How to Register a One Person Company in India?
While an entrepreneur or a business owner is going to register an OPC company in Bangalore or any other cities in India; he/she should have to aware and know the most important things related to it such as features, advantages, reasons, requirements, documents, process and time and cost involved in registration. That’s why in this article, we discuss the key points which is most essential to get started a one person company in India.
Introduction to OPC
The concept of a one person company (OPC) was brought out as per the Company’s Act 2013. Previously, in order to find a private company you need at least 2 members and directors. On the other hand, you needed at least 7 members and 3 directors in order to start a public company. A single person was never allowed to incorporate a company earlier on.
However, the Section 2 (62) of said act has made it possible for the people who want to form a company with just one director and one member. Normally, in such a company the compliance related requirements are lot lesser than a private company.
As per the statistical report, it is shown that the number of registered one person company is growing gradually in India. Because the entrepreneurs or single business owners are liking to do business as OPC rather than sole proprietorship to get the advantages of it.
You might be interested to know what are the numbers of one person company are registered in India till date. Here we share a little information on OPC formation which carries the records that how many companies are annually registered from financial year 2014-18 (until March).
As on 30th June, 2018, a total number of 18,153 One Person Companies (OPCs) were registered in India. The below image chart gives a pictorial representation view of OPC.
See the growth chart of registered one person company (OPC) as on 30th June, 2018:
What is OPC Registration?
OPC registration means solopreneurs or entrepreneurs could register their venture or business enterprises with MCA (Ministry of Corporate Affairs) under the laws and rules of Companies Act, 2013 and start as a single person/owner entity to reach in their business goals. To do business in India; a business has to get a legal name and this called registration. After registration, the ABC Company will be known as “ABC OPC Private Limited” and it is treated as one person Pvt Ltd Company.
Features of a One Person Company (OPC)
As far as the rules and regulations in India are concerned only a natural citizen of India can start an OPC over here. The same facility is also available to the residents of India. Such an individual can be both the nominee and a member of such a company. For the purpose of this particular discussion it must be mentioned that the term resident indicates a person who has stayed in the country for at least 182 days in the immediately previous financial year.
A person cannot be a member in more than 1 OPC. You also need to keep in mind that if your paid up share capital crosses the INR 50 lakh mark you have to change yourself into a public or private company. The same is also applicable if in the immediately preceding 3 financial years your yearly turnover crosses the INR 2 crore mark. This mandatory conversion needs to be completed within a period of 6 months.
As far as voluntary conversion is concerned, you need to wait for at least 2 years before you can change your company to a private or public company. After that period you can easily apply and change your company to the kind that you want to. The Companies Act, 2013 has laid down certain rules and regulations for such conversion under Section 18 as well as Rule 7 (4) of the Companies (Incorporation) Rules, 2014. They have to be followed to the letter in such cases.
There are also some mandatory rules and regulations that you have to observe as an OPC. You should have at least one board meeting in each period of 6 months in a calendar year. At the same time, these meetings should not be more than 90 days apart. You have to maintain proper bank accounts and get your financial statements audited the right way. Each year you have to file your business income tax returns prior to 30th September. You need to file your ROC (Registrar of Companies) Annual Return through Form MGT-7 and financial statements through form AOC-4.
If you happen to be a minor you would not be allowed to form such a company. The same will also be applicable if you are a foreign citizen, a person who is contractually incapacitated, or a non resident of India.
Advantages of an One Person Company
There are several advantages of an OPC that may be enumerated as below:
- It is a separate legal entity
- It is easier to get funding for the same
- The liability is limited but opportunities are endless
- You get the benefits normally associated with owning a small scale industry (SSI)
- You are the only owner
- Even with a bad credit rating you would get a loan if you are an OPC
- You get Income Tax benefits
- You get high interest on any late payment
- These companies carry a lot of prestige and the faith in them is increasing by the day
It needs to be stated in this context that the income tax benefit is perhaps the only tax related benefit that an OPC is entitled to. Otherwise all the other kinds of taxes such as Dividend Distribution Tax and MAT (Minimum Alternate Tax) are applicable for these companies as well. They are applicable in this context just as they are for others as well.
Why You Must Register a One Person Company in Bangalore?
There are several reasons as to why you (entrepreneur) should register such a company in Bangalore. The capital city of Karnataka happens to be one of the major business hubs in the country and this means that there are plenty of chances for you to prosper. So you should you start a company over here.
In fact, right now Bangalore can be called as one of the great tech hubs of Asia itself. Foreign investors, entrepreneurs and capitalists have eyes on this place.
Just to name a few reasons here:
- To create better image and credibility in the market
- To magnetize the faith of the customers
- To make distinct personal liability from business
- To get bank credit & investment from investors
- To create faith & attract talented manpower
- To make potential to get more customers
- To make your business a magic brand
Apart from that there are also plenty of companies over here that can help you get started in this regard by providing some wonderful services. These companies are specialists in such work and have plenty of experience in this regard as well. They have helped plenty like you before and you can expect them to do the same for you as well. They know quite clearly what works and what does not. They bring such knowledge and experience to bear for your benefit and make sure that you get what you need.
