ABOUT ONE PERSON COMPANY
Under section 2(62) of companies act 2013 a new concept was introduced and that was one person company which has only one person as a member. One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
One Person Company must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. But, OPC cannot be incorporated or converted into Section 8 Company (i.e. company with charitable objects, etc.) or carry out non-banking financial activities, including investment in securities of any body corporate.
An Indian resident (i.e. have stayed in India for at least 182 days during the immediately preceding FY) can incorporate OPC. However, one of such person cannot form more than one OPC.
SEPARATE LEGAL ENTITY
OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.
OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.
MORE OPPORTUNITIES, LIMITED LIABILITY
One of the advantages of One Person Company is that it has more opportunities, limited liability since the liability of the OPC is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative start-ups.
An OPC can avail the various benefits provided to Small Scale Industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.
Any remuneration paid to the director will be allowed as deduction as per income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.
The OPC with bad credit rating may even get the loan. The credit rating of OPC will not be material if the rating of OPC is as per norms.
You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.
Minimum 1 Shareholder
Minimum 1 Director
The director and shareholder can be the same person
Minimum 1 Nominee
Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other companies.
DOCUMENTS REQUIRED FOR REGISTRATION
IDENTITY AND ADDRESS PROOF
Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.
Address proof will be required for all directors and shareholders of the company to be incorporated. For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted. Residence proof documents like bank statement or electricity bill should not be more than 2 months old.
All documents submitted must be valid
REGISTERED OFFICE PROOF
Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
Documents submitted must be valid and not more than 2 month old.
FREQUENTLY ASKED QUESTIONS
WHO IS ELIGIBLE TO ACT AS A MEMBER OF AN OPC?
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one financial year.
A PERSON CAN BE MEMBER IN HOW MANY OPCS?
IS THERE ANY TAX ADVANTAGE ON FORMING AN OPC?
IS THERE ANY THRESHOLD LIMITS FOR AN OPC TO MANDATORILY GET CONVERTED INTO EITHER PRIVATE OR PUBLIC COMPANY?
WHAT IS THE MANDATORY COMPLIANCE THAT AN OPC NEEDS TO OBSERVE?
WHO CANNOT FORM A ONE PERSON COMPANY?
HOW DO I CONVERT AN OPC TO A PRIVATE LIMITED COMPANY?
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