Table of Contents
What is a One Person Company (OPC)?
A One Person Company (OPC) is a type of business entity in India that allows a single person to operate a company as a separate legal entity. In other words, an OPC is a company that has only one person as its member and director. The concept of OPC was introduced in India in 2013, under the Companies Act, 2013. OPC is a hybrid form of business, which combines the benefits of a sole proprietorship and a private limited company. It is a popular choice for small business owners and entrepreneurs who wish to limit their liability and maintain complete control over their business.
When was the concept of OPC introduced in India?
The concept of One Person Company (OPC) was introduced in India on 1st April 2014, through the Companies Act, 2013. This new form of business entity was introduced to promote entrepreneurship and make it easier for individuals to start and operate their own businesses in India. Before the introduction of OPC, individuals who wanted to start a business had to either form a sole proprietorship or a partnership firm, which did not provide limited liability protection. With the introduction of OPC, individuals can now have the benefits of a limited liability company while operating their business as a sole proprietor. Since its introduction, OPC has gained popularity among small business owners and entrepreneurs in India.
What are the benefits of registering an OPC in India?
There are several benefits of registering an OPC in India, which are as follows:
Limited liability:
One of the key benefits of registering an OPC is that it provides limited liability protection to the owner. This means that the personal assets of the owner are not at risk in case the company faces any financial or legal liabilities.
Single ownership:
As the name suggests, OPC is a business entity that can be owned and operated by a single person, which means that the owner has complete control over the company’s operations.
Separate legal entity:
OPC is considered as a separate legal entity, which means that it has its own identity and is distinct from its owner. This provides credibility and trust among clients, suppliers, and other stakeholders.
Easy to form and manage:
OPC is easy to form and manage as it has fewer compliance requirements compared to other forms of companies such as private limited companies. It is a suitable option for small business owners and entrepreneurs who wish to focus on their core business activities.
Tax benefits:
OPCs are eligible for certain tax benefits and exemptions, such as lower tax rates and deductions on certain expenses.
Better access to funding:
OPCs can easily raise capital from investors and financial institutions, as they are considered more credible and reliable than sole proprietorships.
Continuity of existence:
OPCs have perpetual existence, which means that the company can continue to exist even after the death or incapacity of the owner.
Greater opportunities:
OPCs provide greater opportunities for growth and expansion as they can easily convert into other forms of companies such as private limited companies or public limited companies.
Who can form an OPC in India?
As per the Companies Act, 2013, only a natural person who is an Indian citizen and resident in India can form an OPC. A person can form only one OPC at a time and cannot be a nominee for more than one OPC.
In addition, the following persons are not eligible to form an OPC:
Minor
- Foreign citizen or non-resident Indian
- Persons incapacitated to contract under any law
- Persons who have already incorporated a company as a private limited company or a public limited company
- Persons who have been declared as insolvent
- Persons who have been convicted of an offence and sentenced to imprisonment for a period of more than six months.
Can a minor form an OPC in India?
No, a minor cannot form an OPC in India. As per the Companies Act, 2013, only a natural person who is an Indian citizen and resident in India can form an OPC. A minor is not considered a natural person who can enter into a contract or agreement and hence, cannot form a company. Moreover, a minor is not eligible to become a director or a member of a company. Therefore, it is not possible for a minor to form an OPC in India.
What are the documents required for OPC registration?
The following documents are required for OPC registration in India:
Identity proof of the Director:
PAN card or Passport or Voter ID or Driving License.
Address proof of the Director:
Bank statement or Electricity bill or Telephone bill or Mobile bill or Gas bill.
Passport-sized photograph of the Director.
Address proof of the registered office of the OPC:
Electricity bill or Water bill or Telephone bill or Property tax receipt or Rent agreement along with a No Objection Certificate (NOC) from the landlord.
Memorandum of Association (MOA):
It is a document that outlines the company’s objectives, activities, and scope of operations.
Articles of Association (AOA):
It is a document that defines the internal rules and regulations of the company.
Consent of the Director:
A declaration stating that he/she is not disqualified to become a Director of the company.
Digital Signature Certificate (DSC) of the Director:
It is an electronic form of signature used to sign and submit documents online.
Director Identification Number (DIN) of the Director:
It is a unique identification number allotted to the Director by the Ministry of Corporate Affairs.
