The concept of One Person Company (OPC) is a new vehicle/form of company, introduced by Companies Act 2013, thereby enabling entrepreneur(s) carrying on the business in the Sole Proprietorship to enter into a Corporate Framework.
Features:
- Only One Shareholder: Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a OPC.
- Nominee for the Shareholder (SH): The SH shall nominate another person who shall become SHs incase of death/incapability of the original SH. Such nominee shall give his/her consent for being appointed as the Nominee for the SH. Only a natural person who is a citizen & resident of India can become nominee in this regard.
- Director: Minimum number is one & maximum is fifteen.
Terms & Restrictions:
- A person can form only one OPC.
- Minor cannot become member or nominee of the OPC or can hold share with beneficial interest.
- An OPC cannot be converted or incorporated into a company under section 8 of the Act (Co. not for Profit).
- An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
If you guys have any queries or want to Form/Register an OPC, please inbox me at ca.piyushjainn@gmail.com.
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How much it would cost approximately for opening and one director company? what other requirements needs to be fulfilled?
How to set up an OPC?
As the name suggests, a one person company has only one shareholder, who may also be the director. However, it can have more than one director, and up to a maximum of 15.
The process of setting up an OPC is the same as that for a private limited company. To begin with, check with the registrar of companies for the availability of a name for your company. The name will carry a suffix, ‘OPC’, similar to the manner in which a private company uses the suffix ‘pvt ltd’.
Next, assign a ‘director identification number’ to each director and apply for digital signatures for all of them. You then need to draft the memorandum of association and articles of association, which embody the objectives of the company. These are to be filed with the registrar.
Since the company is owned by a single person, he must nominate someone to take charge of it in case of his death or disability. The nominee must give his consent in writing, which has to be filed with the registrar. Of course, the owner can change the nominee any time he wants to, but he will have to inform the registrar. The nominee, too, can back off at a later stage, in which case the owner will have to make a fresh nomination. Once the paperwork is complete, the registrar will issue a certificate of incorporation within seven days of receiving the documents, after which you can start the business.
An OPC is exempt from certain procedural formalities, such as conducting annual general meetings, general meetings and extraordinary general meetings. No provisions have been prescribed on holding board meetings if there is only one director, but two meetings need to be organised every year if there is more than one director. Any resolution passed by the sole member must be communicated to the company and entered in the minutes book. There is, however, no relief from the provisions on audits, financial statements and accounts, which are applicable to private companies.
The cost of opening an OPC averages between Rs. 5k – Rs. 10k depending on the size & types of business.