ONE PERSON COMPANY REGISTRATION

• It is not mandatory for an OPC to change the Auditor after expiry of maximum term.

• An OPC has the status of a separate legal entity. Here, member’s liability is limited to their shares and they are not personally liable for the losses that are incurring.

• As One Person Company is a separate legal entity it is easy to raise funds through venture capitals, angel investors, incubators, etc. One Person Companies get funds easily than a proprietorship firm.

• As per provisions of Section 98 and Sections 100 to 111 (both inclusive) General Meeting, Extra-Ordinary General meeting and Notice convening to general meeting are not applicable to OPC.

• OPC has much less compliances under the Companies Act, 2013. There is no need for the Company to get signed the books of accounts and annual returns and is to be signed only by the director.

• For incorporating an OPC the minimum authorized capital required is Rs.1 lakh. Therefore, it is easy to incorporate One Person Company as compared to other forms of the companies.

• One Person Company is easier to manage as it can be established as well as run by only one person. The decision-making is easy and quick. Therefore managing an OPC is easy as there won't be any conflict or delay within the company.

To register a One Person Company one has to submit the following documents:

1. PAN Card

2. Aadhar Card

3. Photo (Of Director and Nominee)

4. Latest Bank statement or any bill on the name of Director or the nominee

5. Latest Electricity Bill for the office address.

• APPLICATION FOR DSC:

  First a person needs to apply for DSC (Digital Signature Certificate) to incorporate there company.
  The following documents are necessary to obtain the Digital Signature Certificate for the proposed Director:

  1. Address proof

  2. Aadhar Card

  3. PAN Card

  4. Photo

  5. Email Id

  6. Phone Number

• Stakeholders can access of 5 different services (Name Reservation, Allotment of Director Identification number (DIN), Incorporation Certificate of New Company, Allotment of PAN and TAN) in one form by applying for Incorporation of a new company through SPICe+ form (INC-32) with eMoA (INC-33), eAOA (INC-34). In case eMoA, eAoA are not applicable to the company, users are needed to attach the pdf attachments of MoA and AoA. There is no requirement for reserving a name separately before filing SPICe. One name for the proposed company can be applied through SPICe+ (INC-32).

The Memorandum of Association contains the objectives that are to be followed by the Company. The MOA states the object of the business for which the company is being incorporated.

The Articles of Association states the laws on which the company will operate.

As there is only 1 Director, OPC has to appoint a Nominee because in case of incapacitation or death of the promoter the Nominee has to take the place. The consent of the Nominee will be taken in Form INC 3.

Declaration and Consent of the proposed Director will be taken in Form 9 and DIR 2 respectively.

OPC has to take the declaration by a professional certifying that all the compliances are met.

All the documents will be attached in the SPICe+ Form and uploaded on the MCA for approval.

On verifying, the Registrar of Companies will issue the Incorporation Certificate if no objection was raised and the business can be commenced.

A nominee in an OPC is the person appointed by the sole member of the company to be his successor. In case of death or incapacitation of the sole member, the Nominee will take over the company. The nominee must be a Citizen and a resident of India and who is not a minor. While incorporating a One Person Company, consent of the nominee must be filed with the MCA.

WITHDRAWAL OF CONSENT: The Nominee can withdraw his/her consent; in this case, the sole member is required to nominate another member as a legal successor within 15 days of the notice of the withdrawal. The Nomination of the new nominee must be intimated to the company through a written consent in Form INC 3. In turn, the Company is needed to file the notice of withdrawal of consent along with the intimation of the new nominee with the Registrar in Form INC 4 within 30 days of receiving the intimation.

NOMINEE APPOINTMENT: In case if the nominee becomes the successor of the company due to cessation of the original member's term owing to the death or incapacity of the latter, the new member must appoint a new nominee as a replacement.

PENALTY: If a One Person Company or an officer of any such company is not compliant with the mentioned regulations the entity might have to face the penalties of Rs. 10,000. Further, for each day of default, the penalty will be increased by Rs. 1000 per day fine.

In an OPC a single person can run a company limited by his shares and in sole proprietorships, the entity is owned by a person where there is the owner and the business is treated as the same legal entity. Following is the difference between them:

1. LIMITED LIABILITY

   In an OPC as it is a separate legal entity the liability of the shareholder is limited to his shares. On the other hand, the liability of the sole proprietorship is treated as the liability of the business and any claim against him will be made against the business.

2. TAX BRACKET

   An OPC can be contemplate in the same Tax Bracket of taxation as the other private companies because though the OPC is incorporated under the Companies Act, 2013 the concept of OPCs does not have any existence in the tax laws. On the contrary, the Sole proprietorships are needed to file the Income-tax returns as the proprietorship and the proprietor are treated to be one under the tax law.

3. SUCCESSION

   A nominee is appointed by the sole member of the company. The Nominee will take over the Company in the event of death of the member or incapacitation. But in the case of the sole proprietorship, this can only happen by carry out a will that may or may not is challenged in a court of law.

4. COMPLIANCES

   A registered OPC has to file annual returns just like a normal company and would also need to get the accounts audited for the same. On the other hand, the sole proprietorship would only need to get audited under the provisions of Section 44AB of the Income Tax Act, 1961 when the turnover crosses the given threshold.

As per the new amendments in the Union Budget of 2021-22, OPC registrations will be allowed to convert into any type of company at any time by being subjected to minimum requirements as prescribed in the Companies Act, 2013. The Union Budget 2021-22 has increased the given threshold for paid capital to be not more than Rs. 2 crores from the earlier Rs.50 lakh and the turnover should not exceed Rs. 20 crore from earlier Rs.2 crores.

According to the previous rules if the paid-up capital or turnover exceeded the prescribed limits in three years then the entity has to be converted into a Private or a Public Limited Entity.

The set residency limit for the Indian citizens is set up to a One Person Company is now reduced to 120 days from the earlier 182 days.

Non-resident Indians will also be allowed to incorporate Person Companies in India.

An OPC can be converted into a Private Limited Company either by voluntarily or mandatory method.

VOLUNTARY CONVERSION
An OPC can be converted into a Private Limited Company voluntary if it meets the criteria mentioned below:

A One Person Company can get itself converted into a Private Limited Company after two years from the incorporation, by increasing the minimum number of directors to two or more or minimum of seven members.

MANDATORY CONVERSION
Mandatory conversion is essential in case a One Person Company meets the parameters mentioned below:

If the paid-up share capital of an OPC is exceeds Rs. 2 crores preceding three consecutive financial year, the OPC is required to convert itself within six months of the date as mention in the provision of section 18 of the Companies Act, 2013.
The OPC need to alter its Memorandum of Association and Articles of Association by passing a special resolution to reflect the necessary changes after conversion.
A NOC is needed from the creditors and the other members before the resolution is passed.

The directors of the company should be given a declaration by an affidavit that confirms that all the members and directors have provided their consent for the conversion.

The list of members and the creditors.

The current financial year’s audited Balance sheets and the profit and loss accounts

A copy of the NOC of secured creditors.