One Person Company Registration
1. Minimum Requirements
ONE shareholder ( The shareholder must be natural persons and resident in India)
ONE director ( Only Shareholder will Become Director of Company)
Minimum Authorized Capital - 1 Lakh
Nominee ( The rules for incorporation of one person company requires that the sole member of a One Person Company should include the name of a nominee in the company’s MOA, who will undertake the entity after the expiry or incapacity of the former.)
2. Document Requirements for One Person Company Registration
Proposed Name of Company
Company Business Object ( OPC is not allowed to do Businesses involved in financial activities)
Address Proof - Rent Deed/ownership Document of Property
Utility Bill (Electricity Bill, Telephone Bill, Water Bill, Gas Bill)
No Objection Certificate
Pan Card - Promoter
Address Proof - Promoter
Photo – Promoter
Mobile & Email – Promoter
Following are the Advantages of One Person Company:
1. The very first merits of OPC are the difference between Private Limited Companies and OPC is the process of acquiescence or compliance is uncomplicated due to providing the immunity.
2. No need to get a partner. Only one member is required to run this business formation.
3. If the ownership of company changes, there is hardly any effect on the company.
4. Less Investment: To register One Person Company, you need to have a bank account which should have a minimum balance which could be as much less as 5000.
5. It promotes the entrepreneurship in an individual. A person who wants to run a business without any partnership, you can apply OPC in India.
6. Proprietorship has some issues like owners personal assets are at stake and if any misfortune happens, he needs to bear all the loss while there is nothing like this in OPC registration. Your personal stakes are very much safe like in private limited company.
7. But you need to convert the OPC into a private limited company if it exceeds the turnover of 2 crores or paid capital is more than 50 lacs.
8. It permits the easy loans available after the incorporation.
9. OPC only needs ROC filing.
10. The personal assets will also be safe with from others.
On the other hand, OPC or a one-person company is a hybrid form of business mashing the flexibility or a sole proprietorship with separate distinct identity clause of a corporate body.
Following are a few major cons of incorporating an OPC:
1. Suitable only for a fairly smaller form of business since One Person Company registration can have maximum authorized capital of fifty lakhs and its turnover when exceeds two crores needs to be compulsorily converted into a Pvt Ltd invoking the clause of compulsory conversion which would increase the compliances costs. Most of the startups hurry with an OPC and cross the turnover limit within a year.
2. Cannot voluntarily be converted to a Pvt Ltd or Public Ltd until two years of the date of incorporation.
3. Since an OPC is recognized as a company according to Income-tax Act it would be taxed at a maximum marginal rate of 30% as applicable to Private Limited Companies.
4. Limited to only one shareholder, that means you cannot offer part ownership to any other person.
5. Not suitable for complex form of businesses like NBFCs nor can be incorporated as a Section 8 company(Company Not for Profit)
6. A One Person Company (OPC) cannot raise funds by selling its shares and hence not preferred for startups.
7. It increases the compliance cost yearly because audit and other compliance are mandatory irrespective of turnover.
8. It cannot be converted into a private company voluntary before two years from the date of incorporation.
All the compliances provided under the Company Law may be divided in 2 parts for making it easy to understand Mandatory Compliances and Event Based Compliances.
1. MANDATORY COMPLIANCES:
After registration following are the mandatory compliances for every company:
Meeting of Board of Directors: First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company and thereafter 4 meetings are required to be held in every financial year in such a manner that the gap between 2 Board Meetings should not be more than 120 days. Notice of Board meeting must be send before 7 days of meeting to every director by way of physical or through e-mail.
Benefits to Small Company:
Small company means private limited company which has paid up capital less than Rs. 50 lakh AND turnover less than Rs. 2 Crore. It is sufficient to conduct only 2 board meeting for a small company.
In First Board meeting, Company has to approve pre-incorporation expenses, authorize anyone director for issuing share certificate and bank account opening, appoint first auditor of the company etc.
Issuing of Share Certificate: The Company is required to issue Share Certificates to the subscribers of memorandum within 60 days of Incorporation of Company.
Filling of Disclosure of interest by Directors: Director of every company are required to give disclosures about their interest in any other business entity in first Board Meeting in which they participate as a Director and thereafter in First Board Meeting of every financial year in FORM MBP-1 to the Company.
