OPC Compliance

What Is One Person Company (OPC)?

A One Person Company (OPC) is a unique business structure in India that allows a single individual to operate a company with limited liability. Introduced under the Companies Act, 2013, the OPC provides the benefits of a company with the flexibility of a sole proprietorship, making it an ideal choice for single entrepreneurs who want to limit their personal liability.

Features of One Person Company (OPC):

1. Single Shareholder: An OPC can be owned by a single individual, who is both the shareholder and the director of the company. This is the main distinction between OPC and other types of companies, which require multiple shareholders.
2. Limited Liability: The liability of the shareholder is limited to their investment in the company. Personal assets are protected from the company’s debts and liabilities.
3. Separate Legal Entity: The OPC has a separate legal identity distinct from its owner, meaning it can own assets, enter into contracts, and sue or be sued in its name.
4. Nominee Requirement: The sole shareholder must nominate another person who will take over the company in case of the shareholder’s death or incapacity.
5. No Requirement for Annual General Meetings (AGM): OPCs are not required to hold an AGM, unlike other types of companies, reducing compliance requirements.
6. Taxation: An OPC is taxed similarly to a private limited company, and the income is subject to corporate tax rates, which are often more favorable than personal income tax rates for higher income levels.

Benefits of One Person Company:

• Limited Liability Protection: The owner’s personal assets are protected from business liabilities.
• Complete Control: The sole shareholder has full control over the decision-making process.
• Credibility and Perpetual Succession: An OPC offers enhanced credibility as a corporate entity and ensures the continuity of the business even after the owner’s death or incapacity.
• Tax Efficiency: OPCs benefit from lower tax rates compared to sole proprietorships or partnerships.
• No AGM Requirement: Unlike other companies, OPCs do not need to hold annual general meetings, reducing compliance burden.

Eligibility for One Person Company:

• The owner must be an Indian resident and a citizen of India.
• The business must be a non-banking financial company (NBFC), or it must not be involved in certain restricted activities like charitable organizations.
• The shareholder must nominate another person who can take control of the company in case of the owner’s demise.

Process of OPC Registration:

1. Obtain Digital Signature Certificate (DSC): Required for filing documents online with the Ministry of Corporate Affairs (MCA).
2. Apply for Director Identification Number (DIN): A unique identification number for directors.
3. Choose a Company Name: Select a unique name for your OPC and get it approved by the MCA.
4. Draft MOA and AOA: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) that define the company’s scope and internal rules.
5. Register the Company: Submit the registration application to the MCA and obtain the Certificate of Incorporation once approved.

Documents Required for One Person Company Registration:

• Identity Proof (PAN card, Aadhaar card) of the shareholder and nominee.
• Proof of Address (electricity bill, rent agreement) of the registered office.
• Passport-sized Photographs of the shareholder and nominee.
• No Objection Certificate (if the office is rented).
• PAN Card of the shareholder.