As per Section 2 (62) of the Indian Companies Act 2013 "One Person Company" means a company which has only one person as a member. One Person company is owned and managed by one Person only. Members to the one person company are followers to its Memorandum. One Person Company is a new concept which gives full authority over the company to the single promoter while limiting its liability or duties to contribute to the business. However, it cannot raise equity funding or offering the employee stock option in One Person Company in the early stage of the period. If One Person Company anytime hits an average three- year turnover of over Rs 2 crore or has paid-up capital of over Rs 50 lakhs then it must be turned into the private limited company or public limited company within the six months.
1. No requirement of Minimum Capital
There is no minimum capital required for OPC registration. However, the maximum Authorize capital of One Person Company shall not exceed Rs 50 lakhs at any point in time.
2. Director Liability is Limited
There is a limited liability related to One Person Company which means the liability on the Director is limited. The personal asset of the Director won't be attached to the debt of the business. The property is safe.
3. Statutory Compliances are few only
The compliances under OPC registration are very less as compared to any other company. OPC registration process can be done with minimum paperwork.
4. Death or illness of Director wont affect Existence
The death or illness or incapacity of the director won't disturb the ongoing process of the company as the nominee director will hold the rope to continue the business.
5. Good Credibility among vendors and lending institution
As an OPC needs to have its books audited annually, it has greater credibility among the vendors and the lending institution.
6. Chances of legal dispute are rare
Now, when the company is registered with one person, then there is no chance of any legal disputes arises between the director or any other third party.
- Easy to create and run
- Minimum Paperwork
- Free from multiple compliances
- No minimum paid-up share capital
- A Separate Legal Entity
- Easy Funding
- Limited Liability
- Minimum one director
- Exemption from the third party
- Increase Trust
- Receive Interest on any late payment
- Remains unaffected with the credit rating
- Deduction under Income Tax Law
1. Apply for Digital Signature Certificate
Documents required to apply for DIN:
- Address Proof
- Aadhar Card
- PAN Card
- Phone Number
2. Apply for Name availability and approval
Two proposed Names and one re-submission (RSUB) at the time of preserving Unique Names (RUN) for the companies are permitted.
3. Prepare Documents for LLP Registration
Memorandum of Association and Articles of Association need to be drafted
4. File Application for Registration with ROC
5. Issue of certificate of Incorporation by Registrar of Companies
6. Apply for PAN and Tax Deduction Account Number (TAN)
7. Open Bank Account in the name of the LLP
- Director Identification Number (DIN)
- DSC or Digital Signature Certificate of the designated director
- One Person company Memorandum and Articles of Association
To Incorporate One Person Company the following documents are necessary:
- Memorandum of Association (MoA) stating why the company come into existence.
- Article of Association (AoA), describing the laws on which the company will operate.
- A proof of nominee consent in Form INC-3
- Nominee's PAN card and Aadhar card
- NOC from the owner of building and proof of ownership for registered company office
- Affidavit of the proposed director in the Form INC-9 and DIR-2 respectively
Mandatory statutory Compliances of One Person Company
- Conduct minimum two board meetings in a year as stated under Companies Act.
- Statutory audit of financial statements by chartered accountant
- Appointment of Auditor
- Filing of Income tax Return
- Filing Annual Return (MGT-7) and Financial Statement (AOC-4) with ROC
- Filing Other Documents with Registrar of Companies.
- Maintaining statutory registers
- Income Tax Return filing is Mandatory
- If Company has employee with taxable income, tax should be deducted and deposited
- If Company has more than 10 employees, ESI Registration is mandatory