One Person Companies or OPCs are companies formed with only an individual who is a director and as well as the owner of the company, unlike other forms of business structures where the minimum requirement of members and director is two. One Person Company Registration allows an individual to own and manage the entire business operations. The operations of a one-person company are governed by the Companies Act of 2013. A one-person company has some distinguishing features which differentiate it from Pvt. Ltd. The company, Limited Liability Partnership (LLP), and other forms of similar business structures.
Overview of One Person Company Registration
The Companies Act of 2013 introduces the concept of One Person Company. Under section 2 (62) of the Companies Act, a one-person company is defined as a company formed with only an individual who is director and as well as owner of the company, unlike other forms of business structures where the minimum requirement of members and director is two.
One Person Company Registration allows an individual to own and manage the entire business operations. The operations of a one-person company are governed by the Companies Act of 2013. A one-person company has some distinguishing features which differentiate it from Pvt. Ltd. The company, Limited Liability Partnership (LLP), and other forms of similar business structures. It is a type of sole proprietorship business in the form of a company, which gives absolute authority to an individual to own and manage the business and the same time, limiting the duties and liabilities toward the business.
Entrepreneurs in the preliminary stage of their business have a preference to create One Person Company instead of a sole proprietorship business because of the benefits offered by one person company registration.
Benefits of One Person Company Registration
Most of the people in India prefer Pvt. Ltd. Company registration because of the benefits it offers, but the people are unaware of the benefits of One Person Company registration can be obtained with very few compliances compared to Pvt. Ltd. Company and other business structures.
The following are the benefits of OPC Registration:
Ease in Funding
Just like a Pvt. Ltd. company, one person company can also raise funds via angel investors, venture capitals, financial institutions, etc. A one-person company can also update itself as a Pvt. Ltd. Company to raise funds.
Better Opportunities
One person company has better opportunities and has the advantage of limited liability, which means that the company will be limited to the value of share the owner holds in the company. One person's company registration gives the owner more chances to explore better opportunities and take risks without any pressure of losing his/her personal assets. Therefore, it is an encouraging option for innovative young entrepreneurs.
Incorporation with Least Requirements
No one can beat one person company when it comes to registering a company with the least compliances. An individual can commence a one-person company by fulfilling the following requirements:
o A letter in the name of the company
o Nominee
o Director
o Shareholder
In the case of one person company director and shareholder can be the same individual, but he/she should be an Indian citizen. Due to very few compliances and regulations, an individual has more time to focus on the company's growth and functional areas.
Benefits for Small-Scale Industries
A one-person company is capable of availing benefits provided to small-scale industries like easy funding and no need to deposit security to certain limits, benefits under foreign trade policy, loans at cheaper interest rates, etc. Such benefits play an important role in the progress of a company in its preliminary stage.
Recognized as a Trustful Separate Legal Entity
Any business registered as per the Company Act of 2013 has a separate legal entity and is measured as trustworthy compared to those not registered.
What are the necessary Documents for One Person Company Registration?
One Person Company Registration is an easy process with very less compliance, but to obtain an OPC registration certificate, the applicant has to obtain the following documents:
Identity Proof of Nominee and Director
The applicant has to submit a government-issued identity proof of the proposed director and nominee. Identity proof can be any government-issued ID proof such as PAN card, Driving license, Aadhard card, Voter ID card, etc.
Articles of Association (AoA) and Memorandum of Association (MoA)
Both Memorandum of Association (MoA) and Articles of Association (AoA) are essential documents and are mandatory for submission during the OPC registration process. The applicant has to ensure that all the one person company's objectives are highlighted in MoA and AoA before the submission to the concerned authorities.
Consent of the Designated Nominee
As stated above, one nominee and one director are required to incorporate a one-person company. In case of any mishap such as sudden death or any permanent disability of the director, the nominee will have the authority to replace the director so that the company's working is not affected. In form INC- 3, the consent of the nominee is filed. The PAN card and Aadhar card of the nominee must be submitted.
Affidavit of the Director and Nominee
The company's proposed director and the nominee must submit their affidavit in form INC- 9 and DIR- 2.
Residential Proof of the Office
The applicant has to provide the residential proof of the registered office of the company. Residential proof can be any utility bill such as electricity, telephone, gas bills, which should not be older than two months.
PAN Card
PAN cards of the proposed director and nominee.
Passport Size Photographs
The proposed director and nominee must attach their passport size photographs along with the registration form.
DIN and DSC
DIN and DSC are essential documents for the purpose of OPC registration. DIN grants a unique identification number to the director, and DSC is used by the director to sign online documents.
Conclusion
The Companies Act of 2013 introduces the concept of One Person Company. Under section 2 (62) of the Companies Act, a one-person company is defined as a company formed with only an individual who is director and as well as owner of the company, unlike other forms of business structures where the minimum requirement of members and director is two. Above mentioned documents are necessary for OPC registration.