One person company is a concept introduced in India by the Companies Act, 2013. The concept opens up new vistas of business opportunities and particularly spectacular possibilities for sole proprietorships and entrepreneurs who can enjoy the advantages of limited liability and the benefit of a separate legal entity as well. The introduction of OPC in the legal system is a move that would.
Encourage corporation of micro businesses and entrepreneurship with a simpler legal regime so that the small entrepreneur is not compelled to devote considerable time, energy and resources on complex legal compliance. This will not only enable individual capabilities to contribute economic growth but also generate employment opportunity. One Person Company of sole-proprietor and company form of business has been provided with concessional /relaxed requirements under the Companies Act, 2013. With the implementation of the Companies Act, 2013, a single national Person can constitute a Company, under the One Person Company (OPC) concept.
Benefits of One Person Company are:
A Separate legal entity:
OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.
Easy Funding: It is a company is a private company, OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.
More opportunities, Limited liability: One of the advantages of One Person Company is that it has more opportunities, limited liability since the liability of the OPC is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative start-ups.
Benefits of being a Small Scale Industries (SSI): An OPC can avail the various benefits provided to Small Scale Industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.
Easy Funding: It is a company is a private company, OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company. Being a Separate Legal Entity, A Private Limited Company owns any Property in its Name.
Single Owner: You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.
Credit Rating: The OPC with bad credit rating may even get the loan. The credit rating of OPC will not be material if the rating of OPC is as per norms.
Benefits under Income Tax Law: Any remuneration paid to the director will be allowed as deduction as per income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.
Receive interest on any late Payment: OPC avails all the benefits under Enterprises Development Act, 2006. The newly start-up OPC is micro, small, or medium, hence they are covered under this act. As per the Act, if buyer or receiver receives any late payment (receives payment after a specified period), then he is entitled to receive interest which is three times the bank rate.
Increased Trust and prestige: Any business entity that runs in the form of the company always enjoys an increased trust and prestige.
Obtain DSC & DIN
Digital Signature Certificates (DSC) are the digital equivalent (that is
electronic format) of physical or paper certificates. Examples of
physical certificates are drivers' licenses, passports or membership
cards. Certificates serve as proof of identity of an individual for a
certain purpose; for example, a driver's license identifies someone who
can legally drive in a particular country. Likewise, a digital
certificate can be presented electronically to prove your identity, to
access information or services on the Internet or to sign certain
documents digitally. Like physical documents are signed manually,
electronic documents, for example e-forms are required to be signed
digitally using a Digital Signature Certificate.
DIN: It is an unique Identification Number allotted to an individual who is an existing director of a company or intends to be appointed as director of a company.
Before filing the actual Incorporation documents with the ROC, we need to be sured about the name of the Proposed Company, whether the applicant will be able to get the name or not. So, we need to Reserve our Proposed Company name with the ROC, Which we do with filing of the form INC-1.That Reserved name of the company is valid for 60 days from the day you get its registered.
Drafting of MOA and AOA
Memorandum of Association is the document that reveals the name, registered office address, aims and objectives of the company, clause about its limited liability, share capital, minimum paid up capital etc. MOA also gives information about its first shareholders including the number of shares subscribed by them. MOA is one document that tells people all about the company and its relationship with the outside world. Though it is essential to submit MOA with the registrar when a company is being formed, it does not find mention in the constitution of the company. Subsequent to an amendment added in 2006 Companies Act, it is no longer mandatory to include the details about name, address, objectives and first shareholders names. Hence there is no restriction upon a company to engage in a particular business.
AOA: Articles of Association, also simply referred to as Articles, are necessary to be submitted during incorporation of a company with the registrar of companies. When Articles are taken in conjunction with MOA, they form what is called as the constitution of the company. Articles are also called the internal Constitution of the company.
Filing E-form with ROC
After Name Approval & Drafting of MOA & AOA, now we needs to file INC-2 (Form for incorporation of the One Person Company) which includes all the declarations, Affidavits, etc from Director and Subscriber as well and form INC-3 as the Consent of Nominee.
After 3-4 days of filing the Incorporation form with the ROC, ROC gives its remark over the Incorporation. If ROC founds that all things are in order and as per the standard, then ROC issues Certificate of Incorporation. On the other hand, if ROC found something missing, then they send the form for Re-submission, and after completing of Re-submission of the form, ROC provides Certificate of Incorporation. But, once the form goes in Re-submission, it takes 3-4 days extra. Normally, it takes 5-6 days for name Approval and 5-6 days for Incorporation approval after name approval, if ROC found everything is in order, otherwise 5-6 days will more be considered. Totally, it takes 15-20 working days of Incorporation of the company.
DIN for one Director or Owner
DSC for one Director or Owner
Name Approval Certificate
MOA and AOA
Company Registration Certificate
PAN & TAN of Company