The One Person Company (OPC) is a novel concept included in the Company Act 2013. A minimum number of two directors and two members are necessary for a private limited company, whereas a minimum number of three directors and seven members are required in a public company. Previously, a single individual could not form a company.

The One Person Company (OPC) is a business formed by a single person. A person could not start a company or firm before implementing the Companies Act. If a person desire to start a business, he or she could only do it as a single proprietorship because a corporation required a minimum of 2 directors and two members.

Formation of a Company

Before delving into the notion of a one-person firm, let us first review the numerous sorts of corporations that may be founded. A business can be formed for a legal reason by the following individuals:

• In the case of a Public Company, seven or more people are required.
• In the subject of a Private Company, two or more people.
• In the case of a one-person business, there is just one individual.

Eligibility for OPC Incorporation

The eligibility criteria for the OPC Incorporation are as follows:

• In the prior calendar year, a single individual who is a citizen of India can create OPC.
• An OPC can only have one member.
• The name should be distinct and not identical to any other current corporation or brand.
• An individual cannot establish more than one OPC or be the nominee of more than one OPC.
• At least one director is required.
• In the case of OPC, the minimum paid-up capital is fifty lakh, & the average yearly turnover is two crores in the previous fiscal year. However, according to the most recent budget, there are no restrictions on paid-up capital or turnover limits.
• One Person Company (OPC) Private Limited must be included in its name.
• The necessary condition is to specify the name of an additional individual as a nominee. On the occasion of the subscriber's death, a nominee joins the One Person Company.

Advantages of OPC Incorporation
 

Legal standing
 

The OPC is treated as a separate statutory or legal body from the member. The OPC's unique legal entity protects the sole individual who has formed it. The member's liability is limited to their shares, and they are not personally accountable for the company's loss. As a result, creditors can sue the OPC rather than the member or director.

It is simple to get cash
 

Because OPC, or a one-person company, is a private company, it is simple to raise funds from venture capitalists, angel investors, incubators, and other sources. Financial institutions and banks prefer to lend to corporations rather than sole proprietorships. As a result, obtaining finances becomes simple.

Fewer compliances
 

The Companies Act excludes the OPC from some compliance requirements. The OPC is not required to create the statement of cash flow. The company secretary is not needed to sign the books of accounts or annual returns, which must only be signed by the director.

Simple Incorporation Process
 

It is easy to incorporate OPC because just a single member and one nominee are necessary. The member might also be the director. The minimum amount of authorised capital for the OPC incorporation is one lakh, although no minimum amount of paid-up capital is required. As a result, it is simpler to incorporate than other types of companies.

Simple to handle
 

Because the OPC may be established and controlled by a single person, it is simple to manage its affairs. Making decisions is simple, & the decision-making procedure is rapid. Ordinary & special resolutions can be readily passed by the member by inserting them into the minute book & signing them. As a result, running & managing the firm is simple because there will be no disagreements or delays.

Indefinite succession
 

Even when there is only one member, the OPC has the property of eternal succession. The single member must appoint a nominee while merging the OPC. When a member dies, the nominee takes over as CEO of the firm.

Disadvantages of OPC Incorporation
 

Only suitable for small businesses
 

OPC is appropriate for small business structures. The One-Person company can have no more than one member at any given moment. More shareholders or members cannot be joined to OPC in order to raise additional capital. As a result, new members cannot be joined as the company expands and grows.

Restriction of commercial activity
 

The OPC cannot engage in Non-Banking Financial Investment operations, such as investing in corporate securities. It cannot be turned into a charity corporation under Section 8 of the Companies Act of 2013.

Management and ownership
 

Because the lone member can also be the company's director, there will be no apparent boundary between management and ownership. All decisions must be made and approved by the lone member. The distinction between control and ownership is blurred, perhaps leading to unethical commercial activities.

Documents Required for OPC Incorporation
 

The following documents are necessary for One Person Company incorporation:

• Passport or PAN card
• In the case of NRIs & foreign nationals, a passport is required.
• Transcript of voter ID and driver's licence scan
• Most recent gas or energy bill/bank account statement/mobile phone or landline bill
• Signature of a specimen
• Photographs in passport size
• Self-attestation is required for all papers. NRIs' documents must be apostilled or notarized.

Other documents requested by the Registered Office include:
 

• Transcript of a gas or electricity bill/bank account statement/mobile phone or landline bill
• Rent agreement scanned transcript
• If the member possesses the property, a scanned transcript of the No-objection Certificate from the owner of the property is needed, followed by a scanned transcript of the sale deed.

