To formalise the traditional business, Government of India, amended Companies Act 2013 and introduced the concept of One Person Company (OPC). OPC is the advance version of Proprietorship concern where the only sole proprietor manages its business. Similarly in OPC only one person is needed to incorporate the OPC.
OPC is registered under section 62 of the Companies Act 2013 with only one director and one member. OPC is generally incorporated as Private Limited Company but the compliance requirement is quite less in OPC as compare to Private Limited Company. OPC Registration allows single founders to enjoy the status of a company and founders has full control over affairs of the business while keeping their liability limited.
A One Person Company mandatorily be converted into a Private Limited Company if the following conditions are met:-
1. The average turnover of three years of OPC crosses Rs. Two Crores and
2. OPC has a paid up capital of more than Rs. Fifty Lakhs
If the above two conditions are met, OPC must be converted into a private limited company or public limited company within six months.
An One Person Company is incorporated with only one director and one member. Hence, OPC enjoyed all the benefits of Proprietorship firm. OPC is the upgraded and formalised version of Proprietorship. The decision power of the business lies with the proprietor.
An One Person Company enjoys the benefit of Limited Liability. Limited liability refers that the Liability of the proprietor will not exceed the amount invested in a business through Share Capital by the proprietor.
An One person Company is an Artificial person, incorporated as Private Limited Company and created in the eyes of Law. It is a very old saying that " Members may come and go but the company goes on forever." being the Artificial entity created in the eyes of law OPC enjoys the benefit of perpetual succession. Perpetual succession means that a OPC life is not determined by the longevity of its Proprietor. The OPC will be run even after the death of the Proprietor.
The One person Company incorporates as “Private Limited Company” defined under section 2(68) of the Companies Act, 2013. However, there is less compliance burden in OPC as compared to normal Private Limited Company. One Person Company has been given various exclusions in filing and compliance.
OPC need not to hold the Annual General Meeting (AGM) or Extra General Meeting (EGM). In case of OPC, a resolution might be conveyed by the member from the organization and entered in the minutes book and signed and dated by the member and such date should be considered to be the date of meeting.
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One person company allows a single entrepreneur to get his business registered as a company and get limited liability protection whereas a private limited company can be formed with a minimum of two directors and shareholders. The directors and shareholders can be same individuals.
A minimum authorised capital of Rs. 1 lakh is required to start an Private Limited Company. There is no mandatory requirement for a minimum paid up capital in case of OPC.
When the paid-up capital exceeds Rs. 50 lakhs, OPC must mandatory convert to a private limited company( Pvt. Ltd.). Also, when the average turnover for 3 consecutive years becomes Rs. 2 crore or more, there is a need to convert into a Private Limited Company.
There is no specific tax advantage to an OPC. The tax rate is flat 30%, other tax provisions like MAT & Dividend Distribution Tax are also applicable on OPC.
The basic mandatory compliance are: o Maintenance of proper books of accounts. o Statutory audit of Financial Statements. o Filing of business Income tax return every year before 30th Sep. o Filing Annual ROC return which includes form MGT-7 - Statement of Disclosure of Shareholder's and Directors.
The person should be resident in India and Indian Citizen who is living in India for a period of 182 Days is eligible to act as a member and nominee of an OPC.
The new OPC registration has been made a completely online process. All the document are submitted in electronic form and there is no need of any physical presence.
Yes, Stamp duty charges are imposed by the state in which the registered office is proposed to be located. The charges are on MOA, AOA & form INC 32.
Below are the charges applicable for DIN and other government forms: o DIN (1 Nos): Rs.500 o RUN Form: Rs.1000 o AoA: Rs.1000 (up to Rs.10 lakh of authorized capital) o MoA: Rs.1000
A nominee is an individual who becomes a member of the company in case of the promoter's death or incapacitation.
OPC is a Company that has a separate existence and is owned by one single member. One person happens to be a mixture of proprietorship and company form of business.
For an OPC statutory audit is mandatory. A company needs to appoint a CA as the auditor of the Company.
An OPC can raise funds through venture capital, financial institutions or by converting into a Private Limited Company. In a Person Company, the company is run by a single person by shares whereas a Sole Proprietorship is run by one individual, and the owner and business are considered as the same entity.
No. Except for OPCs, all entities are required to conduct an Annual General Meeting every year.
