OPC or One Person Company is a type of company newly defined in India under the Companies Act, 2013. As the name states, it is for when a single individual wishes to start a business venture by themselves.
According the Act, only a natural person and Indian national or Non Resident Indian are allowed to incorporate an OPC. The proprietor is not allowed to be a member or nominee of more than one OPC at a time. Minors are not allowed to become a member or nominee . They are not permitted to hold shares either.
The procedure for incorporation of an OPC is as follows:
1. Obtain the digital signature of the proposed member of the OPC.
2. Submit application for reservation of the company's name via RUN (Reserve Unique Name) system.
3. Form SPICe+ is to be filed along with the following attachments -
Declaration by all the proposed member/nominee/directors in form INC 9.
Consent to act as Director in Form DIR 2.
Self attested copy of PAN of all the proposed member/nominee/directors.
Self attested copy of driving license/passport/voter ID card of all the proposed member/Directors/nominee
Self attested copy of bank statement/utility bill (not older than two months) of all the proposed member/Directors/nominee
NOC from owner of proposed registered office along with utility bill (not older than two months) and ownership proof such as municipal tax paid receipt, sale deed, conveyance, etc.
Signed INC-3 signed by Nominee.
4. File Form SPICe MOA and Form SPICe AOA with the registrar pursuant to section 4 and 5 of the Companies Act, 2013 respectively. The MOA of an OPC must contain the nominee clause.
5. Submit application in MCA portal for registration along with requisite fee.
6. MCA will review the application. If MCA insists for any changes, same should be carried out, If application is complete in all respect MCA will issue certificate of Incorporation.
Benefits of OPC formation:
OPC is a separate legal entity meaning that it has its own legal identity separate from that of the entrepreneur.
One of the benefits of an OPC is that is has more opportunities, limited liability, as the liability of the OPC is limited to the extent of the shares you hold. The individual can therefore take more risks in business without affecting or experiencing personal loss.
OPC's are eligible to the various benefits provided to Small Scale Businesses (SSB) in India such as low interest rates on loans, securing funding from banks without depositing securitites (to a certain limit), and other benefits under Foreign Trade Policy and so on.
The remuneration paid to the director is deductible under the Income Tax laws. Presumptive taxation is also possible.
The Enterprises Development Act, 2006 also provides certain benefits to an OPC. Since the OPC is classified as an MSME, it is entitled to an interest rate three times above the bank rate on any late payments.
There are various compliance exemption to OPC under a Companies Act, 2013, which makes OPC to run the business without much compliance headache.
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