OPC(ONE PERSON COMPANY)

OPC(ONE PERSON COMPANY)

A One Person Company (OPC) is a type of private limited company incorporated by a single person who acts as the sole director and member. It was introduced in India by the Companies Act, 2013, to encourage solo entrepreneurs while offering them the benefits of a corporate structure, such as limited liability. 

Key features of an OPC

• Limited liability: The owner's liability is limited to their investment in the company, separating their personal assets from the company's liabilities.
• Single ownership: The OPC has only one member, who also holds the role of a director. The owner has complete control over decision-making and management.
• Nominee requirement: A nominee must be appointed during incorporation. In the event of the sole member's death or incapacity, the nominee takes over the company to ensure perpetual succession.
• Less compliance: OPCs enjoy certain exemptions from statutory compliance requirements compared to private limited companies. For example, they are exempt from holding frequent board meetings and do not have to prepare a cash flow statement.
• Name: The name of an OPC must end with "(OPC) Private Limited".
• For Indian residents only: Only a natural person who is an Indian citizen and resident in India can be a member and nominee. As per the Companies (Incorporation) Second Amendment Rules, 2021, an NRI can also incorporate an OPC if they have stayed in India for at least 120 days in the preceding financial year. 

How to form an OPC

1. Obtain Digital Signature Certificate (DSC): The proposed director must obtain a DSC for electronic filing.
2. Apply for Director Identification Number (DIN): A DIN for the director can be applied for through the integrated SPICe+ form.
3. Reserve a name: Apply for name approval through SPICe+ Part A on the Ministry of Corporate Affairs (MCA) portal. The name should be unique and compliant.
4. Draft incorporation documents: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA). The MOA must include the name and consent of the nominee (Form INC-3).
5. File for incorporation: Submit SPICe+ Part B along with the drafted MOA, AOA, and other required documents on the MCA portal.
6. Receive Certificate of Incorporation: Once the application is approved by the Registrar of Companies (ROC), a Certificate of Incorporation, along with the company's PAN and TAN, is issued.
7. Open a bank account: Open a bank account in the name of the OPC to commence business operations. 

Conversion to a private limited company 

An OPC must be mandatorily converted into a private limited company if its paid-up capital exceeds ₹50 lakh or its average annual turnover for three consecutive years exceeds ₹2 crore. Conversion can also be done voluntarily at any time by passing a special resolution.