A minimum of two directors and shareholders are required to form a private limited business. You can start your business by yourself (OPC) if you have difficulty finding someone to join you.
Similar to private limited, OPC directors and members can be one person.
Registering is a complex process. If you do not follow these steps, your registration application may be rejected or delayed. We have listed the top 10 things you should remember when registering an OPC (One Person Company) in India.
Name of the One-Person Company
The government won’t know the type of company you intend to register when you apply for name approval. This is the first step in submitting SPICe forms and documents for registration.
When applying for name approval, remember these points if you plan to register an OPC or One Person Company.
The word (OPC) should be placed between the company name and the word private limited. You could think of something like ABC technology (OPC), Private Limited, XYZ Web Solutions (OPC), Private Limited. Names should begin with the words “private limited”.
- Names should not be identical to or too similar to existing companies.
- Your name should not be too broad
- All other provisions must be followed according to the Companies Act 2013.
We recommend that you read our article on how to choose a company name. These are the things you should keep in mind when suggesting names for your advocate, chartered accountant, cost accountant or CS.
Restrictions on OPC
OPCs, which are one-person companies, have certain disadvantages. Private limited companies are a better choice. These are some important restrictions:
- OPC cannot have more than 15 directors.
- One person company can only have one investor.
- OPC cannot have more than 50 Lakhs of paid-up capital and 2 Crore turnover.
- One-person companies are not permitted to engage in non-banking financial investment activities, including the purchase of securities of any corporation.
- OPC cannot be converted to a section-8 company.
If you agree with the OPC’s limitations, you can either register it with the government or form a private limited company.
Compulsory Conversion to Private Limited Company
According to the Companies Act 2013, an OPC must be converted to private limited compulsorily if the following conditions are met:
- The amount of paid-up share capital exceeded Rs 50 lakhs
- The company’s turnover surpassed 2 million in the most recent financial year.
If you meet both of the above conditions, your One Person Company can be converted to a Private Limited. You can’t run it as an OPC.
Restriction on Investors Raising Fund
An OPC should only have one Shareholder or member holding 100% of company shares.
You cannot have more than one OPC member if you need additional funds to grow your business.
You must wait 2 years to attract investors to your company or meet both of the conditions discussed above to convert to private limited.
The main purpose of your business
The main object of the One Person Company is to define the types of business activities it will engage in after incorporation.
If you plan to create it as an information technology company, the main object clause should be written in such a manner that you can do all types of business related to IT.
The OPC cannot do a specific type of activity if it isn’t listed in the main object clause. To change the MOA, there are certain procedures that must be followed. It can take time and money.
We recommend that you draft your document right before registration to avoid any problems.
It is important that you ensure that the MOA main object clause is written in a way that allows you to conduct almost all business in your field of expertise.
SPICe and AOA Director Details
A member of an OPC can either be appointed director or any other person that the member chooses.
You must include the details of any director who has been chosen in the SPICe and AOA.
Attach the following documents to the director.
- Photographic copy of the permanent account number (or PAN)
- Scanned copy Identity proof – voter ID/DL/Passport
- A scan of the address proof – Bank statement/telephone bill/mobile billing/electricity bill no older than 2 months
Based on the information you provided in the SPICe questionnaire, DIN is issued. The concern person is then appointed to the role of director.
Although you can easily change your director after registration, we recommend that you choose someone who is qualified to manage the company.
Registered Office Address
When you fill out the SPICe form to register OPC, your office address will be required. You can choose to have it as either a registered or correspondence address.
If you choose a correspondence address, the form won’t ask for supporting documents. In this instance, you will need to submit e-form INC-22, registered office address, within 30 days of the date of incorporation, along with a lease agreement/houseowner proof, utility bill, and NOC from your house owner.
Failure to file the e-form INC-22 will result in additional fees depending on the number of days that have passed.
If you wish to have the chosen address registered as your registered office when you file SPICe, the above documents should be attached along with the SPICe forms. You do not need separate forms (INC-22 for registered office)
You should ensure that your requirements are met by filling out the correct address form and selecting the appropriate correspondence option.
Paid up and authorized share capital
Paid-up share capital refers to the amount you, as a member, will invest in the company.
The maximum amount you can raise your capital by ROC is called authorized share capital.
After registration, you can increase the authorized and paid-up share capital.
We recommend that you verify the amount as you will need to deposit money equal in value to your share capital in the OPC bank account after registration.
It is important to ensure that your SPICe form pays the exact amount you want to invest.
Nominee
A nominee is someone who is appointed to the One Person Company as a member in the event that the sole member dies. This means that he/she will become 100% owner of the company upon the death of the sole member.
The nominee must be an Indian citizen who is a resident of India. A minor should not be nominated. For this purpose, a person will be considered resident in India if he or she has been in India for not less than 182 consecutive days in the preceding calendar year.
If a subscriber is a single person company, he must mention the name and contact information of any other person he has nominated to take on the responsibility of member in the event of death or incapacity.
If you have engaged a consultant to draft registration documents, make sure the correct name is in the nominee section.
Before you apply for registration, make sure these things are done correctly before filing SPICe
- Attached to SPICe is a scanned copy of the nominee’s ID, PAN and address proof. All such documents must be legible.
- You will need to fill in the details and name of the nominee on the Memorandum d’association page.
- The nominee for the proposed nomination should not be from any other One-person company.
Anytime you wish, you can change the name or address of the nominee. Changes to the name of the nominee are not considered to be a change to the memorandum.
For one person companies, you will need to have the following documents
Before you submit your application for OPC membership, make sure the following documents are in order
- In Form INC-3, the nominee must give consent.
- Scanned copy of the PAN card for director, member, and nominee. It is a must.
- Nominee, director, and member must provide proof of residential address. As proof of residential address, you can use either a bank statement, an electricity bill, or a mobile bill that is not more than two months old.
- Director, member or nominee’s proof to prove identity. As ID proof, voter ID, Passport or Driving License are accepted.
- Digital signature certificate for director and member. One DSC is required if director and member are the same person.
We recommend that you seek the assistance of a chartered accountant, cost accountant or company secretary. Before approaching them, you must have the following documents.
The OPC incorporation professional must prepare additional legal documents to attach to the SPICe form. Before you upload the SPICe form, ask them to send you a duplicate.