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One person company is an improved and better form of a sole proprietorship firm. One person companies are a great business organization structure for medium-sized businesses. One person company is an improved and better form of a sole proprietorship firm and thus conversion of sole proprietorship into One Person Company is a good business decision. This business structure gives the single promoter a full control over the company and at the same time limiting his liabilities to safeguard his personal assets. The owner of this company is a shareholder. Similar to Private Company, OPC may also appoint a distinct individual as director for its management. Appointment of a nominee is mandatory in case of OPC.
Protection of the company’s assets ensures that the owner’s liability is limited to the value of their shareholding.
Large organizations often prefer dealing with a One Person Company (OPC) over a sole proprietorship. Since an OPC is registered like a private limited company, it is viewed as a more credible and trustworthy business structure. This enhances its ability to secure funding from financial institutions and builds greater confidence among suppliers and customers.
The OPC structure is easy to manage, as it involves only one member. There’s no need to hold annual or extra general meetings, and decision-making is streamlined since a single person holds full authority without needing approval from others.
An OPC offers a structured setup similar to a private limited company, providing the benefits of limited liability and better organization. In contrast, a sole proprietorship lacks this formal structure.
Scanned copy of PAN Card of all directors, nominee and Aadhar card/ Voter ID/ Passport/ Driving License.
Recent bank statement or utility bill in the name of the director and nominee, dated within the last two months.
No Objection Certificate (NOC) from the property owner, a utility bill dated within the last two months, and either a notarized rent agreement (for rented property) or registry proof/house tax receipt (for owned property).
Written consent of nominee is required to be filed with the Registrar of Companies (RoC)
Latest Passport sized photograph of the directors and nominee.
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An OPC requires an authorized capital of ₹1 lakh to begin with. However, this amount does not need to be paid-up immediately. The capital should not exceed ₹50 lakh during incorporation.
Once incorporated, a company remains active and in existence as long as it meets its annual compliance requirements. Failure to comply may result in the company becoming dormant and eventually being struck off the register. However, a struck-off company can be revived within a period of up to 20 years.
A One Person Company (OPC) limited by shares must adhere to the following requirements:
It must have a minimum authorized share capital of ₹1 lakh.
Transfer of shares is not permitted to any other individual.
The OPC is not allowed to invite the public to subscribe to its securities.
If the OPC, whether limited by shares or by guarantee, enters into a contract with its sole member—who also serves as the director—the terms of the contract must be documented in writing. These terms should either be included in the company’s memorandum or recorded in the minutes of the next Board meeting following the contract.
Additionally, the OPC must notify the Registrar of Companies about any such contract within fifteen days of its approval.
No, an individual is allowed to form only one One Person Company (OPC) at a time. The same restriction applies to a nominee director as well.
To register a One Person Company (OPC) in India, it is mandatory for the director and the subscriber to the Memorandum of Association (owner), as well as the nominee, to obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN). Additionally, a registered office must be in place for completing the online registration process.
The promoter must ensure that the proposed name for the OPC is unique and not similar to any existing company or trademark. Additionally, all required documents related to the subscriber, nominee, directors, and registered office must be in proper order as per the guidelines.
To learn more about selecting a company name, visit: Mark Business Identity Wisely – Choosing the Name of a Company.
Yes, an OPC can be converted into a Private or Public Company after two years from the date of incorporation.
A nominee is an individual appointed during the incorporation of the OPC. In the event of the owner’s death or incapacity, the nominee becomes the member of the OPC, ensuring its perpetual existence.
In case of cessation of the OPC member due to death, incapacity, or change in ownership, Form INC-4 must be filed with the ROC, providing details of the new member.
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