The above documents are mandatory for OPC registration. However, additional documents may be required depending on the nature of the business and the state in which the OPC is being registered.
How much capital is required to form an OPC in India?
There is no minimum capital requirement to form an OPC in India. The Companies Act, 2013 does not prescribe any minimum capital requirement for OPCs. Therefore, an OPC can be formed with any amount of capital, even with as low as Rs. 1.
However, it is important to note that the capital of an OPC should be adequate enough to carry out its business activities. The amount of capital required would depend on the nature of the business and the scale of operations. The capital can be increased as and when required by the company, subject to compliance with the provisions of the Companies Act, 2013.
Can an OPC convert to a private limited company?
Yes, an OPC can be converted into a private limited company as per the provisions of the Companies Act, 2013. The conversion can be voluntary or mandatory depending on the circumstances.
If the OPC exceeds a certain threshold limit in terms of turnover or paid-up share capital, it becomes mandatory to convert into a private limited company. As per the Companies Act, 2013, an OPC needs to be converted into a private limited company in the following cases:
- If the OPC has a paid-up share capital of more than Rs. 50 lakh.
- If the turnover of the OPC exceeds Rs. 2 crore in any financial year.
If the OPC wishes to convert voluntarily into a private limited company, it can do so by passing a special resolution and complying with the necessary legal requirements. The process of conversion involves filing of necessary documents with the Registrar of Companies (RoC), obtaining the approval of the RoC, and making necessary changes to the Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
Can an OPC be converted into a partnership firm or sole proprietorship?
No, an OPC cannot be converted into a partnership firm or sole proprietorship as per the provisions of the Companies Act, 2013.
An OPC is a separate legal entity, distinct from its owner. It enjoys perpetual succession and has a separate legal existence. Therefore, it cannot be converted into a partnership firm or sole proprietorship.
However, an OPC can be closed down voluntarily by its owner, in which case it can be converted into a sole proprietorship. In such cases, the assets and liabilities of the OPC will be transferred to the sole proprietorship, and the OPC will cease to exist. Similarly, if the owner of the OPC wishes to form a partnership firm, he/she can dissolve the OPC and form a partnership firm with the same assets and liabilities.
How many directors are required for an OPC in India?
As per the Companies Act, 2013, an OPC can have only one director. The owner of the OPC is also the sole director of the company.
However, if the owner of the OPC is incapacitated or dies, and the company is unable to appoint a new director within a period of 180 days, the OPC will be converted into a private limited company. In such cases, the provisions relating to the appointment of directors for private limited companies will apply, and the company will need to have a minimum of two directors.
Can a foreign national form an OPC in India?
Yes, a foreign national can form an OPC in India. The Companies Act, 2013 allows foreign nationals to form and own companies in India, subject to certain conditions.
To form an OPC in India, a foreign national needs to have a valid business visa or employment visa. The foreign national must also have a valid address proof in India, which can be used as the registered office address of the OPC. The documents required for OPC registration, such as identity proof, address proof, and other statutory documents, should also be in order.
It is important to note that a foreign national cannot be a nominee of an OPC. Only an Indian citizen who is a resident of India can be appointed as the nominee of an OPC. Therefore, if a foreign national forms an OPC, he/she will need to appoint an Indian citizen as the nominee of the company.
What is the procedure for incorporating an OPC in India?
The procedure for incorporating an OPC in India involves the following steps:
Obtaining Digital Signature Certificate (DSC):
The first step is to obtain a Digital Signature Certificate (DSC) for the owner of the OPC. The DSC is a digital equivalent of a physical signature and is required for filing the application for OPC registration.
Obtaining Director Identification Number (DIN):
The next step is to obtain a Director Identification Number (DIN) for the owner of the OPC. The DIN is a unique identification number assigned to every director of a company.
Name Reservation:
The next step is to reserve a suitable name for the OPC. The name should comply with the naming guidelines prescribed by the Companies Act, 2013. The name reservation application can be filed online with the Ministry of Corporate Affairs (MCA) along with the necessary fee.
Preparation of Documents:
After the name is reserved, the next step is to prepare the necessary documents, such as Memorandum of Association (MOA), Articles of Association (AOA), and other statutory documents. These documents should be in the prescribed format and should be signed by the owner of the OPC.
