Companies Act, 2013 introduced the concept of One Person Company (OPC) for entrepreneurs who want to create a single person economic entity. Similar to a Company, a One Person Company is a separate legal entity from its promoter and it is easy to incorporate. One Person Company (OPC) allows a single member to Incorporate and run a business. OPC should be incorporated on MCA Portal.
Who can incorporate One Person Company (OPC)?
Any individual who is an Indian citizen and resident of India in the previous financial year can incorporate OPC. A Resident of India means a person who has stayed in India for more than 182 days during the previous year. The minimum authorised capital required for incorporation is Rs. 1,00,000. For incorporation of OPC, the promoter must appoint a nominee and the nominee cannot be minor.
Who can not Incorporate One Person Company (OPC)?
- Legal entities like Company, LLP, Trust, AOP, BOI can not incorporate OPC.
- Any businesses involved in financial activities can not incorporate OPC.
- Any businesses covered under section 8 of the Companies Act,2013 can not incorporate OPC.
- Non- Resident, Foreign Citizen and Minor individuals can not incorporate OPC.
What are the benefits of incorporating OPC?
- Separate Legal Entity
One Person Company is a separate entity from its promoter/ member. It is capable of doing business in its own name.
- Control with the single owner
It becomes easy to control and manage any entity if there is a single owner. By incorporating One Person Company (OPC) an owner can take quick decisions and focus on the growth of the business.
- Minimal Compliances
In the case of One Person Company (OPC) compliances are also less compared to a private limited company. No requirement to hold an annual or extraordinary general meeting, only one meeting of the Board of Directors is required each half of a year. Form filing with the Registrar of Company (ROC) is also lesser than a private limited company. Any remuneration paid to the director will be allowed as deduction as per income tax act. Any rent or interest paid to the director is also allowed as deductible expenses which reduce the profitability of the company.
- Easy Transferability
Since there is a single person holding 100% of shares of One Person Company (OPC), it is easy to transfer the ownership of company by transferring the shares.
- Ease in obtaining a loan from the bank
One Person Company can avail of the benefits of Small Scale Industries and can obtain funding from the bank without depositing any securities to a certain limit. Incorporating One Person Company (OPC) is also beneficial since the banking and financial institutions prefer to lend money to the company rather than proprietary firms.
FAQs
No, a person can not be a member of more than one One Person Company. And if a person who is a member of One Person Company becomes a member of another One Person Company by virtue of his being a nominee then he shall meet the eligibility criteria of being a member in only One Person Company within a period of 180 days. In simple words, he shall withdraw his membership from either of One Person Company within 180 days.
Yes, One Person Company can not be incorporated without a nominee. The nominee is an individual who will take place of a sole promoter in case of death or incapacitation of the sole promoter. The nominee must be over the age of 18 years and must be an Indian citizen and Indian resident.
Tax rates on an OPC are the same as of a Private Limited company. Thus OPC is liable to pay tax at the flat rate of 30% plus 2% education cess and 1% secondary higher education cess. Also, surcharge at 5% is levied if the turnover exceeds Rs. 1 Cr. similar to a Private company.
Hello @Dixita
One Person Company (OPC) is a company where there is only one members and one director. Similar to a Company, a One Person Company is a separate legal entity from its promoter and it is easy to incorporate. In order to reserve the name for an OPC, one must file the web-form SPICe+ Part A on the MCA Portal.
You can read the rules to select name of a Company here:
Hope this helps!
What is SPICe+? Can I incorporate an OPC through SPICe+?
Hello @Dixita
SPICe+ is an integrated Web form for incorporating a company offering 10 services. Through SPICe+, you can apply for the name of your company, incorporation of the company, DIN of the directors, PAN and TAN registrations, PF and ESI registration of the company, GST registration, Professional Tax (only in Maharashtra), open a bank account. One can incorporate any kind of Company with SPICe+ be it Private Limited Company, Public Limited Company, OPC, Section 8 Company, etc.
You can learn about the process of incorporating a company through SPICe+ here:
Hope this helps!
Which documents are required to incorporate OPC?
Hey @Dixita
To incorporate an OPC, various documents like self-attested copies of PAN card, Aadhaar Card, Identity Proof, Address Proof, etc., are required of the proposed director and the nominee.
You can find the complete checklist here:
Hope this helps!
Hello @Paritosh_Trivedi
The first director in OPC shall hold the office until the holding of a general meeting. However, the first director can be re-appointed or another person can appointed on that meeting.
An individual CS does not have the authority to change the nominee. After the death of a member, the nominee will become the new member and only that new member will appoint another nominee.
You can refer to the procedure of change in nominee of an OPC here:
Hope this helps!
Hey @Dia_malhotra
It is mandatory for an OPC to convert into a Private Limited Company within 6 months if it surpasses the below-given parameters:
You can read the entire process of conversion of an OPC to Pvt Ltd Co. here:
Here are the key differences between a Private Limited Company and an OPC
Hope this helps!
Hello @CSDEV999
Conversion of OPC to any other Company is only possible by way of:
Hence, in your case it is not possible to convert the OPC to a Pvt Ltd Co., since none of the above-mentioned conditions are satisfied.
Hope this helps!
does a director can get loan from OPC or give loan to opc?
Hello, @Private
As per Section 185, it prohibits loans, advances, etc. to Directors of the company or its holding company or any partner of such Director or any partner of such Director or any firm in which such Director or relative is a partner. Whereas for giving a loan, yes a public company can accept a loan from its directors, but not from the relative of the director.