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OPC / One Person Company Registration

Guide to OPC / One Person Company Registration and Incorporation in India

OPC or One Person Company is a new concept of Corporate Legal Entity perfectly suitable for the entrepreneurs who desire to have the advantages of being solely in charge and yet having a credible legal entity.

The Registration and Compliance of OPC / One Person Company are governed by the Ministry of Corporate Affairs as per the provisions of Companies Act, 2013 and the Companies Incorporation Rules, 2014.

What is One Person Company / OPC? It’s Meaning

In simple terms, an One person company is a Private Limited Corporation, which is fully held (Shareholder) and completely controlled (Director) by only one / single person.

A single shareholder holds 100 percent shareholding. Meaning, only 1 person is required to form an OPC, who can be both a Shareholder as well as the Director.

A One Person Company, or OPC, is a type of “Privately Held Independent Legal Business Entity” similar to a Private Limited Company which limits the liability of the owner up to the extent of the shares he/she has subscribed. It means that the liability of the shareholder to Creditors or Lenders of the company is limited to the capital originally invested.

The Minimum and the Maximum number of members (Shareholders) required to form an OPC Pvt. Ltd. company is one.

Thus, an OPC has one shareholder who is also the director. Further, as there is only one shareholder / director, there is a ‘nominee’ director who is nominated by the shareholder / director to step in, in the event the shareholder / director is unable to carry on their functions.

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Characteristics or Features of One Person Company / OPC

Independent / Separate Legal Entity

An OPC Pvt. Ltd. Company is established under Section 2(62) of the Companies Act 2013. Hence, an OPC is a a Legal and Independent Person in the eyes of Law.

Limited Liability

Similar to a private limited company, an OPC Pvt Ltd protects your personal assets with the “Limited Liability” feature. Maximum Liability of the shareholder / director is limited to the extent of the shares held.

Only One Shareholder / Member

Given the nature of the business entity, there can only be one shareholder / member in an OPC Pvt Ltd at any given point of time. Hence, the only member owns the 100% of the shares in the OPC.

No minimum paid-up capital requirement

There is no minimum Capital required to start an OPC Private Limited Company. So, even with zero registered capital, an OPC can be incorporated and can start doing business.

Uninterrupted Existence or Perpetual Succession

An OPC Pvt. Ltd. company has perpetual succession. Which means it continues to do business even if the member changes or dies (which is not the case of Sole Proprietorship or Partnership Firms).

Membership in only one OPC at a time

A person can be a member of only one OPC Pvt Ltd at any point of time. In case a person becomes a member in more than one OPC Pvt Ltd, that person is required to withdraw from the membership of any of the OPC companies within 180 days.

Restricted rights to transfer of shares

Companies Act, 2013 expressly restricts the transfer of shares of an OPC Pvt. Ltd. Company. Means, the shares of OPC cannot be transferred to others easily without fulfilling various compliances.

Only One Director

There can only be one director and one nominee director in an OPC Pvt Ltd. The sole Director / member must be a natural citizen of India as well as a resident of India. Hence, a foreigner or an Indian citizen not residing in India cannot be a member of an OPC Pvt Ltd.

External funding Not allowed

An OPC Private Limited Company has only one shareholder / member. Thus, it cannot be used for receiving investments and cannot issue shares to investors. Entrepreneurs seeking investment may opt for a Private Limited Company which can raise funds from external investors including Venture Capitalists or Angel investors

Mandatory Conversion to Private / Public Company

If the paid up share capital of an OPC exceeds Fifty Lakh Rupees or the average annual turnover for three immediately preceding financial years exceeds Two Crore Rupees, the OPC Private Limited has to mandatorily convert itself into Private or Public Limited Company.

When to consider Registering a One Person Company?

Consider the below points before deciding to choose OPC Private Limited Company as your choice of entity to do business.

Opt for an OPC Private Limited Company:

  • When you need a separate “Legal Identity” for your business, and also want complete ownership and control.
  • If you want to Limit your Liability (as opposed to a sole proprietorship concern)
  • If you don’t want to use your personal assets as collateral for business loans
  • If you decide to not have Employee Stock Options or ESOPs
  • If you have decided not to have external investments or funding from Angel, Seed or Venture Capital Investors.

If you are unsure of choosing the right form of entity for your business, feel free to get in touch with us. Our Business Expert will guide you with the proper form of entity, suitable for your needs.

OPC / One Person Company Registration Process in India

As with a Private Limited Company, an OPC Private Limited Company is registered with the Registrar of Companies (MCA).

Steps for Registering / Incorporating an OPC Private Limited Company

Step 1: Obtain Digital Signature Certificate or DSC

It is mandatory for the Director / Shareholder / Member to have a valid Digital Signature Certificate (DSC). The registration process is online and the forms need to be signed electronically with the digital signature.  

The Digital Signature Certificates (DSC) must be obtained only from government recognized certifying agencies.

 

Step 2: Apply for Director Identification Number or DIN

Director Identification Number (DIN) is a unique Identification Number allotted to an individual who is appointed (or wants to be appointed) as a Director of a company. In order to apply for DIN, an application using Form DIR-3 needs to be made at the MCA website (Ministry Of Corporate Affairs).

A person can apply for DIN only once and the same DIN would be enough to become a Director in any number of companies.

However please note that a person can be a Member in ONLY One OPC Pvt Ltd.

 

Step 3: Name Approval / Reservation

In order to register or incorporate an OPC Private Limited Company in India, the name for the proposed company should be approved by the MCA Authorities. Hence, it is recommended to apply for the Name Reservation before applying for incorporation.