Documents Required for OPC Registration in Bangalore
- PAN card copy of director/members
- Passport size photograph
- Proof of identity (Aadhaar Card, Voter ID, Passport, Driving License)
- Proof of Residence in the name of applicant (Bank statements, Electricity Bill, Telephone Bill, Mobile Bill)
- Rental agreement/ Sale deed of property from owner of the premises for using it as registered office
- NOC from the owner of the premises for registered office
- Electricity/ Telephone/ Mobile Bill & Property Tax Receipt required for premises address proof
How to Incorporate or Register an OPC?
Here are the 6 steps which must be needed for OPC registration process:
- Applying for Company Name Approval
- Applying for Digital Signature Certificate (DSC)
- Applying for Directors Identification Number (DIN)
- Preparing Documents for Registrar of Office (ROC)
- Filing Forms with MCA
- Issuing Certificate of Incorporation (COI)
And here we have shared a brief explanation for the above procedure where the applicant or entrepreneur could learn, know and understand the step by step process of incorporation.
Applying for name approval in MCA
There are certain steps as far as how to register an OPC in Bangalore is concerned. The first step in this regard is to apply to get your company’s name approved. As per rules and regulations the name of the company should be like this – name of company (OPC) private limited. There are 2 options that you have in this regard – you can fill up Form SPICe 32 or use a web service named RUN (Reserve Unique Name) being operated by the MCA (Ministry of Corporate Affairs). In both these cases you would have to provide a name and also the significance of why you want that name. However, from 23rdMarch 2018 onwards the MCA has opted to provide the option of a resubmission (RSUB) along with 2 proposed names.
Applying for DSC
The second step is that you need to take in this regard is to procure a Digital Signature Certificate (DSC) from the authorized Certifying Authority (CA), to whom the permission has given by the Central Government to issue the DSC. This is for the person who is supposed to become the company’s director – you. You normally need documents such as address proof, Aadhaar Card, PAN (Permanent Account Number) card, a photo, email id (identification), and phone number.
Applying for DIN
After you get your DSC the next step that you take in order for OPC registration in Bangalore Karnataka is to apply for your DIN (Director Identification Number). For this, you need to fill up the SPICe (Simplified Proforma for Incorporating Company Electronically) form and provide your name and address proof. If you are already an existing company you should be filling up Form DIR-3. This implies that starting from January 2018 companies need not file that particular form in a separate manner. This particular application can be made for a maximum of 3 directors.
Preparing the documents for ROC
Once the MCA approves of the name you have to start preparing the documents that you would submit to the ROC.
The first such document is the Memorandum of Association (MoA). It contains the objectives that the company would follow. It basically states the business for which the company is being started.
The second document in this regard is the Articles of Association (AoA). It basically mentions the bylaws that would be followed in order to run the company.
Since such a company has only 1 member and 1 director a nominee needs to be appointed. This person would take over the reins when the director is unable to run the company because of death or incapacity of some or the other kind. In this case the consent would be taken in Form INC-3. The concerned person would have to provide documents such as Aadhaar Card and PAN Card.
The fifth document in this regard is the proof that you have a registered office for the proposed company. You also need to furnish a NOC (No Objection Certificate) from the property’s owner or show proof of ownership yourself.
You, the director, would also need to provide Consent and Affidavit by way of Form DIR-2 and INC-9 respectively.
You also need to provide professional certification of the fact that you have met all the compliances in this regard.
Filling forms with MCA
You need to attach all these documents to the SPICe Form, SPICe-AoA, and SPICe-MoA. You would also need to attach your DSC as well as that of the professional who has certified that you have satisfied all the necessary compliance. Then you need to upload these on the official website of MCA in order for them to be approved. Once you have uploaded the documents Forms 49B and 49A would be created. These would help generate your company’s PAN and TAN (Tax Deduction and Collection Account Number). You would have to attach them to your DSC and upload them to the official website of MCA.
Issuing the certificate of incorporation
The ROC would verify all the documents and then issue the Certificate of Incorporation. Then you would be able to start your business legally.
One person company has the great opportunities rather to sole proprietorship; it can build a great wall of success by taking its advantages, when an innovative and creative thinking of an entrepreneur executed in his/ her business and energy to do some good things where the customer will be benefited as well as you also. But the thinking should be clear and concise about your motive.
How Long does it Take to Register an OPC?
We can register your one person company within 7 days. But before that client should have to provide all the necessary documents in time and choose a fresh unique name which helps to get approval quickly from MCA and speed up the incorporation process. Otherwise it will take more time for company incorporation.
How much does it Cost to Register a One Person Company?
We can help you to do complete your OPC registration in Bangalore at Rs 12,500 without any hidden charges. If any requirement is there; we would talk with you proceed for next step.
If you are thinking to get free consultation on company formation as well as for business matters from experienced Chartered Accountants, Company Secretary and Lawyers; get counsel here.