How to start Single person company in India?

How to start Single person company in India

For many years people have believed a myth that opening a business enterprise or commencing a new start-up cannot be done single-handed. They think one always needs a co-founder to start their own company and meet the possible requirements for registering the same. But a new concept had been introduced in 2013 under the Company’s Act about One Person Company (OPC). This concept 

states that any person willing to operate a company single-handedly has the full right to do so. 

He/she doesn’t need any co-founder for this purpose. One Person Company is a company incorporated by a single person without the consent or support of any other. Before the enforcement of the Companies Act 2013, and a single individual could not open or establish his/her company without the presence of a co-founder. But now the situation has been changed. It has become comparatively more straightforward for any individual to commence his/her company easily just by completing few legal formalities and adhering to some norms. As per Section 2(62) of the Company’s Act 2013, a company can be formed with just one single director and one member. It is that Form of the company where the compliance requirements are lesser than the private company. 

The Companies Act states that any individual can form a company with a single member and one director. This also means that the owner of the company’s director is solely responsible for the company’s growth, development, assets, and liabilities. Today, in this article, we’ll be talking about the registration process of a Person Company with the completion of the required documentation and formalities for its establishment. 

Benefits of One Person Company 

One-person company is easy to establish with a minimum of capital and people involved. It just needs one single director for its commencement. The most important benefit of a one person company is that the owner is solely responsible for the assets, liabilities and the management of the company without the interference of the other. 

1. OPC avails the benefits of having small scale industries with various services and easy 

funding available from banks to execute the management of these industries. 

2. The best advantage is of a single owner. Single owner is much more helpful as compared to two owners in a business. With a single owner, there are no chances of any 

conflicts and issues. 

3. Another advantage is that OPC with a bad credit score can also avail the required funding and apply for loans without any hurdles and barriers of getting rejected. 

4. OPC also enjoys limited liability as compared to Private Limited Company. 

5. OPC also enjoys continuous existence and legal identity. It would, later on, pass to the nominee director.6. Another benefit of OPC is that it is easy to sell because of its minimum documentation. 

7. It enjoys complete control of a single owner without any conflicts between partners and so 

on. Therefore the company has smooth functioning and management of affairs. 

8. It enjoys the availability of adequate funding options with ear and comfort in returns. 

Requirements to Establish a One Person Company 

• Only one person who is an Indian citizen and not any NRI has the privilege to commence 

Person Company. 

• A natural person shall not be a nominee of any other One Person Company at any point in time. 

• No minor person can become a member of One Person Company or hold any advantage associated with it. 

• This company cannot be converted into a company under section.8 ( Company with 

Charitable Objects) by any chance. 

• Such a company is not entitled to carry any Non-Banking Financial Investment Activities in security and other things. 

• No such company has the power to get converted into some other kind of corporation unless it has expired two years from the date of its commencement. 

• Company is required to use the word OPC in brackets after the name of the company. 

This is a mandatory clause. 

• Once an OPC is formed, you will have to meet the minimum requirements, i.e. the company must have an annual turnover of Rs. 2 crores in the current financial year with progressive standards to grow in future. 

• Such a company cannot incorporate more than one OPC at a time. 

• It should have at least one shareholder/nominee/director. 

Documents Required for the Registration of an OPC 

The following documents are essentially required for the registration of a One Person 

The company under the Companies Act : 

1. Copy of PAN Card ( Owner) 

2. Passport size photographs ( 5-6) of the owner. 

3. Copy of Aadhaar Card/Voter Identity Card. 

4. Copy of Rent agreement ( in case if it is a rented property) 

5. Electricity / Water bill ( of the business place) 

6. Copy of property papers 

7. NOC by the Landlord 

Steps for Incorporation of an OPC 

• The proposed directors of the company must obtain DSC ( Digital Signature Certificate ) 

from 8 authorized DSC markets. 

• An application with a suitable reservation name must be filled in as soon as possible•. If the articles of association contain provisions for entrenchment, the company must inform the Registrar of such provisions in Form No.INC -2 at the same time. 

• An application for the incorporation of the OPC must be filed with the Registrar of 

Companies ( ROC ). 

• The Memorandum of Association and the Articles of Association must be signed by the sole member responsible for the company’s functioning. He/she must also give the details like name, address, contact information, occupation etc., to the Registrar of Companies. 

• Next, the affidavit must be submitted by the sole member who has subscribed to the memorandum. 

• The company’s sole member is entitled to file the particulars of subscription with the Registrar of Companies. 

• On Verification of all the applications and documents, the Registrar will issue a 

Certificate of Incorporation, and you can smoothly commence business. 

A Checklist of meeting all the requirements for the establishment of an OPC 

• Minimum no. of members 

• A nominee must be appointed before the commencement and incorporation. 

• Consent of the nominee should be obtained in Form INC-3. 

• There should be a minimum authorized capital of at least Rs. 1 Lakh. 

• DSC of the proposed owner of the company 

Frequently Asked Questions 

1. How many people can be a part of an OPC? 

Only one person. 

2. Does OPC enjoys limited liability? 

Yes, One Person Company enjoys limited liability with easy funding options. 

3. What are the mandatory rules that OPC must follow for its smooth functioning? 

• It should conduct at least one board meeting every six months to discuss the company’s affairs. 

• Maintenance of logbooks, daybooks and proper accounts. 

• Filing of business Income Tax on time. 

4. Who cannot establish One Person Company? 

A foreign citizen, an NRI and a minor cannot establish a One-Person Company.

Also Read: How to start your own car rental business in India

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