One Person Company Registration

What is One Person Company Registration in India?

Before the Companies Act of 2013, starting a company in India required at least two people. However, with the new law, One Person Companies (OPCs) were introduced, allowing just one person to form and run a company. The Companies Act of 2013 specifically supports OPCs, making it easier for individuals to start their own business. Unlike traditional private companies, which need at least two directors and members, an OPC can be set up by just one person. The rules for OPCs are laid out in Section 262 of the Companies Act of 2013. The registration process for an OPC involves having only one director and one member to represent the company. OPCs also have simpler compliance requirements, making them less burdensome compared to traditional companies. This law provides a straightforward way for individuals to create and run a business on their own in India.

Features of One Person Company in India

Simple Succession:
Even though the company is run by one person, OPCs allow for continued operation. If the owner passes away, a nominated person can take over the business.
Limitation of Liability:
The owner of an OPC has limited liability. Since the OPC is a separate legal entity, the owner's personal assets are protected. If the company faces losses or bankruptcy, creditors can only claim the company’s assets, not the owner's personal property.
Shareholder and Director:
In an OPC, the single member is also the director, managing the company’s daily operations. There is no need for additional executive directors, as the sole member takes on full responsibility.
Ownership of Real Estate:
As a separate legal entity, an OPC can own property, including land, buildings, and assets like machinery. The owner can hold these assets in the company’s name, and others cannot claim them.

Documents Required for OPC Registration in India

Following are the crucial documents required for One Person Company Registration in India

Scanned copy of a current bank statement:
You can obtain your bank statement either through internet banking or by visiting the bank. This document shows your account transactions and balance.
Utility bills (phone, electricity, gas, or mobile bill):
These bills show the cost of services like electricity, gas, and phone usage. They help verify the address of the business and should be recent (within 2 months).
Rental agreement in English:
If the business premises are rented, a rental agreement in English must be provided. This document proves the lease between the tenant and landlord.
Digital copy of landlord’s no-objection certificate (NOC):
This certificate from the landlord confirms that they allow the business to use the property as a registered office. It’s required for company registration.
Scanned copy of property or sale deeds in English (if the property is owned):
If the business property is owned, you need to submit a scanned copy of the property or sale deed. This document proves ownership and the legal transfer of property.

Procedure for One Person Company Registration

Following is the procedure for One Person Company Registration in India:

Step 1:
OPC offers a unique feature called "eternal succession," meaning that if the member of the company passes away, a nominee can take over and continue running the business.

Step 2:
Members of an OPC have limited liability, meaning they are only responsible for the company’s debts up to their share in the company. In case of financial trouble, creditors can only sue the company, not the individual member.

Step 3:
In an OPC, a single person can be both the owner and the director, handling all the day-to-day operations without needing an additional executive director.

Step 4:
As a separate legal entity, the OPC can own property and assets in its own name. No one else can claim these assets, including machinery, land, or buildings.

Step 5:
The Registrar of Companies (ROC) will issue a Certificate of Incorporation along with a PAN and TAN for the OPC.

Step 6:
Open a bank account in the company’s name to start your business operations.

Restrictions on One Person Company

Despite its many advantages, starting a one-person business comes with a number of constraints.

Not Ideal for Growth:
An OPC is great for small businesses, but it’s not suitable for large-scale growth. Since it can only have one member, adding more members or shareholders isn’t possible. This limits the ability to raise more funds and expand the business.
Restrictions on Investments:
An OPC is not allowed to invest in non-banking financial operations, which limits its ability to invest in other companies' securities.
No Clear Separation of Ownership and Management:
In an OPC, the same person is both the owner and the director, meaning all decisions are made by one individual. This lack of separation can lead to potential conflicts or unethical practices.

LLP Compliance

The Companies Act of 2013 sets out certain requirements that must be followed within specific timeframes. These rules help ensure transparency, good governance, and protect everyone involved, including the ROC, shareholders, directors, investors, and tax authorities. These compliances are divided into four types: annual compliances, recurring compliances, one-time post-incorporation compliances, and event-based compliances. The one-time compliances have already been explained in detail.