ELIGIBILITY CRITERIA OF OPC?
ELIGIBILITY
The eligibility criteria for forming a One Person Company (OPC) under the Companies Act 2013 are as follows:
- The OPC can be formed by only a natural person who is an Indian citizen and resident in India.
- The nominee for the sole member of the OPC should also be a natural person who is an Indian citizen and resident in India.
- The minimum authorized share capital for incorporating an OPC is INR 1 lakh but there is no minimum paid-up capital requirement.
- The OPC can have only one director, who can be the same person as the member.
- The OPC can have only one nominee, who will become the member of the OPC in case the sole member dies or becomes incapacitated.
- The OPC cannot be formed for non-profit activities, and it cannot carry out any unlawful activities.
Addition to the above eligibility criteria, there are certain other conditions that must be met in order to form an OPC. These conditions include:
- The OPC must have a name that includes the words “One Person Company” or the abbreviation “OPC”.
- The OPC must have its registered office in India.
- The OPC must file all the necessary documents and fees with the Registrar of Companies (ROC).
Advantages
- Limited liability: The member of an OPC is only liable to the extent of their unpaid share capital. This means that their personal assets are protected in case the OPC goes bankrupt.
- Simple and inexpensive to form: The process of forming an OPC is relatively simple and inexpensive. There are no minimum share capital requirements and the paperwork is less complex than for other types of companies.
- Fewer compliance requirements: OPCs are subject to fewer compliance requirements than other types of companies. This can save time and money.
- Good for small businesses: OPCs are a good option for small businesses that do not need to raise a lot of capital or have a large number of shareholders.
Disadvantages
- Can only have one member: An OPC can only have one member. This means that it is not suitable for businesses that want to have multiple owners or investors.
- Nominee requirements: An OPC must have a nominee. The nominee is the person who will become the member of the OPC if the sole member dies or becomes incapacitated.
- Maximum paid-up capital: The maximum paid-up capital for an OPC is INR 50 lakhs. This means that OPCs cannot raise a lot of capital.
- Not suitable for all business activities: OPCs cannot carry out certain types of business activities, such as banking and insurance.
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some additional considerations for businesses thinking about forming an OPC:
- The size of the business: If you are planning to start a small business, an OPC may be a good option. However, if you plan to grow your business significantly, you may need to consider a different type of business structure.
- The type of business activities you plan to conduct: Some business activities are not permitted for OPCs. If you plan to engage in any of these activities, you will need to choose a different type of business structure.
- Your personal circumstances: If you are not an Indian citizen or resident, you cannot form an OPC. You will need to choose a different type of business structure if you want to do business in India.
