YOU NEED TO KNOW WHAT IS ONE PERSON COMPANY?
A One Person Company (OPC) is a type of business structure introduced in India to support entrepreneurs who wish to start and manage a business on their own. OPC allows a single individual to own and operate a company, providing a legal framework that combines elements of sole proprietorship and company structures. The concept of OPC was introduced under the Companies Act, 2013. Here are key features of a One Person Company: Visitofficialwebsite
PROCESS OF ONE PERSON COMPANY
- Single Ownership:
- As the name suggests, OPC is owned by a single individual who acts as the sole shareholder and director. This individual is responsible for managing the affairs of the company.
2.Limited Liability:
- One of the key advantages of OPC is that the liability of the sole shareholder is limited to the extent of their share capital. This means that personal assets of the shareholder are protected from the company’s liabilities.
3. Nominee Director:
- While there is only one natural person as the director, OPC is required to appoint a nominee director in the Memorandum of Association (MOA) and Articles of Association (AOA). In the event of the original director’s death or incapacitation, the nominee director takes over.
4. No Minimum Capital Requirement:
- OPCs are not required to have a minimum paid-up capital. The company can be formed with any amount of capital deemed sufficient by the owner.
5. Conversion to Private Limited Company:
- Once the OPC grows and meets certain criteria, it has the option to convert into a private limited company. This involves changes in the company structure to accommodate more members.
6. Annual Compliance:
- OPCs, like other companies, are required to comply with annual filing and compliance requirements. This includes filing financial statements, annual returns, and other documents with the Registrar of Companies (RoC).
7. Limited Regulatory Compliance:
- Compared to larger corporate structures, OPCs have relatively simpler compliance requirements. For example, they are not required to hold annual general meetings.
8. Taxation:
- OPCs are taxed at the same rates as private limited companies. The corporate tax rates applicable to companies in India apply to OPCs.
WHO IS ELIGABLE TO OPEN ONE PERSON COMPANY?
n India, the eligibility criteria for opening a One Person Company (OPC) are outlined under the Companies Act, 2013.
- Natural Person:
- Only a natural person, who is an Indian citizen and resident in India, is eligible to form an OPC. Foreign nationals, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are not eligible to incorporate an OPC.
2. Sole Member/Director:
- An OPC must have only one member (shareholder) and one director. The same individual can hold both positions.
3. Nominee Director:
- The sole member of the OPC is required to nominate another person as a nominee director in the Memorandum of Association (MOA) and Articles of Association (AOA). The nominee will become the owner of the OPC in case the original owner becomes incapacitated or dies.
4. Resident in India:
- The sole member and nominee director must be residents in India. Resident status is determined as per the provisions of the Income Tax Act, 1961.
5. Not Eligible for Another OPC:
- An individual cannot be a member or nominee in more than one OPC at the same time. If a person already has an OPC, they cannot incorporate another OPC unless they cease to be a member or nominee in the existing OPC.
6. Not a Partner in Partnership Firm:
- The individual forming an OPC cannot simultaneously be a partner or a nominee in more than one partnership firm.
WHAT ARE THE DOUCUMENT ARE REQUIRED TO OPEN ONE PERSON COMPANY?
The process of opening a One Person Company (OPC) in India involves the submission of various documents to the authorities. The required documents may vary based on the specific circumstances and the nature of the business. Here is a general list of documents typically required to open a One Person Company:
- Documents for the Proposed Director/Member:
- PAN Card: Copy of the Permanent Account Number (PAN) card of the proposed director/member.
- Address Proof: Any one of the following documents as address proof – Passport, Voter ID, Aadhar card, Driver’s License, or utility bills.
- Passport-sized Photograph: Recent passport-sized photograph of the proposed director/member.
2. Documents for the Nominee Director:
- PAN Card: Copy of the PAN card of the nominee director.
- Address Proof: Same as mentioned above for the nominee director.
- Passport-sized Photograph: Recent passport-sized photograph of the nominee director.
3. Registered Office Address Proof:
- Rental Agreement: If the office premises are on rent, a copy of the rental agreement along with the landlord’s consent and utility bill.
- Property Ownership Proof: If the premises are owned, documents such as property tax receipt, sale deed, etc., can be submitted.
4. NOC from the Property Owner:
- If the registered office is owned by someone else (not the company), a No Objection Certificate (NOC) from the owner is required.
5. Memorandum of Association (MOA) and Articles of Association (AOA):
- Draft and signed copies of the MOA and AOA. These documents outline the company’s objectives, rules, and internal regulations.
6. Declaration by the First Subscriber and Director:
- A declaration by the first subscriber/member and director confirming compliance with the requirements and specifications.
7. Consent to Act as Director and Nominee:
- Consent to act as a director and nominee by the individuals concerned.
8. Form DIR-2:
- Consent to act as a director in Form DIR-2.
9. Form INC-3:
- Intimation of appointment of the nominee director in Form INC-3.
10. Form INC-9:
- Declaration by the subscriber to the MOA.