The proposed Company Name has to be unique and should not have been taken by any other business. Availability of the name can be searched on http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

Also, the proposed company name should not be already Trademarked by anyone else. You can check the Trademark availability here https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx

 

Few General Guidelines for Name Approval / Reservation:

  • The Proposed Name should be easy to spell and remember
  • The proposed name should provide a distinct identity to the company
  • To the extent possible, the proposed name should be short & simple
  • The proposed name should not contain any word opposed to Public Policy or should not be Prohibited by Law
  • Proposed Name should not infringe any Trademark registered and should not be similar or identical to any existing Company / LLP

 

Step 4: Application for issuance of Certificate of Incorporation

Once the name is reserved and approved, the same shall be valid for only next 20 days. The next step is to file an application for obtaining the Certificate of Incorporation using SPICe forms has to be filed with the MCA (Within the valid time, if the name has been reserved).

Alternately, the name reservation step can be avoided, and the SPICe forms for obtaining the Certificate of Incorporation may be filed.

Drafting Memorandum of Association (MoA)

Memorandum of Association is a legal document which showcases the Main Objectives of the OPC private limited company as well as information on the member shareholder.

Drafting Articles of Association (AoA)

Articles of Association is a legal document which has the rules and regulations for the general management of the OPC private limited company.

They define the rights, duties, powers of the management of the company and also provides the manner in which the operations and administration should be carried on.

SPICe Form (Simplified Proforma for Incorporating Company Electronically)

Ministry of Corporate Affairs (MCA) has recently introduced the SPICe Form INC-32 where the full form translates to “Simplified Proforma for Incorporating Company Electronically” (company registration form).

Form INC-32 must be accompanied by supporting documents including Details of Directors & Subscribers, Affidavits, Declarations, Identity Proof, Address Proof, MoA, and AoA etc.

Once the eForm is filed, it shall be processed by the MCA’s Central Processing Centre. If found complete, the company would be registered and Corporate Identification Number (CIN) would be allocated along with a Certificate of Incorporation.

List of Documents Required for the Registration of an OPC Private Limited Company

Directors/Shareholders Documents:

  1. PAN Card of the Shareholder / Director
  2. ID Proof – Voter’s ID / Passport / Driving License / Aadhaar
  3. Address Proof –  Latest Bank statement with transactions / Telephone bill / Mobile Bill not older than 60 days
  4. Passport Size Photograph

Registered Office Documents:

  1. Address Proof of the Premises:
    1. Rental agreement or Lease agreement if the premise is rented / leased
    2. Latest tax paid receipt / Sale deed if the premise is owned by any of the Directors
  2. Latest Electricity bill / Telephone bill / Gas bill
  3. NOC from the owner of the premise

Timeline – How long does it take to register an OPC Private Limited Company in India

Normally, if everything is in order, it may take anywhere between 8 to 12 business days for registering a private limited company. Below, breakup depicts the approximate timeline for registering a Private Limited Company in India: 

Getting a DSC (Digital Signature Certificate 2 Days
Getting a DIN (Director Identification Number) 1 Day
Name Approval 2 to 3 Days
Getting Certificate of Incorporation 3 to 5 Days

This timeline is further subject to Government processing, approval time, public holidays, etc.

OPC Private Limited Company Registration Fees / Cost

The basic Government fees for the OPC formation in india starts at as low as Rs. 3,000. Please note that the general fee includes the actual charges of all general formalities such as DSC, DIN, Form Filing, Name Approval, etc and stamp duty charges as well.

Also, keep in mind that Stamp Duty charges vary from one state to another. Eg: If you are registering your company in Bangalore, the Stamp Duty Charges levied by Karnataka State Govt are applicable. Therefore the government fee will change depending on the state you are based.

The Charges will also change as per the amount of share capital of your company and the number of Directors you wish to appoint. This is because you would need separate DIN and DSC for each individual director.

Process

Charges

Digital signature certificate (DSC)

Around Rs. 1,000 – 1,500 for each Director

Director Identification Number (DIN)

Rs. 1,000 for 2 Directors

Name Reservation (RUN)

Rs. 1,000

Spice 32 form

Depends on Authorized capital and State of registration:

Rs.2,020 is stamp duty in Karnataka for authorized capital of Rs.10,00,000 and Rs.131 for PAN and TAN

Stamp paper and Notary charges

Depends on the number of Subscribers:

Rs. 500

Professional fees

Depends on the number of Subscribers:

Rs. 6,000

Other important things to consider – Post Incorporation Compliance Requirements of an OPC Private Limited Company

After incorporation / registration of an OPC company, certain additional compliances needs to be performed. Though the actual requirements differ from company to company, we have listed a few important Post Incorporation Compliances which an OPC company would normally comply.

1

Maintenance of Books of Accounts / Accounting

Mandatory

2

Opening of Bank Account for the Company

Mandatory

3

Applying for PAN and TAN for the Company

Mandatory

4

Appointment of Statutory Auditor (within 30 Days of Incorporation)

Mandatory

5

Issue of Share Certificate (within 60 Days)

Mandatory

6

Payment of Stamp Duty on Share Certificate

Mandatory

7

Registration under the Shops and Establishment Act

As Applicable

8

Professional Tax (PT) Registration (Within 30 Days)

Mandatory

9

GST Registration

As Applicable

10

Trademark, Copyright, Patent Registrations

Optional

11

PF and ESI Registration

As Applicable

12

Trade License

As Applicable

13

Annual Filing Forms (ROC filing, etc)

Mandatory

14

Annual General Meeting / AGM

Mandatory15

15

Auditing of Accounts by Chartered Accountants (CA)

Mandatory