One Person Company
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About One Person Company
One Person Company (OPC) means a company formed with only one person as a member, unlike the traditional manner of having at least two members.
The Companies Act, 2013 introduced a new form of business, which is a hybrid version of sole proprietorship and company, to provide sole proprietors with an opportunity to enter into the corporate world. It is treated as a private company only, having a separate legal entity and limited liability. Every One Person Company shall have to at least hold one meeting of the Board of Directors in each half of a calendar year, and the gap between the two meetings shall not be less than ninety days. The concept of OPC is not alien to the world.
Conversion of One Person Company (OPC) to Private Limited Company
Compulsory Conversion of One Person Company (OPC) to Private Limited Company is required in case a One Person Company meets the below parameters :
- If the paid-up share capital of a One Person Capital increased beyond rupees fifty lakhs,
- If the average annual turnover during the period of immediately preceding three consecutive financial years is beyond rupees 2 crores.
In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public company within Six Months.
Advantages of a One Person Company
- The liability of the company’s member will be limited to the extent he have agreed to contribute towards the capital of the company.
- The continuity of the company and its functioning is not affected by the death, disability or retirement of its member because of Nominee director is assigned.
- No need for minimum share capital.
- Easy to get Bank Loans.
- Better opportunity for strengthening capital resources, growth, and development of the enterprise.
- Minimal registration costs.
- Few business compliance requirements.
Disadvantages of One Person Company
- Not suitable for small Business activity with limited geographic market.
- Compliance cost and Penalties if not regular in filing the compliance.
- Difficulty in the transfer of the ownership.
- Requirement to appoint a nominee director for incorporating OPC.
Documents Required
It is very easy to register this type of business as very few documents are needed. The required documents include:
- PAN card (Copy) of all the Directors
- Adhaar card (Copy) of all the Directors
- Passport size photo of all the Directors
- Voter id/ Driving Licence/ Passport
- Bank statement of all Directors
- Proof of Address(Power bill, Municipal tax bill, Sale deed copy)
- Rental Agreement or NOC
Registration Duration
Registration of One Person Company takes the shortest time and can be completed within a minimum of 7–10 working days. Despite registration taking the shortest time possible, this solely depends on government procedures and approvals during the time of your registration.
Registration Fee
The Government’s registration fee starts at Rs. 1,700, while professional fees start at Rs. 7,500. The variance would depend on the type of business, number of employees, location of the business, and specific requirements to be met while registering your business.
