Back in 2013, the Companies Act introduced a special form of business entity. It was suited for those who want to establish their own business, run it on their own terms and be the sole beneficiary of the profits. That business entity was the One Person Company.
Fast forward to 2020 and after 7 years, One Person Company is still the favourite for college drop-out entrepreneurs and established businesses alike. And in this article, we are going to look into why, along with tell you all the things to know about One Person Company.
Why was a One Person Company Introduced?
Just when India was on the verge of creating the Start-Up India initiative, the government realized something: because many entrepreneurs lacked structure and attitude to start business venture, they might not be able to handle a private limited company. Thus, the government wanted to introduce a business entity that:
- Acted as training wheels for budding entrepreneurs, allowing them to dip their toes in the business waters and get them the lay of the land.
- Removed the complexity of managing the business that include other partners.
- Suited the needs and dreams of small entrepreneurs who could give high performance despite their limited resources.
The result of these desires took the form of a One Person Company. One Person Company Registration is suitable for anyone whose annual turnover isn’t more than INR 2 Crore. It acts as a training wheels for budding entrepreneurs and, it gives autonomy to a single person to make decisions within the enterprise.
Why should one choose to start an OPC?
Other than being able to run your own business on your own terms, not sharing the profits with others and getting a better sense of business world, choosing OPC registration also has following advantages:
- It’s a separate legal entity:Once you register a One Person company, you start a business entity that’s separate from you. Being a separate legal entity, a One Person Company provides you the benefit of limited liability. A limited liability is a concept which says that you’re only liable to the company losses to the amount of capital you have invested in the company. Your personal assets won’t suffer any negative reaction if the business fails.
- It’s more credible in the eyes of the investors:Getting OPC company registration basically means that you have the guts to start your own business. It drives venture capitalists and other interested parties towards your business to invest in you.
- Perpetual succession:The director of a One Person Company can appoint a nominee. That nominee, in the event of the death of the director, can take the control of the OPC company. That way, a One Person Company can continue to exist even after the death of the director.
Requirements of One Person Company Registration
Now that you know why you should start an OPC company, let’s dive into the requirement of starting one.
Requirements for a Member:
- A member of a One Person Company should be at least 18 years old.
- The member of a One Person Company should not be a Non Resident Indian.
- The Member of a One Person Company should be a citizen of India.
- The member of a One Person Company should reside in India.
Requirements for a Director:
- Only a single director is needed for the incorporation of OPC.
- The number of directors can increase to 15.
- Director gets the remuneration, while the member gets the profit.
- It’s the director that takes the work of managing the One Person Company.
Requirements for a Nominee:
- At the time of One Person Company Incorporation, you should appoint at least one Nominee.
- A Nominee should be a willing individual.
- A nominee should be given the right to withdraw his/her nomination.
Once you get the handle on these requirements, you can move on to the task of actually setting up your one person company.
The process of One Person Company Registration
The One Person Company registration process follows the same series of steps as a Private limited company.
However, for the sake of simplicity, let’s dive into the process, keeping a one person company as the context:
Choose a good name for your One Person Company: The process of name choosing isn’t as easy as it sounds. You have to really make sure that the name you choose is unique, non-offensive and can actually be pronounced. To decide the uniqueness of the name you can try the OPC company name search or the trademark search modules.
Get The DSC and DIN of the people you want as the director(s) of the company: As the director of the proposed company, you should have two things:
- DSC to authenticate the documents you submit online when you are filing the application for the registration for OPC one person company.
- The Director Identification Number (DIN) to assign director for your proposed company.
Get the consent from person who you want to make the nominee of your one person company: Get the INC 3 Letter, the form for consent from the person you’re appointing as the nominee of your One Person Company.
Present the documents required for OPC company registration: Furnish the following documents and get them certified by a Chartered Accountant:
- Your Photo ID.
- Your ID proof.
- Your address proof.
- A consent letter from the individual you making the nominee of your OPC company.
- The ID proof, address proof and the photo ID of your Nominee.
- The address proof of the registered office space along with your PAN card.
Draft MOA and AOA: Memorandum of Association is an important document that details the objectives of your One Person Company. It’s the foundation document of your company that shows what you actually do. An AOA or Articles of Association is a policy document – highlighting the rules and regulations you ought follow via your One Person Company.
Get approval for the name of your One Person Company: One of the major, albeit optional steps of one person company registration process is to reserve the name of the company. Do so with the aid of RUN application. File the application for ONE Person Company Incorporation: Finally, you’re ready to file the online application for registration of an OPC. One Person Company is registered after you successfully complete the registration process. It makes the MCA give you the certificate of incorporation.
So that’s it, all that you need to know about a One Person Company. The process of Registration of a One Person Company can only be completed successfully if you have the will for it. And the will for it you do have. To ensure that any of your steps aren’t in vain, contact our OPC consultants to get your company registered.