What is One Person Company

Shareholder Nominee: One Person Company (OPC) is a unique business entity with a single shareholder. An OPC must appoint a nominee for the shareholder, who steps in as the shareholder in the unfortunate event of the shareholder's demise.

Advantages akin to Private Limited Companies: Opting for a One Person Companyoffers benefits similar to those enjoyed by Private Limited Companies. This structure instills confidence in suppliers and customers, making it preferable for large organizations over proprietorship or partnership firms. The corporate status of a Private Limited Company enhances its appeal to prospective employees, who are attracted by the opportunity for corporate designations like directorship, unavailable to those in proprietorship firms.

Limited Liability Protection: The primary incentive for shareholders to establish a single-person company lies in the limited liability it affords. Unlike proprietorship firms where personal assets are at risk in case of business failure, One Person Private Limited Companies provide limited liability to shareholders, safeguarding their personal finances against business losses or debts.

Reduced Compliance Requirements: One Person Companies entail fewer compliance obligations compared to Private Limited Companies. There's no requirement to maintain cash flow statements or conduct Annual General Meetings. OPCs are only obligated to hold two Board Meetings annually, with a minimum gap of 90 days between them.

Fundraising Opportunities: OPCs have the flexibility to raise funds through various avenues, including self-funding, venture capital, or private investors. Furthermore, OPCs can transition into Private Limited Companies to access additional fundraising opportunities and expand their business operations.

Cons for a One Person Company

1. One Person Companycannot be converted in Section 8 Company (i.e. Not for Profit Company) or a Non-Banking Financial Company

2. Only a resident (who has stayed in India for 182 days in a year) could be a shareholder of OPC. Non-residents can not form a One Person Company.

3. Only 1 OPC per individual or 1 Nominee per OPC. Hence, one person can not be a shareholder or nominee in more than 1 OPC.

4. Can not be converted into a Company before 2 (two) years have expired from the date of incorporation of One Person Company, except in case threshold limit has crossed (i.e. in case the paid up capital exceeds Rs. 50 lac or its average annual turnover of immediately preceding three consecutive financial years exceeds Rs. 2 Crore).

5. Not recommended, in case the Entrepreneur is planning to seek investment from an Investor.

Requirements for a One Person Company

• At least 1 Director Shareholder must be a resident.
• Minimum of 1 Nominee is mandatory.
• Authorised Capital should be a minimum of 1 lakh.
• No minimum requirement for Paid Up capital.

Post-Formation Compliance Requirements:

Compulsory Annual Compliances:

• Submission of MCA Filings Companies Act Compliances is mandatory.
• Compliance relating to the issuance of a Commencement Certificate following OPC formation.
• Appointment of Auditors for the OPC.
• Filing of DIR-3 KYC for Director(s).
• Maintenance of Statutory Register.
• Issuance and stamping of Share Certificates.
• Conducting the First Board Meeting within 30 days of incorporation.
• Conducting 2 Board Meetings annually and 1 Annual General Meeting.
• Annual disclosure of interests/non-disqualification by Directors.
• Filing of Financial Statements Returns with the Registrar of Companies.

Accounting Auditing (Compulsory):

• Fulfilment of accounting and auditing requirements.

IT Filing (Compulsory):

• Submission of Income Tax returns.

GST Compliances (Compulsory):

• Compliance with GST regulations, if registration has been obtained.

Other Compliances:

• Trademark Registration for the brand name and logo.
• GST Registration Compliances, if applicable.
• Obtaining a Trade License as necessary.
• Filing of Professional Tax, if employees are hired.
• Registration with Employees Provident Fund Organisation (EPFO) once the Company exceeds 20 employees.
• Registration with Employee State Insurance Corporation (ESIC) once the Company surpasses 10 employees in other states and 20 in Maharashtra.