)
- Proof of registered address of the principal place of business
- No Objection Certificate from the owner of the premises
- Rent Agreement or property documents of the premises
Conclusion
One person companies are generally small, single owner businesses, looking forward to being registered as a limited liability business. Compared to other forms of businesses, a one person company can be set up and operated at a limited amount of capital infused into it, by its only shareholder. The fact that the sole owner of the OPC does not have to share any part of its profits, shares, and voting rights with any other investor, makes it even more attractive for small start up businesses.
The reduced cost of OPC registration and filing of OPC registration documents due to a completely online process and negligible application fee is an added cherry on the cake for young and nascent entrepreneurs. Therefore, being thoroughly informed about the eligibility, procedure, and other prerequisites for setting up an OPC is extremely relevant in a country witnessing a startup boom in recent years.
