OPC Registration in India: Meaning, Eligibility, Process and Benefits for Solo Founders

Many professionals work in India as sole practitioners. These include professionals such as consultants, advisors, and online merchants. While there are several advantages of conducting business as a sole proprietorship, there are several risks as well. For instance, in the eyes of the law, there is no distinction between the owner and the business. An OPC (One Person Company) provides a framework for the sole entrepreneur to run the business in a more professional manner and mitigate the risks to some extent. As the name suggests, an OPC requires only a single share and a single member to form the company.

What the law calls "OPC registration" is the process whereby a company with a single member is formed.

This guide simplifies eligibility, necessary documents, cost, and theprocess of MCA, and what compliance means. We have broken down the information simply provided by VenturEasy.

What gives us the authority to create this article? This is based on the Companies Act 2013, the amended Companies (Incorporation) Rules 2014, the SPICe+ process, and our experience. Our team consists of lawyers, company secretaries, and chartered accountants. We have assisted clients in India and abroad to incorporate over 500 companies in India.

What Is a One Person Company?

A One Person Company (OPC) is defined in Section 2(62) of the Companies Act, 2013 as a company that has only one member. By default, the sole member is also the only director.

Like a regular company, an OPC is a separate legal entity and is permitted to own property, enter into contracts, and Open bank accounts. Because it is a separate legal entity, the owners are not personally liable for the debts and obligations of the company. However, in the case that the company is insolvent, the creditors can seize the personal assets of the owners.

There are circumstances that require an OPC to appoint a nominee. These include the member’s death or if the member becomes of unsound mind. In either case, the nominee replaces the member. The company’s name also has to end with the words “Private Limited”, and the words “One Person Company” also need to be included.

Who Can Apply for OPC Registration?

Familiarize yourself with the conditions. You may not be eligible to open an OPC.

• An OPC can only be registered by a natural person. No company, LLP, or trust can open an OPC.

• The person opening the OPC must be an Indian citizen, and as of 2021, an NRI can also open an OPC.

• One person can open only one OPC. The same person can also be nominated by an OPC.

• A person below the age of 18 cannot be a member or nominated by an OPC.

• The person nominated by an OPC must be an Indian citizen and must also give his/her consent by filing Form INC-3.

OPC vs Sole Proprietorship vs Private Limited Company

Before OPC registration, compare the three common structures.

An OPC suits you if you want protection and credibility now, and you do not plan to bring in investors soon.

Example: When an OPC Makes Sense

Illustrative example. Take a freelance UI designer who works with clients in India and abroad. She works alone, wants to sign contracts under a company name, and does not need investors yet. An OPC fits her well. If she later wants a co-founder or an angel investor, she can convert it into a larger company structure.

Documents Required for OPC Registration

Organize your documents in advance. For Members/Directors and Nominees:

• PAN Card

• Government ID (Aadhaar/Passport/ Voter’s ID/ Driving Licence

• Address Proof (Bank Statement/ Post Paid Phone Bill/ Electricity Bill) issued not more than 2 months before the date of application

• Passport-Size Photograph, E-Mail ID and Mobile Number

For Registered Office:

• No Objection Certificate from the Landlord (if the office is rented)

• Utility Bill (of the office premises)

In addition to the above,

• Digital Signature Certificate of Director

• Nominee’s Consent in Form INC-

• Draft Memorandum and Articles of Association

Non-Resident Indians of India should also produce their valid Passport. In addition, they should also produce Resident Address Proof of the country where they are residing from time to time, which may require Attestation.

How to Register an OPC: Step-by-Step Process

The entire OPC registration process is online and is processed through the SPICe+ form on the MCA website.

1. Obtain a DSC and get it registered for the director.

2. Log in to the MCA website and, if you haven’t already, create your account.

3. Make the name availability request for the names proposed by you (up to 2 names are allowed) in Part A of the SPICe+ form. The name should be in accordance with the norms prescribed by the MCA and should not be identical or similar to any company or LLP incorporated or registered or trademark registered or applied for in India.

4. Upon submission of SPICe+ Part B, you will be required to upload the consents, MoA & AoA of the company, and the Inc 3 (in case of a one-person company, the consents are given by the same person), and also provide the details of the nominated person and the capital of the company. The DIN of the director and the PAN and TAN of the company are also granted at this point in time.

