Saturday, 12 August 2017

How to Establish One Person Company?


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Establish One Person Company. It costs INR 50, 000

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The Company Act explores certain evolving areas of business such as inclusion of One Person Company, Key Managerial Personnel, Secretarial Audit, etc.

Individual owners often face the difficulty to borne unlimited liability in the event of losses incurred while doing business. So, they require an alternative to carry on their business smoothly.  The idea of One Person Company was first mooted by JJ Irani Committee in 2005. The Act makes provision for One Person Company ( hereinafter stated  as ‘OPC’ ) under Section 3(1). OPC refers to such a company which has only one member and can work with minimum one Director. The letters ‘OPC’ has to be suffixed after the name of a company so as to distinguish it from other companies. An OPC can avail the benefits of a private limited company as provided in the Companies Act, 1956.

As mentioned above One Person Company is the hybrid of Sole Proprietorship and Company form of business. Here are the features of the OPC:

1.      It only has one person as shareholder or member.
2.      A shareholder shall nominate someone else as a shareholder who will take his position in case of death or incapacity of the shareholder.
3.      It can have 1 to a maximum of 15 directors.
4.      OPC can either be a company limited by share or company limited by guarantee or it can also be an unlimited company.
Minimum Requirements

1.      It shall have only 1 shareholder
2.      Minimum 1 director mandatory
3.      The director and the shareholder can be the same person
4.      The shareholder shall nominate some else as shareholder
5.      There is no minimum capital requirement to establish One Person Company.
6.      OPC has to be suffixed with the name of the OPC to identify it as One Person Company.
7.      Only an Indian resident or an Indian citizen is eligible to incorporate OPC and can become a nominee of the OPC.
8.      An OPC cannot be converted or incorporates under Sec-8 of the Act.
9.      An OPC cannot carry out Non-Banking Financial Activities.
10.  An OPC cannot convert into any kind of company until its 2 years have expired from the date of its incorporation of OPC, the only exception to this case is when the annual turnover exceeds Rs.2 crores or its threshold limit exceeds 50 lac.
Steps to incorporate OPC

1.      Get the DSC or Digital Signature Certificate for the director(s)
2.      Get the DIN or Director Identification Number
3.      Choose the name of the company and apply for the same at Ministry of Corporate Affairs
4.      Drafting of MOA (Memorandum of association) and Article of Association (AOA)
5.      Sign all the documents and submit wit with the ROC or Registrar of Company.
6.      Make the fee payment to the Ministry of Corporate Affairs and pay the stamp duty as well.
7.      Documents are screened by the ROC or Register of Company
8.      Receipt of the certificate of incorporation

Documents Required for INC-29
·         Director Identification Number (DIN)
·         Memorandum of Association (MOA)
·         Articles of Association (AOA)
·         Affidavit and declaration by first Subscribers and Directors.
·         Proof for Registered Office Address. – Rental Agreement / Sale Deed.
·         Copies of utility bill of the registered office address that are not older than 2 months.
·         If the proposed company name is a filed or registered trademark, then NOC from the trademark applicant or owner must be attached

Benefits of One Person Company
Some benefits of doing business as an OPC are:
·         Limited liability.
·         Only one shareholder.
·         The same shareholder can act as the director as well.
·         Freedom of operation.
·         Certain relaxations such as tax-benefits and lesser compliance burden.
·         Fast decision making.
·         Credibility
·         A separate legal entity.

Documents for Registration of One Person Company
Before you go for registration of your OPC, go through the below checklist. It lists out the documents and details you need for registration:
·         A digital signature certificate in the name of the director.
·         A Director Identification Number (DIN)
·         Application for registration in Form INC 2.
·         Form DIR 12 (only if you wish to appoint a director other than you)
·         No Objection Certificate from the nominee in Form INC 3.
·         Registered office address in Form INC 22.
·         Identity proof of the member and the nominee.
·         Address proof of the member of the member and also the nominee.
·         PAN of the member as well as the nominee.
·         Proof of address for registered office.
·         Affidavit for Memorandum subscription in form INC 9.


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