One Person Company

In an OPC or One Person Company, a single promoter gains full authority over the company thereby, restricting his/her liability towards their contributions to the enterprise. Therefore, the said person will be the sole shareholder and director (however, a director nominee is present, but has zero power until the real director proves incapable of carrying on).

Advantages of One Person Company

1. Liability – According to the Companies Act, the liability of the single shareholder in an OPC is limited to the unpaid subscription money in his/her name. This means that his/her personal property is completely safe from creditors of the business.

2. Market Value – An OPC is registered under the Companies Act and enjoys the same privileges that come with a firm being listed as a private limited company.

3. Easy Credit Facilities – The legality of this type of business, and also the perpetual succession clause, makes it popular among banks and financial institutions.

4. Easier Returns Filing – While it is mandatory for an OPC to get its accounts audited and file requisite annual returns, the same can be easy with the signature of the director; the need for a company secretary’s signature is not mandatory.

Disadvantages of One Person Company

● Tax Rate – Since the firm is treated in the same way as a private company, the tax slab applicable is the same. That would mean an OPC would have to pay 30% tax on all profits. There are no exemptions.

● Need for Change – An OPC will only support small businesses. If the turnover crosses ₹2 crores, on average, for three consecutive years, the OPC must convert to a private limited company, public limited company, or LLP.

● Only One – A person can only register only one OPC, until and unless it loses its status. This is bound to affect serial entrepreneurs.

Documents Required for OPC Registration

  • PAN card or passport
  • Passport, for NRIs and foreign nationals
  • Scanned transcript of driver’s license or voter’s ID
  • Updated gas or electricity invoice/bank account statement/mobile or landline phone invoice
  • Specimen signature or impression
  • Passport-size photo.

Please Note: The OPC director must self-attest to the first three documents. All paperwork for a foreign citizen or NRI must be notarised (if they are currently residing in India or a non-commonwealth country) or apostilled (if living in a commonwealth country at present).

Documents Necessary for the Registered Office

  • Scanned transcript of current bank account statement/phone or mobile invoice/gas or electricity invoice
  • Scanned transcript of rental agreement written in the English language
  • Scanned transcript of a no-objection certificate from the concerned property landowner
  • Scanned transcript of property or sale deed printed in English (if the property is owned).

Note: Your registered office space needs to be a commercial premises; however, it can be the sole director’s place of residence as well.