One Person Company (OPC)
A One Person Company (OPC) is a business structure introduced under the Companies Act, 2013, allowing a single entrepreneur to start and manage a company with limited liability. OPC bridges the gap between sole proprietorship and private limited companies, giving solo entrepreneurs the flexibility of sole ownership and the benefits of a corporate framework. It is an ideal choice for individuals with innovative ideas and plans to start their ventures independently
Features of an OPC
✅Single Owner: Owned and managed by one person, who acts as both the shareholder and director
✅Separate Legal Entity: An OPC is distinct from its owner, with its own legal identity.
✅Limited Liability: The personal assets of the owner are protected from business liabilities.
✅Nominee Requirement: A nominee must be appointed during incorporation to take over in case of the owner’s death or incapacity.
✅Perpetual Succession: The company remains in existence regardless of changes in ownership.
✅Restrictions on Conversion: An OPC must convert into a private or public limited company if its paid-up capital exceeds ₹50 lakh or its annual turnover crosses ₹2 crore.
Advantages of an OPC
- Complete Control: The owner has full control over decision-making and operations.
- Legal Protection: Offers protection of personal assets due to limited liability.
- Ease of Compliance: Lesser regulatory requirements compared to other corporate structures.
- Tax Benefits: Eligible for corporate tax rates and deductions.
- Credibility: Enhances the business’s credibility compared to sole proprietorships.
- No Minimum Capital Requirement: Can be started with a minimal investment.
Compliance Requirements for an OPC
Income Tax Filing
Submit annual income tax returns.
Annual Return Filing
File Form MGT-7A annually.
Financial Statements
File Form AOC-4 with the MCA.
Statutory Audit
Conduct an audit if applicable.
Board Meetings
OPCs with only one director are exempt from board meeting requirements, but resolutions must be recorded.
Benefits of an OPC
Reduced Compliance
Compared to private limited companies, the regulatory burden is lower.
Continuity
Business operations continue without interruption due to the appointment of a nominee.
Legal Recognition
Recognized as a separate legal entity, enhancing the company’s market reputation.
Structured Growth
Enables smooth scalability and conversion to a private limited company if needed.
Attractive for Investors
Though initially limited to one shareholder, conversion to other structures is possible to attract funding.
Documents Required for Incorporating an OPC
- Identity Proof:
- PAN Card (mandatory for the owner and nominee).
- Passport (for foreign nationals).
- Address Proof:
- Aadhaar Card, Voter ID, or Driving License.
- Residential Proof:
- Bank Statement or Utility Bill (not older than two months).
- Office Address Proof:
- Latest Electricity or Water Bill, Rent Agreement, and NOC from the property owner (if rented).
- Digital Signature Certificate (DSC): For signing the incorporation documents.
- Director Identification Number (DIN): Mandatory for the owner.
- Consent of Nominee: Signed consent from the nominee in Form INC-3.
Deliverables Upon Incorporation
- Certificate of Incorporation (CoI).
- PAN and TAN for the Company.
- DIN for the Owner/Director.
- MoA and AoA.
- Company Name Approval Certificate.
- GST Registration Certificate (if applicable).
- Bank Account Opening Assistance.
Frequently asked Questions
Any individual who is an Indian citizen and resident can start an OPC. NRIs and foreign nationals are not eligible
Yes, an OPC can have up to 15 directors, but only one shareholder.
GST registration is mandatory if the turnover exceeds ₹40 lakh (₹20 lakh for specific states) or if the business operates in sectors requiring GST compliance.
An OPC cannot issue shares to the public but can borrow funds or convert into a private limited company for equity funding.
Yes, conversion is mandatory if the turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh. Voluntary conversion is also possible after two years of incorporation
Yes, it is ideal for solo entrepreneurs looking for limited liability and legal recognition.
OPCs are taxed at the corporate tax rate applicable to companies.
No, OPC ownership is restricted to Indian residents.
Steps to Register an OPC
- Obtain DSC and DIN: Apply for the Digital Signature Certificate and Director Identification Number for the owner.
- Name Approval: Reserve the company name using the RUN (Reserve Unique Name) service.
- File Incorporation Forms: Submit the SPICe+ form along with the required documents and nominee details.
- Verification and Approval: The Registrar of Companies (RoC) verifies the application and issues the Certificate of Incorporation.
- Post-Incorporation Requirements: Open a bank account and register for GST if applicable.
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