HOW MANY DIRECTORS CAN ONE PERSON COMPANY HAVE?
a One Person Company (OPC) in India is designed for a single individual to operate as both the shareholder and the director. Therefore, an OPC can have only one director. The individual incorporating the OPC is the sole director and holds all the shares of the company.
While an OPC can have only one director, it may appoint a nominee director during the incorporation process. The nominee director is someone nominated by the sole member of the OPC who will take over the management of the OPC in case of the original director’s death or incapacity. The nominee director’s details are mentioned in the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC.
So, to summarize, an OPC can have the following positions:
- Sole Director (Owner):
- The individual incorporating the OPC is the sole director and holds all the shares.
2. Nominee Director:
- The OPC may have a nominee director, whose details are mentioned in the MOA and AOA. The nominee director becomes responsible for the OPC in case of the original director’s death or incapacity.
WHAT ARE THE BENEFITS OF ONE PERSON COMPANY?
One Person Company (OPC) is a business structure in India that provides several benefits, especially for individual entrepreneurs who want to establish a separate legal entity for their business. Here are some key benefits of a One Person Company:
- Limited Liability:
- One of the primary advantages is limited liability, which means the personal assets of the owner are protected in case of business debts or liabilities. The liability is limited to the extent of the capital invested in the company.
2. Separate Legal Entity:
- An OPC is a distinct legal entity, separate from its owner. This separation of legal identity enables the business to enter into contracts, acquire assets, and incur liabilities in its own name.
3. Single Ownership and Control:
- An OPC can be owned and controlled by a single individual, who acts as both the shareholder and the director. This simplifies decision-making and operational control.
4. Ease of Operation:
- OPCs enjoy more flexibility and operational ease compared to larger corporate structures. Compliance requirements are generally simpler, and the administrative burden is reduced.
5. Nominee Director:
- OPCs are required to appoint a nominee director. This individual steps in to manage the affairs of the OPC in case the original director is incapacitated or passes away. This ensures continuity of the business.
6. Creditworthiness and Credibility:
- Operating as an OPC can enhance the creditworthiness and credibility of the business. It is seen as a more formal and structured business entity, which can be beneficial when dealing with suppliers, customers, and financial institutions.
7. Perpetual Succession:
- The concept of perpetual succession means that the OPC continues to exist despite changes in the ownership or the death of the original owner. The nominee director ensures continuity.
8. No Minimum Capital Requirement:
- Unlike some other business structures, there is no mandatory minimum capital requirement for starting an OPC. The owner can start the business with any amount of capital deemed sufficient.
9. Conversion to Private Limited Company:
- As the business grows, an OPC can be converted into a private limited company. This allows for additional shareholders and directors, providing scalability for the business.
10. Tax Benefits:
- OPCs are eligible for various tax benefits and incentives available to small businesses. They are taxed at the same rates as private limited companies.
11. Compliance Requirements:
- OPCs have simplified compliance requirements, especially when compared to larger corporate entities. The annual filing and regulatory obligations are generally less burdensome.
IS GST MANDATORY FOR OPEN PERSON COMPANY?
Yes, Goods and Services Tax (GST) registration is mandatory for a One Person Company (OPC) in India under certain circumstances. GST is a consumption-based tax that is applicable to the supply of goods and services, and businesses meeting the specified criteria are required to register for GST.
Here are the scenarios in which GST registration is mandatory for an OPC:
- Exceeding Threshold Turnover:
- If the aggregate turnover of the OPC exceeds the prescribed threshold limit, GST registration becomes mandatory. As of my last knowledge update in January 2022, the threshold limit for GST registration was INR 20 lakhs for most states and INR 10 lakhs for special category states.
2. Inter-State Supply:
- Regardless of the turnover, if the OPC is involved in the inter-state supply of goods or services, GST registration is mandatory.
3. Casual Taxable Person:
- If the OPC operates as a casual taxable person, meaning it undertakes occasional transactions in a taxable territory where it does not have a fixed place of business, GST registration is required.
4. Non-Resident Taxable Person:
- If the OPC is a non-resident taxable person, i.e., a person who occasionally supplies goods or services in India but does not have a fixed place of business in India, GST registration is mandatory.
5. E-commerce Operator:
- If the OPC is operating as an e-commerce operator facilitating the supply of goods or services through its platform, GST registration is required, irrespective of the turnover.
WHAT IS THE MINIMUM CAPITAL TO OPEN PERSONN COMPANY?
there is no specific minimum capital requirement to open a One Person Company (OPC) in India. The concept of OPC was introduced to support individual entrepreneurs and small businesses, and it allows flexibility in terms of the initial capitalization of the company.
The Companies Act, 2013, which governs the registration and functioning of companies in India, does not mandate a minimum authorized or paid-up capital for OPCs. Entrepreneurs can start an OPC with any amount of capital they consider sufficient for their business activities.
It’s important to note that while there is no minimum capital requirement, OPCs may still need to consider the capital they bring into the business for operational purposes. The capitalization of the company can depend on factors such as the nature of the business, its scale, and its financial requirements.
