Setting up a One Person Company (OPC) in India: A comprehensive guide

One Person Company (OPC), as the name suggests, means a company which has only one person as a member. In other words, the sole member is the only shareholder and director in the company. The concept of a One Person Company was introduced in the Companies Act 2013 (the Act) to encourage single entrepreneurs to set up a business structure enjoying the benefits of a company thereby formalising the informal structure of a sole proprietorship.

Incorporation of a One Person Company

An OPC is a company established and managed by a single person and therefore An OPC has all the features of a company, such as perpetual succession, limited liability and a separate legal entity. The Ministry of Corporate Affairs (MCA) governs the registration of a One Person Company (OPC) in India. An OPC is a private company so it is easy to go for fundraising through venture capitals, angel investors, incubators etc. OPCs are incorporated and regulated under the Companies Act, 2013 and the Companies Incorporation Rules, 2014.

Minimum Requirements for incorporation of a One Person Company

• Members AKA Shareholders: A One Person Company requires one shareholder and one nominee to register, the shareholder can be the Director cum Shareholder of the company.
• Directors: In a One Person Company there should be 1 Director. To become a Director, a Director Identification Number (DIN) must be obtained. Anyone i.e., Resident of India or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.

Benefits for incorporation of a One Person Company

• Separate legal entity: A One Person Company is legally recognised as a separate entity. Hence, a company can have its PAN, bank accounts, licences, approvals, contracts, assets and liabilities in its unique name.
• Limited Liability: Members of the One Person Company have limited liability to the extent of his/her share in the company and personal assets of members cannot be utilised for the payment of the liabilities of the company under any circumstances.
• Equity Raise: A One Person Company can raise the funds from venture capitals, angel investors, incubators etc. The Banks and the Financial Institutions prefer to grant loans to a company rather than a proprietorship firm. Thus, it becomes easy to obtain funds.
• Easy Incorporation: A One Person Company requires only one member, and one nominee is required for its incorporation. The member can be the director also. The minimum authorised capital for incorporating OPC is Rs.1 lakh. Thus, it is easy to incorporate as compared to the other forms of company.
• Easy to manage: A One Person Company is established by single person, it becomes easy to manage its affairs. The decision-making process is quick as the ordinary and special resolutions can be easily passed by the member by entering it into the minute book and signed by the sole member. Thus, running and managing the company is easy as there won’t be any conflict or delay within the company.

Documents required for company incorporation.

• PAN card copies of Director and Nominee.
• Scanned copy of document for Identity Proof i.e. Voter Id/ Passport/ Aadhar card/ Driving licence.
• Latest scanned copy of document for Address Proof (not older than two months) i.e. Bank account statement/ Telephone bill/Electricity Bill.
• Passport size photo in jpg.

For the registered office proof of the company:

• If the property is rented/ leased:
  • Rental agreement or lease agreement duly notarized.
  • No objection certificate from the owner of the property for the company.
  • Latest Utility Bill issued by the government authority (not older than two months) i.e., Electricity bill/ Telephone Bill/ Water Tax/ Gas Bill.
• If the property is owned:
  • No objection certificate from the owner of the property for the company.
  • Latest Utility Bill issued by the government authority (not older than two months) i.e., Electricity bill/ Telephone Bill/ Water Tax/ Gas Bill.

In the case of NRI or Foreign national, Passport copy must be notarized at the Indian Embassy of the country and OCI Card.
In case one of the shareholder or subscriber is a Corporate Entity (Company, LLP, etc.,) then Certificate of Incorporation and MOA and AOA of the Body Corporate must be attached along with the resolution passed by the Body Corporate to subscribe to the shares of the company under incorporation.

Process of a One Person Company Incorporation

Step 1: Acquire Digital Signature Certificate for Directors and shareholders:

The first and foremost step to register a One Person Company is to acquire the Digital Signature Certificate (DSC) of the Director and the nominee. Any e-form is filed with the Ministry after affixing the DSC of the Authorised Signatory for Company Incorporation. The documents that are required is listed below-

• PAN Card
• Aadhaar card
• Passport size photo
• Mobile number
• Email ID

Step-2: Name Approval Application:

The next step in company registration involves making an application for reservation of name for the proposed company. The application is to be made in ‘Part A ’of SPICe+ Form, where one can apply for maximum 2 names in order of preference along with the NIC code that are chosen as per the vision of the business. One shall keep in mind that the names applied are not identical or nearly resembling with any existing Company or LLP or Registered Trademark. A pdf is also attached in the form where the 2 names, purpose of the business and NIC code is mentioned.
Next, you must give particulars of the ‘proposed or approved name’ and click on the ‘Auto-check’ to do the first level automatic scrutiny of the proposed or approved name in accordance with the rules governing the name. Once the form is checked and no similarity is found then the form is submitted for reservation of name.

Step-3: Application for Certificate of Incorporation

Once the “Part A” of SPICe+ is submitted and the name is approved, the next step involves filling out the following forms: SPICE+ PART B, AGILE PRO, MOA, AOA, and INC-9.

The details included in these forms are:

• Capital structure: Authorised share capital and paid-up share capital.
• Company details: Address, phone number, email ID, and registered office details.
• Shareholder and director information: Details of the shareholder, director, and nominee.
• Tax registration details: Information required for PAN and TAN application.

After completing the details in PART B, click ‘submit.’ A confirmation pop-up will appear, indicating the successful submission of the form. This submission unlocks the other forms (AGILE PRO, MOA, AOA, and INC-9) for further completion.

Next, download the PDF of the submitted PART B form to verify the details. After reviewing, proceed to fill out the remaining forms. Once all the forms are filled out, download them, attach the Digital Signature Certificate (DSC), and upload each form to the MCA portal in its respective section.

After uploading, click the ‘verify’ button. Upon successful verification, proceed with the payment for the SPICE+ PART B form and stamp duty. Once the payment is complete, the forms are submitted successfully.

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Step 4 : Formulation of MOA, AOA and AGILE-PRO

MOA and AOA stand for Memorandum of Association and Articles of Association, respectively. These are the two most important documents for any company and marks the last step in the process of registering a Company. MOA of the company states the scope of operations of the company, whereas AOA states how the company will be carrying the operations as per the Companies Act,2013.

AGILE stands for Application for Goods and services identification number, employees’ state Insurance corporation registration plus Employees’ provident fund organisation registration.
A Service Request Number is generated for making a payment towards company incorporation. Once the payment is made successfully, the forms would be processed. In a case where the forms need resubmission for any errors being flagged upon processing, the SPICe+ form must be resubmitted in the same manner.

After due verification of the application and documents provided, the concerned RoC may grant the Certificate of Incorporation (COI). It is conclusive proof of the existence of the company, wherein the date of Incorporation, Company Identification Number (CIN) and Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) is mentioned with the sign and seal of the Registrar.

Once the Certificate of Incorporation is granted, the company may commence its business activity by executing the post-incorporation activities listed here.

Q. How can Inrole help? What is the cost incurred to register a One Person Company?

Inrole is an online financial services platform backed by a team of the in-house professionals to facilitate business registrations in India starting at Rs.8,000 +18% GST. We create real value by assigning a dedicated expert to handhold you through the process of company incorporation from start to finish and assist with managing the business operations i.e., finance, accounting, tax, legal, secretarial and payroll compliances post incorporation. ‍
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