OPC Registration:
The final step is to file the application for OPC registration with the Registrar of Companies (RoC) along with the necessary documents and fees. The application can be filed online on the MCA portal. Once the application is approved, the RoC will issue a Certificate of Incorporation, and the OPC will be legally formed.
It is important to note that the entire process of OPC registration can be completed online through the MCA portal, making it easy and convenient for entrepreneurs to start their own business.
What is the minimum and maximum number of members in an OPC?
As the name suggests, an OPC can have only one member, who is also the sole director of the company. Therefore, the minimum number of members in an OPC is one.
There is no maximum limit on the number of members in an OPC, but if the paid-up share capital of the company exceeds Rs. 50 lakhs or the annual turnover of the company exceeds Rs. 2 crores, the OPC will be automatically converted into a private limited company.
Is it mandatory to appoint a nominee for an OPC?
Yes, it is mandatory to appoint a nominee for an OPC at the time of registration. The owner of the OPC is required to nominate a person who will become the nominee of the company in the event of his/her death or incapacity to contract.
The nominee should be an individual who is an Indian citizen and a resident of India. The nominee’s consent to act as a nominee should be obtained and filed with the Registrar of Companies (RoC) at the time of OPC registration.
It is important to note that the nominee has no rights over the OPC and does not have any power to make decisions or act on behalf of the company unless the owner of the OPC becomes incapacitated or dies. In such cases, the nominee will become the owner of the OPC, and the ownership will be transferred to him/her.
Can the nominee be changed for an OPC?
Yes, the nominee of an OPC can be changed at any time by the owner of the company. The process for changing the nominee of an OPC involves the following steps:
Hold a Board Meeting:
The owner of the OPC should convene a board meeting of the company and pass a resolution to change the nominee of the company. The resolution should be recorded in the minutes of the meeting.
Obtain the Nominee’s Consent:
The owner of the OPC should obtain the consent of the new nominee to act as the nominee of the company. The nominee should also furnish his/her identity proof and address proof to the company.
File Form INC-3:
The owner of the OPC should file Form INC-3 with the Registrar of Companies (RoC) within 30 days of the change in the nominee. The form should be accompanied by the consent of the new nominee and other relevant documents.
Obtain Approval:
The RoC will examine the application and, if satisfied, approve the change in the nominee. The RoC will then issue a fresh Certificate of Incorporation, which will reflect the new nominee’s name.
It is important to note that the new nominee should also meet the eligibility criteria for being a nominee of an OPC, i.e., he/she should be an Indian citizen and a resident of India.
What are the restrictions on an OPC?
There are certain restrictions on an OPC in India, which are as follows:
Only one member:
An OPC can have only one member, who is also the sole director of the company.
Nominee requirement:
It is mandatory to nominate a person who will become the nominee of the company in the event of the owner’s death or incapacity to contract.
Limited activities:
An OPC cannot carry out non-banking financial investment activities, including investment in securities of any other body corporate.
No minor allowed:
A minor cannot become a member or nominee of an OPC.
Conversion to private limited company:
An OPC must be converted to a private limited company if its paid-up share capital exceeds Rs. 50 lakhs or its annual turnover exceeds Rs. 2 crores.
Prohibition on voluntary conversion:
An OPC cannot voluntarily convert into any other type of company unless two years have elapsed from the date of its incorporation, it has exceeded the threshold limits, and it has complied with all legal requirements.
No foreign investments:
An OPC cannot accept foreign investments or participate in any activities related to foreign investments. It is required to be 100% owned by an Indian resident.
These restrictions are in place to ensure that the OPC structure is used only by small businesses and start-ups and not by larger companies that require multiple shareholders and directors.
Can an OPC have branches in India and overseas?
Yes, an OPC can have branches in India and overseas. However, it is important to note that an OPC can only operate in the areas where it is authorized to do business, as per its Memorandum of Association (MoA) and Articles of Association (AoA).
If an OPC wishes to open a branch office in India or overseas, it must comply with the relevant laws and regulations governing the establishment of branch offices. This may involve obtaining approvals and registrations from various authorities, such as the Registrar of Companies, the Ministry of Corporate Affairs, and the Reserve Bank of India.