When incorporating an OPC, entrepreneurs need to specify the authorized capital and the paid-up capital in the Memorandum of Association (MOA) and Articles of Association (AOA). The authorized capital is the maximum amount of capital that the company is authorized to issue, while the paid-up capital is the amount of capital that the company has actually received from its shareholders.
Entrepreneurs should also be mindful of the stamp duty applicable to the authorized capital mentioned in the MOA.
WHAT ARE THE RULES TO OPEN PERSON COMPANY?
A One Person Company (OPC) in India is governed by the Companies Act, 2013, along with the relevant rules and regulations prescribed by the Ministry of Corporate Affairs (MCA). The rules and regulations provide the legal framework for the formation, operation, and dissolution of OPCs. Here are some key rules and requirements associated with OPCs:
- Formation and Incorporation:
- OPCs are formed and incorporated under the Companies Act, 2013.
- The process involves filing the necessary documents, including the Memorandum of Association (MOA) and Articles of Association (AOA), with the Registrar of Companies (RoC) through the online portal of the Ministry of Corporate Affairs (MCA).
2. Single Member and Director:
- An OPC must have a single member who is the owner and a single director who is also the shareholder. The same individual can hold both positions.
- A nominee director must be nominated by the sole member to take over in case of the original director’s death or incapacity.
3. Nominee Director:
- The sole member of the OPC is required to nominate a person as a nominee director in the MOA and AOA. The nominee director’s role becomes crucial in the event of the death or incapacity of the original director.
4. No Minimum Capital Requirement:
- There is no specific minimum capital requirement for OPCs. The owner can start the business with any amount of capital deemed sufficient.
5. Conversion to Private Limited Company:
- OPCs can be converted into private limited companies if they exceed the prescribed thresholds (such as a paid-up capital of more than INR 50 lakhs or an average turnover of more than INR 2 crores in the preceding three financial years).
6. Annual Filing and Compliance:
- OPCs are required to comply with annual filing requirements, including filing financial statements and annual returns with the RoC.
- OPCs enjoy certain relaxations in compliance compared to larger corporate entities.
7. Perpetual Succession:
- The concept of perpetual succession applies to OPCs, meaning the company continues to exist despite changes in ownership or the death of the original owner. The nominee director ensures continuity.
8. Audit Requirements:
- OPCs with a turnover exceeding the prescribed limit or having a paid-up capital above a specified threshold are required to undergo a mandatory audit.
9. Dissolution and Closure:
- OPCs can be voluntarily closed or dissolved as per the provisions of the Companies Act.
WHAT IS THE ITR FORM FOR OPEN PERSON COMPANY?
The Income Tax Return (ITR) form that a One Person Company (OPC) needs to use for filing its income tax return depends on various factors, including the nature of income, the total income earned, and the structure of the company. As of my last knowledge update in January 2022, the specific ITR form may vary from year to year, and it’s crucial to refer to the latest guidelines issued by the Income Tax Department. As of my last update, the common ITR forms for companies included ITR-6.
Here are some key points to consider regarding ITR filing for an OPC:
- ITR-6:
- Generally, companies, including OPCs, are required to use ITR-6 for filing their income tax returns. ITR-6 is the form applicable to companies other than those claiming exemption under section 11 (income from property held for charitable or religious purposes).
2. Presumptive Taxation Scheme:
- If the OPC opts for the presumptive taxation scheme under Section 44AD, it may use the relevant ITR form (e.g., ITR-4). The presumptive taxation scheme is applicable to eligible businesses with a turnover up to a specified limit.
3. Audit Requirement:
- If the OPC is required to undergo a tax audit under the Income Tax Act, it needs to file the return using the applicable ITR form for auditable cases (e.g., ITR-6).
4. Resident or Non-Resident:
- The residential status of the OPC may also impact the choice of ITR form. For example, if the OPC is a non-resident, it may need to use a different ITR form.
5. Annual Turnover:
- The turnover of the OPC may also be a factor in determining the applicable ITR form. For example, certain ITR forms are applicable to companies with turnover up to a specified limit.
CONCLUSION
The conclusion for an One Person Company (OPC) typically summarizes the key points about this unique form of business entity. Here’s a sample conclusion:
“In conclusion, the concept of One Person Company (OPC) represents a significant milestone in the realm of business incorporation, particularly aimed at encouraging entrepreneurship and facilitating ease of doing business. Through its innovative structure, OPC provides a single individual with the opportunity to establish and operate a corporate entity with limited liability, thereby mitigating personal risk while fostering business growth. With its simplified compliance requirements, reduced administrative burden, and distinct legal identity, OPCs offer a viable alternative for solo entrepreneurs to formalize their ventures. As a result, OPCs have emerged as a popular choice, particularly among small business owners, freelancers, and professionals seeking to establish a corporate presence with minimal regulatory complexity. However, it is imperative for OPC proprietors to adhere diligently to regulatory obligations and corporate governance norms to ensure sustained compliance and credibility in the business ecosystem. Overall, OPCs represent a dynamic and adaptable business structure that empowers individuals to pursue their entrepreneurial aspirations while enjoying the benefits of limited liability and corporate legitimacy.” Visitofficialwebsite
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