5. Upon payment of the government fees and state stamp duty, sign the SPICe form using your DSC.

6. The ROC approves the documents, and thereafter, the company is officially incorporated. Generally, the process takes 5 to 15 working days.

7.  After incorporation, you are required to do the following within 180 days: Open a current account; Deposit the share capital; File Form INC-20A to commence business.

OPC Registration Fees in India

Costs may vary. The total will be determined by:

• Fees charged by the government

• Stamp duty charged by the state on the MoA and AoA

• DSC charges

• Professional costs charged for document filing

There are no requirements for a minimum capital, and capital may be increased at a later date. Authorized capital may be kept low at the outset. Obtain an itemized quote before payment to avoid hidden charges. Fee structures may be confirmed on the MCA website.

Benefits of OPC Registration

• Limits liability: Your personal and business assets are kept separate.

• Full control: You have complete control over the business as you do not need partner approval to make decisions.

• Continuity: The nominee ensures the business continues even after the founder.

• Easier than a private limited company: An OPC has fewer compliance responsibilities than a private limited company.

• Reputation: Banks, customers, and suppliers prefer dealing with a company over dealing with an individual.

• Support from the government: An OPC is allowed to apply to the DPIIT for recognition.

Limitations to Know Before You Apply

• OPCs cannot give shares to outside parties; therefore, you would need to change the structure before fundraising.

• OPCs cannot do non-banking financial investments or work as a charitable company.

• One person can create only one OPC.

• Compliance for an OPC is more than that of a Sole Proprietorship.

An OPC can be voluntarily converted to a public or a private limited company. The 2021 amendment removed constraints of a paid-up capital of 50 lakhs and a turnover of 2 crores for such a conversion.

Conversion requires a paid-up capital of 2 lakhs. As of now, the Company has to have a minimum of 2 members and 2 directors. Check recent MCA circulars for the latest position.

OPC Compliance After Registration

There are other procedures for incorporation. An OPC must

•  Appoint the first auditor within 30 days of the incorporation (via Form ADT-1).

• Prepare financial statements and file the annual return not later than 180 days from the end of the financial year. An OPC annual filing service will process these returns on your behalf with the ROC.

• Keep proper accounts. This can be outsourced to an accounting service.

• File returns as required under the Income Tax Act and the Central Excise Act.

• File returns as required under the Goods and Services Tax Act.

• File returns as required under the Undisputed Claims of Tax Deducted at Source Act.

• Hold at least one meeting of the board of directors in each half of a year, with a gap of not less than 90 days between the meetings.

• Maintain statutory registers.

• Keep up to date Director's KYC as per the requirements of the MCA.

  Be aware of the due dates of the above requirements to avoid late filing. Filing after the due date will attract penalties and additional costs.

Practical Tips Before You File

• Have alternatives in mind if your first choice is turned down.

• Determine your nominee as early as possible, and obtain the consent form completed and signed as soon as possible.

• Ensure your name and address are the same on all documents (PAN, Aadhaar, Address Proof).

Common Mistakes in OPC Registration

• Submitting a name similar to an existing business name or trademark.

• Failing to provide proof of address (older than 2 months) or the owner’s NOC.

• Appointing a nominee who has already been appointed as a 

• nominee for other businesses.

• Selecting an OPC if the business is expected to accept investor funding within a year.Failing to file Form INC-20A within 180 days of allotment.

Conclusion

If you, as a solo founder, want to incorporate your business but also want to protect your personal assets, you can consider an OPC. However, be prepared to comply with the laws that govern an OPC. Check your eligibility to incorporate an OPC. Organize the documents and be prepared to accept investments. Getting an OPC registration means complying with a significant amount of documents and information, and it may take some time to get used to the process.

Book a free call to see if incorporating an OPC is a good option for you at this stage.

About VenturEasy: We are an online service provider for company incorporation and secretarial services in India. Our team of law and finance professionals provides end-to-end services for starting and operating a business in India.

Disclaimer: We are not responsible for any errors or omissions in the information enclosed. This information is subject to change.