A One Person Company (OPC) is a type of business structure in India where a single individual can form a company with limited liability and do his startup. OPCs are governed by the provisions of the Companies Act, 2013, and are suited for solo entrepreneurs who wish to benefit from corporate status without needing multiple partners. Unlike sole proprietorships, OPCs offer the benefit of limited liability, which means that the owner’s personal assets are protected from the company’s liabilities.

The concept of a One Person Company (OPC) was introduced in India to encourage individuals, especially entrepreneurs and small business owners, to start their ventures with limited liability and a structured corporate entity.

The OPC model allows a single individual to own, control, and manage a company while benefiting from limited liability and other legal advantages traditionally reserved for larger corporations. This GrowthX article by CA Manish Mishra provides a detailed guide on One Person Company Registration in India, covering eligibility, benefits, registration process, compliance requirements, and other essential aspects.

Origin of OPCs in India

The Companies Act, 2013 introduced OPCs to simplify the process of forming a company by reducing compliance burdens for single-person businesses. Inspired by similar models in countries like the United Kingdom and the United States, OPCs aim to bridge the gap between sole proprietorships and fully incorporated companies. This allows individuals to adopt a corporate structure with fewer compliance requirements, thereby encouraging entrepreneurship. At GenZCFO, we have registered hundreds of OPCs for solopreneurs and can help you too.

Eligibility Criteria for Registering an OPC

To register an OPC in India, certain eligibility conditions apply:

• Only Indian Citizens: The applicant must be an Indian citizen.
• One OPC per Individual: An individual can only incorporate one OPC, and they cannot act as a nominee in more than one OPC.
• Nominee Requirement: A nominee is required who will take over the company’s management in the event of the founder’s incapacity or death.

Advantages of Registering an OPC

OPCs offer numerous benefits to individual entrepreneurs, such as:

• Limited Liability Protection: Personal assets are safeguarded from business liabilities.
• Separate Legal Entity: An OPC is a separate legal entity, allowing it to own assets, incur liabilities, and enter contracts independently.
• Ease of Management: Minimal regulatory requirements and no need for shareholder meetings simplify management.
• Perpetual Succession: Unlike sole proprietorships, OPCs offer continuity, even in the founder’s absence.
• Access to Funding: While limited, OPCs can still attract certain types of investments, facilitating growth.

Limitations of One-Person Companies

Despite their benefits, OPCs come with a few limitations:

• Restricted to Indian Residents: Only Indian citizens can form OPCs.
• Limited Funding Options: OPCs cannot raise funds by issuing equity shares, which restricts investment options compared to private or public limited companies.

Comparison: OPC vs. Sole Proprietorship

Documents Required for OPC Registration

For OPC registration, the following documents are required:

• Identity Proof: PAN card of the applicant and nominee.
• Address Proof: Aadhaar card, voter ID, DL or passport for the applicant and nominee.
• Proof of Office Address: Utility bill or rental agreement as proof of registered office.
• Photograph: Passport-sized photograph of the applicant.
• Digital Signature Certificate (DSC): For digital authentication of documents.
• Director Identification Number (DIN): Required for the sole director of the OPC.

Step-by-Step Guide to Registering an OPC

Step 1: Obtain a Digital Signature Certificate (DSC)

A Digital Signature Certificate (DSC) is essential to sign electronic documents for registration. This can be obtained from authorized government agencies.

Step 2: Apply for Director Identification Number (DIN)

The Director Identification Number (DIN) is mandatory for the OPC’s director and can be obtained via the MCA portal using the SPICe Form. For your information, now DIN is generated at the time of incorporation itself and no separate application is required.

Step 3: Reserve Company Name

Through the Spice Part A service, the applicant can reserve a unique company name as per Ministry of Corporate Affairs (MCA) guidelines.

Step 4: Submit SPICe+ Form

The SPICe+ Form is a consolidated form for company registration, where applicants can upload the company’s MoA and AoA along with details of the director and nominee.

Step 5: Obtain a Certificate of Incorporation

Upon verification and approval, the Registrar of Companies (RoC) issues a Certificate of Incorporation, officially establishing the OPC. The company's detail is also made live on the MCA Master Data.

MoA and AoA for OPCs

The MoA and AoA are foundational documents that define the company's objectives, rules, and regulations. The MoA outlines the company's purpose and scope, while the AoA governs internal operations and decision-making processes. Together, these documents provide a legal framework for the OPC’s functioning and are essential for registration.

Role and Responsibilities of a Nominee in an OPC

The nominee plays a crucial role, as they will assume control of the OPC if the sole director becomes incapacitated or passes away. The nominee’s responsibilities include:

• Managing the Company’s Affairs: In case of the owner's absence.
• Ensuring Compliance: As a successor, the nominee is responsible for statutory compliance.
• Accepting or Declining Role: The nominee has the choice to accept or decline the role if the position becomes active.

Compliance Requirements for an OPC

While OPCs have fewer compliance requirements than larger corporations, they still need to adhere to certain regulations, such as:

• Annual Return Filing: OPCs must file an annual return with the Ministry of Corporate Affairs.
• Financial Statements: Audited financial statements must be submitted annually.
• Income Tax Returns: Annual tax filing is mandatory.

Annual Filing and Other Compliance for OPCs

OPCs must fulfill several annual compliance requirements:

• Annual Financial Statements: These include balance sheets, profit and loss statements, and auditors’ reports.
• Form ADT-1: For the appointment of auditor in the company.
• Form AOC-4: This form is required for filing financial statements.
• Form MGT-7A: An annual return that includes the details of the director and shareholder.

Frequently Asked Questions (FAQs)

Can an NRI form an OPC?

Yes, as per the changed law, even NRI are eligible to form OPCs.

What is the minimum capital required for an OPC?

There is no minimum capital requirement.

How many OPCs can an individual own?

An individual can only own one OPC.

Is it possible to raise funds through equity in an OPC?

No, OPCs cannot raise funds through equity shares.

Can an OPC engage in any business activity?

Yes, OPCs can engage in any lawful business, subject to industry regulations.

What is the primary benefit of OPC over sole proprietorship?

OPCs offer limited liability, protecting the owner’s personal assets from business liabilities.

GenZCFO Advice

Registering as a One Person Company in India offers an ideal balance between simplicity and structure for solo entrepreneurs. OPCs enable individuals to operate under a corporate structure, enjoy limited liability, and avoid the risks associated with sole proprietorships. For professionals, freelancers, and solo business owners looking for a scalable and secure business structure, an OPC is a compelling choice that combines flexibility with protection.