One-Person Company (OPC) Incorporation Process
 

Step 1: Obtain DSC
 

The applicant must possess a Digital Signature Certificate issued by the Certification Body in order to register.

Step 2: Obtain a Director Identification Number for the proposed Director 
 

The DIN is entered into the SPICe Form together with the Director's information.

Step 3: Name Approval
 

The RUN service will be utilized to verify name availability, & one name for the OPC may be applied using SPICe (INC 32). If the name is refused, a different name can be offered by submitting a new Form SPICe+ 32 application.

Step 4: Submission of the Documents
 

• The Memorandum of Association summarises the company's goals and objectives and the industry in which it will operate.
• The Articles of Association establish the rules under which the firm will function.
• Because there is only one Director & a single member, a nominee on his behalf must be nominated because if he becomes incompetent or dies and is unable to discharge his obligations, the nominee will perform on his behalf and take his place. Along with the PAN card & Aadhaar card, consent in Form INC - 3 would be obtained.
• Proof of the prospective company's registered office, as well as proof of ownership & a letter of authorization from the owner.
• Forms INC -9 & DIR -2, Declaration & Approval of the Suggested Director
• A professional declaration stating that all requirements have been met.

Step 5: Filing of Forms with the MCA Portal
 

All of these papers, together with the Digital Signature Certificate of the Director as well as the professional, will be linked to the SPICe Form, SPICe-MOA, and SPICe-AOA and posted to the MCA portal for approval. The Pan Number & TAN are produced automatically when the company is formed. There is no requirement to file separate applications for the PAN Number and the TAN.

Step 6: Incorporation of One-Person Company
 

Within 20 days following the date of RUN approval, i.e., approval of name- the form SPICe, an application for OPC incorporation must be filed. All required documentation must be added to the SPICe form and posted to the MCA portal. The PAN & TAN will be generated automatically at the moment of incorporation.

Step 7: Obtaining an Incorporation Certificate
 

If the information and documentation are appropriate, the Registrar of Companies (ROC) will provide a COI or Certificate of Incorporation.

Post Incorporation
 

An OPC's compliance procedures are comparable to those of a private corporation. If a notification of circumstance pertaining to a registered office (ROC) was not submitted during the OPC incorporation process, it must be filed within thirty days after incorporation. 

The following documents are necessary for submitting INC-22:

• Rent receipts and a lease document or rent agreement
• Utility bill copies that are no more than two months old, as specified above
• Documentation that the company is permitted to use the location as its registered office if it is owned by another corporation or person & is not leased by the firm.

Nominee in a One-Person Company
 

The laws for one-person company incorporation mandate that the lone member of One Person Company include the name of the concerned nominee in the company's Memorandum of Association, who will take over the entity following the former's death or incapacity. Furthermore, the document must include the nominee's written consent, which must be submitted to the Registrar together with the MOA and AOA during incorporation.

Consent Withdrawal
 

The applicant has the right to revoke their permission, in which case the only member must designate another member as a legal successor after fifteen days of receiving the withdrawal notification. The nomination of new staff must be communicated to the Company in writing using Form INC-3. In turn, the business must file the notice of revocation of permission and notify the new nominee with the Registrar in Form INC 4.

Alteration of Nominee
 

The lone member of  One Person Company has the authority to alter the company's nominee for any reason by filing a written notification to the company. Similarly, the fresh nominee must agree to the appointment in Form INC 3, as well as the company must publish the notice of alteration & nominee consent, along with the necessary fee, with the Registrar within thirty days of getting the notification of change.

Appointment of a Nominee
 

If a nominee takes over the one-person corporation after the original member's term expires due to death or incapacity, the new member must choose a nominee as a successor.

Penalty
 

If a One Person Corporation or an officer of such a company fails to comply with the stipulated requirements, the body or the officer may face fines of up to rupees ten thousand. In addition, the penalty would be enhanced by rupees one thousand for each day of default.

Conclusion
 

A company can be established with only one director and one member, according to Sec 2(62) of the Company Act. It is a kind of company with fewer regulatory obligations than a private firm.

According to the Companies Act of 2013, a person can start a company with one director & one member. Both the director and the member might be the same individual. Thus, a one-person company means that one person, who may be a resident or an NRI, can incorporate their firm, which has the characteristics of a corporation and the advantages of a sole proprietorship. With Online legal India, you can register your business as any type of company in a few simple steps.