One Person Company (OPC) Company Registration in India

One Person Company (OPC) is a unique entity introduced under the Companies Act, 2013, allowing a single individual to establish a company with the benefits of limited liability and perpetual succession. OPC combines the features of a traditional company with the simplicity of a sole proprietorship, making it an ideal choice for solo entrepreneurs.

Before the enactment of the Companies Act, 2013, a minimum of two members and two directors were required to form a company in India. However, Section 2(62) of the Act enables an OPC to be registered with just one director and one member, who can be the same person.

OPC registration offers a streamlined process with fewer compliance requirements compared to private companies. It was primarily introduced to encourage the formalization of small businesses and foster entrepreneurship, particularly among Micro, Small, and Medium Enterprises (MSMEs).

Incorporating an OPC allows individuals, including residents and NRIs, to enjoy the advantages of a company structure while retaining full control over the business. This registration is ideal for those seeking to limit their liability while operating a business independently.

Legal Standing of OPC: A One Person Company (OPC) enjoys a distinct legal entity status under the Companies Act, 2013. The sole member’s liability is limited to the value of their shares, protecting them from personal liability for any losses incurred by the company. In case of legal action, only the OPC, not the individual member or director, can be sued by creditors.

Easy Access to Funding: OPC registration in India opens up opportunities to raise funds through venture capital, angel investors, incubators, and more. As a private company, OPCs find it easier to secure funding compared to sole proprietorships, facilitating growth.

Reduced Compliance Requirements: The OPC enjoys exemptions from various compliance requirements under the Companies Act, 2013. It is not required to prepare cash flow statements, maintain detailed account books, or have a company secretary for filing annual reports. This makes managing legal and regulatory obligations simpler.

Simple Integration: One Person Companies can be seamlessly incorporated in India without legal complexity. A single member, who can also act as the director, needs to provide consent for the registration. There is no minimum paid-up capital requirement, further easing the process.

Easy Management: OPCs are designed for simplicity in management, allowing a single person to both lead and make quick decisions. Ordinary and special resolutions can be passed without delays, as only the member’s signature is required. The absence of internal conflicts ensures smooth management.

Perpetual Succession: Despite having only one member, an OPC benefits from perpetual succession. At the time of incorporation, a nominee must be appointed, who will take over the company’s operations in case the original member passes away, ensuring the continuity of the business.

Suitable for Small Businesses: OPC is ideal for small businesses with a limited structure. It allows only one member at all times, meaning that additional members or shareholders cannot be added to raise capital. As a result, if the business grows and requires expansion, it cannot accommodate more members under the OPC structure.

Restrictions on Business Activities: OPCs are restricted from engaging in Non-Banking Financial Investment activities, including investing in securities of other corporate bodies. Furthermore, they cannot be converted into companies with charitable objectives as defined under Section 8 of the Companies Act, 2013.

Blurred Ownership and Management: In an OPC, the sole member often acts as the director, which blurs the distinction between ownership and management. The member has full control over decision-making, which can lead to challenges in maintaining ethical business practices due to the lack of oversight or external control.

Before starting the OPC registration process, it’s vital to understand the eligibility criteria and limitations outlined in the Companies Act, 2013. These rules ensure the proper formation and operation of a One Person Company (OPC).

• Natural Person and Indian Citizen: Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs are not allowed to create an OPC.
• Resident in India: The promoter must be a resident of India, having lived in the country for at least 182 days in the preceding calendar year.

• Minimum Authorized Capital: An OPC must have a minimum authorized capital of ₹1,00,000, which is stated in the capital clause during the registration process.

• Nominee Requirement: During OPC incorporation, the promoter must appoint a nominee. This individual will take over the OPC in the event of the promoter’s death or incapacitation.

• Restricted Business Operations: OPCs cannot operate in financial sectors like banking, insurance, or investments, as these activities are not permitted for OPC registration.

• Capital and Turnover Limits: If an OPC’s paid-up share capital exceeds ₹50 lakhs or its average annual turnover goes beyond ₹2 crores, it must be converted into a private limited company to meet regulatory compliance.

• Get a Digital Signature Certificate (DSC) for the Director.
• Get consent from both the Director and the Nominee.
• Draft the e-Memorandum of Association & e-Articles of Association.
• Reserve your Company Name.
• Apply for registration through the SPICe+ form.
• Get a Certificate of Incorporation from the RoC.
• Acquire PAN & TAN of your Company.
• Get a Current bank account for your Company.
• Follow post-incorporation compliances.

Several essential documents must be prepared and submitted to the Registrar of Companies (ROC) as part of the single person company registration process:

• Memorandum of Association (MoA)
• Articles of Association (AoA)
• The nominee’s consent, along with their PAN card and Aadhaar card, must be submitted via Form INC-3.
• Proof of Registered Office
• The proposed director should furnish a declaration in Form INC-9 and their consent in Form DIR-2.
• A declaration by a qualified professional certifying that all necessary legal compliances have been adhered to.

The Companies Act of 2013 outlines several essential compliances that an OPC must meet by specified deadlines. These regulations are designed to ensure transparency, promote good governance, and protect the interests of all stakeholders, including the Registrar of Companies (ROC), shareholders, directors, investors, and tax authorities. These compliances fall under four main categories: annual compliances, recurring compliances, post-incorporation one-time compliances, and event-based compliances. The one-time compliances are covered in detail below.

One-Time Compliance for OPC

After incorporation, an OPC must adhere to certain legal requirements as per the Companies Act of 2013. Additionally, local registrations might be necessary based on state laws, depending on where the OPC operates. The complete list of mandatory one-time compliances and their respective deadlines is provided for reference.

The OPC registration process typically takes around 7 to 10 days from the submission of documents, pending approval by the Ministry of Corporate Affairs (MCA).

Factors That Can Delay the Registration Process

Several factors can cause delays in the company registration process, such as:

1. Documentation Errors or Omissions
Incorrect or missing documents can slow down the process significantly.

2. Name Approval Issues
Delays can occur if the chosen company name doesn’t comply with naming guidelines or is already in use. Our Company Name and Trademark Search tool can help you avoid these complications for a seamless registration.

3. Technical Issues on the MCA Website
Technical glitches or downtime on the MCA portal may impact the submission of your application.

4. Response Time
After name approval, you have limited time to complete the registration process. Missing this window may require reapplying for name approval.

5. Payment Processing Delays
Delays in payment processing can extend the overall registration timeframe.