ONE PERSON COMPANY (OPC)- INCORPORATION PROCEDURE
When confronted with umpteen number of options as to running a business, one sure goes through a lot of confusions and double mindedness. A private company till 2013 was considered to be the most sought after form of business, given its least cumbersome incorporation procedures and easy compliances. After the enactment of The Companies act 2013, along with simplifying procedures to geta business registered, a new vehicle to run a business, named as ONE PERSON COMPANY (OPC) has also been introduced by the lawmakers. The concept has been in existence in western countries for years. Taking a cue from there, India too adopted this, opening a plethora of opportunities to entrepreneurs.
Prior to March 2014, if you wished to start a business, you required one another person venture. A One Person Company seeks to do away with the requirement of at least 2 persons to commence a business. As the name suggests, to incorporate an OPC, only one person may act both as the Director as well as Shareholder. In a way, it reformed the existence of sole proprietorship, and recognized it legally, which was not the case earlier. A sorted regime to comply with and lesser chaos owing to less people around enable a businessman to concentrate more on day to day affairs rather than getting entangled in procedural formalities.
Features of an OPC:
- Mandatory requirement to have only one member at any point of time.
- Minimum one Director to get incorporated.
- One person can incorporate only one OPC cannot be a nominee in more than one OPC.
- An OPC cannot exceed an amount of 50 lacs as it paid up capital.
- The average annual turnover cannot be more than 2 crores in preceding 3 years.
- Upon exceeding the amounts specified in above two points, an OPC would, by default, lose its status of being an OPC.
- No voluntarily conversion to a private company or any other form possible for 2 years from date of incorporation. Also no conversion to Section 8 Company (Non-profit incorporation) possible.
Advantages endowed to an OPC:
- Limited Compliance: An OPC has been conferred with very less E-filing at MCA portal, since major provisions as to rotation of auditor, holding of AGM’s etc doesn’t apply on OPC.
- Recognized form of Sole proprietorship: As mentioned in introduction part too, an OPC is a hybrid of a sole proprietorship and a company. It legalises the existence of a sole proprietorship and attain a recognized status of being a company and enjoying privileges like perpetual succession, limited liability, and being considered as a separate entity from its owner.
- Easy loan/funds availability: Since an OPC is recognized legally, it has better access to banks and other financial institution which help them raise funds for better functioning of business.
- Centralised control: Since an OPC is manager by one person, it provided better control over business activities and sorted decision making.
- Other privileges
- No provisions to hold an AGM and quorum applicable to OPC’s.
- An OPC may only hold one Board meeting in each half of the financial year with gap between two meetings not exceeding 90 days.
- Relaxed Provisions relating to signing an Annual return, only to be signed by a company secretary, or where there is no CS, by the director of the company.
- Financial statements to be signed by director alone. No mandatory provision as to attaching Cash flow statements.
Requirements & Documents Checklist
- At least one Director/promoter
- Obtaining DIN/DPIN for the director(S)
- Obtaining DSC, which shall be affixed in all the incorporation filing and further annual compliances.
- Drafting MOA/AOA stipulating objects to be carried out.
- Director’s PAN card
- Pass port size photo
- Address proof, utility bills
Process of Incorporation:
Like stipulated earlier, incorporating an OPC is a simple regime that walk on footsteps of incorporating a private company only. Step wise procedure for the same has been specified below:
Step 1: Search for an appropriate name depicting the type of business and check for its availability o MCA 21.
Step 2: Apply for name in e-Form INC-1 on MCA website mentioning DIN of Director and affixing DSC.
Step 3: After the name is approved, it will remain valid for 60 days within which the documents for incorporation of OPC are to be submitted to registrar of companies.
Step 4: The next step would be nomination, where the subscriber to MoA would nominate a person after attaining nominee’s written consent in form INC-3.
Step 5: Application for incorporating the OPC shall be filed in e-Form SPICe (INC-32) for less than 7 subscribers and which shall linked form like eMOA and eAOA in INC 33 & 34 respectively.
Step 6: For more than 7 subscribers, INC-7 (general application for incorporation) has to be filed with:
- DIR-12 – appointment of directors
- INC-22 – Notice of situation of registered office
After all the documents have been submitted and upon no objection on the same, the registrar of company shall provide Certificate of incorporation.
If all the documents are in place and passed by registrar, the company shall get certificate of incorporation and the business can be commenced henceforth.