Additionally, it is important to note that an OPC must comply with the foreign exchange regulations and other laws applicable to the operation of a business in a foreign country. This may include obtaining necessary licenses and approvals, adhering to tax and regulatory requirements, and complying with local labor laws.
Therefore, while an OPC can have branches in India and overseas, it must ensure compliance with all relevant laws and regulations to operate smoothly in such locations.
What is the tax structure for an OPC in India?
An OPC in India is taxed in the same way as a private limited company. The tax structure for an OPC in India is as follows:
Income Tax:
An OPC is taxed at a flat rate of 25% on its income. Additionally, a surcharge of 7% may be levied if the company’s income exceeds Rs. 1 crore. If the OPC’s income exceeds Rs. 10 crore, an additional surcharge of 12% may be levied.
Dividend Distribution Tax (DDT):
An OPC is required to pay DDT at a rate of 15% on the dividends distributed to its shareholders.
Goods and Services Tax (GST):
An OPC is required to pay GST on the goods or services it provides. The GST rates vary depending on the nature of the goods or services.
Other taxes:
An OPC may also be required to pay other taxes such as professional tax, property tax, and other local taxes.
It is important for an OPC to comply with all the tax requirements to avoid any penalties or legal issues. An OPC should maintain proper books of accounts, file its tax returns on time, and pay its taxes within the due dates.
What is the annual compliance requirement for an OPC?
An OPC in India is required to comply with various annual compliance requirements, which are as follows:
Annual General Meeting (AGM):
An OPC is required to hold an AGM every year within six months from the end of the financial year. However, if the OPC has only one member, then an AGM is not required.
Financial statements:
An OPC is required to prepare financial statements, including a balance sheet, profit and loss account, and cash flow statement, at the end of each financial year.
Audit:
An OPC is required to get its financial statements audited by a Chartered Accountant if its turnover exceeds Rs. 1 crore or if its paid-up share capital exceeds Rs. 50 lakhs.
Income tax return:
An OPC is required to file its income tax return by 30th September of every year.
Annual return:
An OPC is required to file its annual return in Form MGT-7 with the Registrar of Companies within 60 days from the date of the AGM.
Board meetings:
An OPC is required to hold at least one meeting of its Board of Directors every six months.
Compliance certificate:
An OPC is required to obtain a compliance certificate from a practicing Company Secretary in Form No. 8 for the financial year ending on 31st March.
It is important for an OPC to comply with all the annual compliance requirements to avoid any penalties or legal issues. Non-compliance can result in heavy fines, legal proceedings, and even the striking off of the company’s name from the register of companies.
What are the consequences of non-compliance for an OPC?
Non-compliance by an OPC in India can result in various consequences, including:
Penalties:
The Registrar of Companies can impose penalties for non-compliance with the annual compliance requirements, which can range from Rs. 100 to Rs. 1 lakh.
Prosecution:
Non-compliance with the annual compliance requirements can lead to prosecution by the Registrar of Companies, which can result in fines and even imprisonment.
Striking off the company’s name from the register:
If an OPC fails to comply with the annual compliance requirements for a continuous period of three years, the Registrar of Companies can strike off the company’s name from the register of companies.
Inability to avail benefits:
Non-compliance can result in the OPC being unable to avail benefits such as tax exemptions, incentives, and subsidies.
Loss of credibility:
Non-compliance can lead to a loss of credibility for the OPC and can impact its reputation in the market.
Therefore, it is important for an OPC to comply with all the annual compliance requirements to avoid any penalties or legal issues. An OPC should maintain proper books of accounts, file its tax returns on time, and pay its taxes within the due dates to ensure compliance.
Can an OPC be dissolved voluntarily?
Yes, an OPC in India can be dissolved voluntarily by filing an application for closure with the Registrar of Companies. The voluntary dissolution of an OPC can be done in the following ways:
Fast-track exit:
An OPC can apply for fast-track exit by filing Form FTE with the Registrar of Companies. This method is applicable only if the OPC has not commenced any business operations or has ceased its operations for more than one year.
Normal winding-up:
An OPC can be wound up by filing a petition for winding-up with the National Company Law Tribunal (NCLT) if it has commenced business operations and has liabilities. The NCLT will appoint a liquidator who will sell the assets of the OPC and use the proceeds to settle the liabilities.
