One Person Company formation is done by incorporating it under the Companies Act, 2013 and this gives legal recognition to such companies. According to Section 2(20) of the Companies Act, 2013, a “company” is considered to be incorporated under this Act or under any previous company law. It is considered a “legal person” or has a separate legal identity and is capable of surviving beyond the lives of its members. The promoter has limited liability in the company. It can be classified into three basic types they are Private Limited Company, Public Limited Company, and One Person Company. Initially, a single person could not incorporate a company. Now, One Person Company (OPC) is a new concept that is introduced under this act. Section 2 (62) of the act defines a “One Person Company” and it is a company that has only one person as a member. This article explains the process for One Person Company formation.
Important Points Regarding One Person Company Formation
Moreover, a member or director of the OPC should fulfil the following conditions the formation of OPC:-
- The memorandum of One Person Company should indicate the name of the other person who shall become a member of the company upon the subscriber’s death or his incapacity to contract i.e. nominee, in the prescribed form.
- The written consent of such person should be filed with the Registrar at the time of incorporation of the OPC along with its MOA and AOA.
- The member of OPC can change the name by giving notice in the prescribed manner.
- It is the duty of members to inform the company if any changes are made in the name of the nominee.
- Above all, any such change in the name of the person shall not be deemed to be an alteration of the memorandum.
For the purposes of One Person Company formation, the following are the eligibility criteria of a director for incorporating an OPC under Rule 3 of the Companies (Incorporation) Rule 2014:-
- Only one person can incorporate OPC.
- Natural person who is an Indian citizen (whether resident in India or otherwise)
- “Resident in India” means a person who has stayed in India for a period not less than 120 days immediately preceding the financial year.
- A person shall not be a member or a nominee of more than one OPC and if he does, then he has to withdraw his membership from the OPC within 182 days
- A minor cannot become a member or nominee of the OPC
- Minor cannot hold share with beneficial interest.
Restrictions in One Person Company Formation
- The director or the owner cannot incorporate or convert an OPC into a company specified under Section 8 of the Companies Act, 2013
- OPC cannot invest in Non-Banking Financial activities and securities of any Body corporate.
The following are the documents required for OPC formation:
- PAN Card
- Passport (Non-residents and foreign nationals)
- Scanned copy of Voters Identity Card/Driving License
- Electricity Bill/Telephone Bill/ Bank Statement
- Aadhaar Card
- Copy of Sale Deed /Lease / Rent Agreement
- MOA Subscriber Sheet
- AOA Subscriber Sheet
Registration Process for One Person Company formation
Registration of One Person Company is necessary for One Person Company formation and to give legal identity to an entity. There are two ways in which OPC formation is initiated and they are as follows:
Incorporation through SPICe (Without filling RUN)
SPICe stands for Simplified Performa for Incorporating Company electronically. Ministry of Corporate Affairs (MCA) has integrated 5 forms under form INC-32. For One Person Company formation the applicant should submit this SPICe form along with MOU (Memorandum of Articles) in form INC-33 and AOA (Association of Articles) in form INC-34. The applicant can avail of the 5 following services in SPICe form for Incorporation of a new company:-
- Name Reservation,
- Allotment of Director Identification Number (DIN),
- Incorporation of New Company,
- Allotment of PAN and
- Allotment of TAN
Incorporation through SPICe (With filling RUN)-
Step 1: Check eligibility criteria and arrange necessary documents
The applicant should fulfil the eligibility criteria and ensure that all the necessary documents are scanned and prepared before the process of registration OPC formation.
Step 2: Create New User ID on the MCA website
For OPC formation and in order to avail of the services provided under the MCA website, the applicant should register themselves as a new user.
Visit this link to register : https://www.mca.gov.in/content/mca/global/en/home.html
Step 3: Apply for Name Approval through RUN service on the MCA website
Reserve Unique Name Service (RUN) is the service through which companies reserve or gets name approval for their company. Before registering themselves for One Person Company formation, a company should obtain name approval for the business from the Ministry of Corporate Affairs (MCA). This process takes about 24-48 hours. One Person Company is a private limited and its name will end in Pvt. Ltd.
Note: A company name decided to be registered cannot be similar to an existing company name.
Step 4: Apply for the Digital Signature Certificate (DSC) and Director Identification Number (DIN) of the proposed director
The MCA website has mentioned 8 Certified Agencies that prepare DSC for directors. Visit the website in order to avail of this service:- https://www.mca.gov.in/content/mca/global/en/home.html
Step 5: File Spice+ form for company incorporation with MCA along with DSC of the proposed director
After receiving the approval of the name given, the applicant should fill out the SPICe form and it shall be filed for OPC formation within 20 days from the date of approval of RUN. The company shall file form INC-22 within 30 days once form SPICe is registered in case the address of correspondence and registered office address are not the same.
Step 6: Apply for PAN and TAN of the new company
After receiving the approval for the OPC formation, the company should apply for PAN and TAN for the new company.
Note: Permanent Account Number (PAN), and Tax Deduction or Collection Account Number (TAN)
Step 7: Registrar will issue a certificate of incorporation with a PAN and TAN
After all the documents are verified by the MCA authorities, the Registrar of the Company will grant a Certificate of Incorporation. This certificate will be accompanied by the CIN.
Step 8: Open bank account and business commences
One person company formation is done through online registration. The above-mentioned steps are the procedures to be followed for this registration process. The two important forms the applicant should remember are SPICe+ and RUN. This is a newly evolving concept under companies’ law. Even a one single person can start company now with the help of this new concept. This will also increase the competition in the market. For this one has to take registration as per the law. It is a lengthy process to take such kind of registration; hence one should always take help from experts like BizAdvisors. They will make your work easy.
Read our article:One Person Company V/S Nidhi Company: A Complete Difference