Annual General Meeting: A company may hold its first AGM within a period of 18 month from the date of incorporation. However, this should not be more than 9 months from close of financial years. There must be one meeting held in each year and the gap between two AGM must not be more than 15 months. Meeting must be held not later than 6 months from close of financial year.
Minutes of proceedings of Meeting of Board of Directors, General Meeting: It is mandatory for every company to cause minutes of the proceedings of every meeting of Board of Directors, General meeting within 30 days of conclusion of meeting concerned. Minutes shall be preserved permanently and shall act as evidentially value in case of any dispute.
Approval and Signing of Financial Statements: The financial statement shall be approved by the Board of Directors and signed by 2 Directors out of which one shall be managing director and the chief executive officer, if he is a director in the Company, Chief Finance officer and the Company Secretary of the Company, wherever they are appointed for submission to the auditor for his report thereon.
Report by Board of Directors: Every Company has to prepare a board report in which details of the state of the company, operations during the year, net profit, dividend declaration and its compliance with a set of financial, accounting and corporate social responsibility standards contains.
Filling of Financial Statements or Financial Results: Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with Registrar of Company in E-FORM AOC-4 available at mca.gov.in which shall be digitally signed by at least one Director and is required to be certified by A Company Secretary in Practice/Chartered Accountant in Practice/ Cost Accountant in Practice if the Company is not a Small Company.
Filling of Annual Return: It is mandatory for every company to file its Annual Return with Registrar of Companies within 60 days of Annual General Meeting in E-FORM MGT-7 available at mca.gov.in which shall be digitally signed by at least one Director and is required to be certified by A Company Secretary in Practice if the Company is not a Small Company.
The annual return of a listed company or a company having paid-up capital of Rs. 10 Crores or more OR turnover of Rs. 50 Crores or more shall be certified by a Practicing Company Secretary in Form No. MGT-8 stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.
♣ Maintenance of Statuary Registers: Following registers are required to be maintained by every company:
MGT-1: Register of Members
MGT-3: Foreign register of members, Debenture Holders other security holders or beneficiary residing outside india
FORM SH-2: Register of renewed and duplicate share certificate
FORM SH-3: Register of Sweat Equity Shares
FORM SH-6: Register of Transfer and Transmission of Shares
FORM SH-10: Register of Shares or Securities bought back
FORM SH-12: Register of loan, investment and guarantee
FORM CHG-7: Register of Charges
FORM MBP-4: Register of contract or arrangement in which directors are interested
Register of Director and KMP
Register of deposits
2. EVENT BASED COMPLIANCES
Change in Shareholder, Directors or Managerial Person
Increase in Authorized Share capital
Increase in Paid up share capital (Issue of security)
Change in registered office
Change in secured borrowing (Creation, modification and satisfaction of charge)
Change of name of company
Conversion of company
Filing of resolution and agreements
3. Compliance of Filing the Income Tax Returns
Income Tax Return is mandatory to be filed by every Private Limited annually. It contains all the information regarding the earning of the Private Limited from all sources, tax liabilities it has, taxes that have been paid for the financial year and any rebates that it receives from the government. It is mandatory for these Private Limited to close their financial year on 31st March every year.
Companies are required to file their Income Tax Return by 30th of September every year or on the dates notified by the Income Tax Department for that year. They are required to get their books audited under the Income Tax Act If prescribed limit exceed.
FAQ on Private Limited Company Registration
1) How do I start a private limited company?
All that is required are PAN card of the promoters, address proof and bank statement copies of the promoters along with address proof for the registered office address. A company can be started in about 3 – 7 days.
2) What is authorised capital of the private limited company?
Authorised capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid up capital is the amount of shares issued by the company to shareholders. Authorised capital can be increased after incorporation at any time to issue additional shares to the shareholders.
3) Can registered office be a residential property?
Yes, a residential property can be used as a registered office of a company. However, empty land or vacant buildings cannot be used as a registered office.
Can NRIs and foreign nationals or foreign entities register a private limited company?
Yes, NRIs, foreign nationals and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, incorporation rules in India require for one Indian national to be a part of the company on the Board of Directors.
4) How to select a name from my company?
The name selected by you should not be identical or similar to an existing company name or LLP name or registered trademark.