Once the application for closure is approved by the Registrar of Companies or the NCLT, the OPC will be dissolved and its name will be struck off from the register of companies. It is important for an OPC to settle all its liabilities and comply with all the legal requirements before applying for closure to avoid any legal issues or penalties.
What is the procedure for dissolving an OPC?
The procedure for dissolving an OPC in India is as follows:
Board resolution:
The first step is to convene a board meeting and pass a resolution for the voluntary winding-up of the OPC. The board of directors should authorize a director to apply for closure of the OPC.
Special resolution:
After the board resolution, a special resolution must be passed by the member of the OPC for the voluntary winding-up of the company. The special resolution must be passed by a majority of not less than three-fourths of the members present in person or through proxies at a general meeting.
Appointment of liquidator:
If the OPC has any liabilities, the member must appoint a liquidator to sell the assets of the OPC and use the proceeds to settle the liabilities. The liquidator will also distribute any remaining assets to the member of the OPC.
Filing of application:
The next step is to file an application for closure with the Registrar of Companies. The application should be filed in Form STK-2 along with the necessary documents such as the board resolution, special resolution, and proof of appointment of liquidator.
Verification of application:
The Registrar of Companies will verify the application and, if satisfied, will issue a notice to the OPC in Form STK-7. The notice will be published on the official website of the Ministry of Corporate Affairs.
Objections:
If there are no objections to the notice within 30 days of its publication, the OPC will be dissolved, and its name will be struck off from the register of companies.
Compliance certificate:
After the dissolution of the OPC, the liquidator must file a compliance certificate in Form STK-8 with the Registrar of Companies within 30 days of the dissolution.
It is important for an OPC to comply with all the legal requirements and settle all its liabilities before applying for closure to avoid any legal issues or penalties.
Can an OPC be revived after it has been dissolved?
No, an OPC cannot be revived once it has been dissolved by the Registrar of Companies. Once the name of the OPC has been struck off from the register of companies, it ceases to exist as a legal entity. Therefore, it is important for an OPC to comply with all the legal requirements and settle all its liabilities before applying for closure to avoid any legal issues or penalties.
However, if the OPC is dissolved due to the failure of the company to file its annual returns and financial statements, the Registrar of Companies may restore the name of the OPC on the register of companies if the company applies for restoration within 20 years from the date of dissolution. The company must file all the pending documents and pay the necessary fees to the Registrar of Companies for restoration. If the Registrar of Companies is satisfied, it will issue an order for restoration, and the OPC can continue its business operations.
What is the role of a director in an OPC?
The director of an OPC (One Person Company) in India plays a crucial role in managing and running the company. As the sole director and shareholder of the OPC, the director is responsible for making all the major decisions related to the business, including the management of the company’s affairs, operations, and finances.
Here are some of the key roles and responsibilities of a director in an OPC:
Managing the day-to-day operations of the company:
The director is responsible for managing the day-to-day affairs of the OPC, including overseeing the business operations, finances, and employee management.
Ensuring compliance with laws and regulations:
The director must ensure that the OPC complies with all the laws and regulations applicable to the company, including filing of annual returns, maintaining proper records, and adhering to tax and other regulatory requirements.
Maintaining proper records:
The director must ensure that the OPC maintains proper records of its financial transactions, including accounting records, invoices, receipts, and other relevant documents.
Filing of statutory documents:
The director must ensure that the OPC files all the necessary statutory documents with the Registrar of Companies within the prescribed deadlines, including annual returns, financial statements, and other filings.
Representing the company:
The director is the official representative of the OPC and must act in the best interests of the company at all times.
Making strategic decisions:
The director must make strategic decisions related to the growth and development of the OPC, including deciding on new business opportunities, investments, and other strategic initiatives.
Overall, the director of an OPC has a significant responsibility for the success of the company and must ensure that the OPC operates in compliance with all the applicable laws and regulations.
What are the liabilities of a director in an OPC?
The liabilities of a director in an OPC (One Person Company) in India are similar to those of a director in any other company. The director has a fiduciary duty to act in the best interests of the company and its shareholders and can be held liable for any breach of that duty or for any other violations of the law.
Here are some of the potential liabilities that a director in an OPC may face:
Liability for non-compliance:
The director is responsible for ensuring that the OPC complies with all the applicable laws and regulations. Failure to do so may result in penalties or other legal consequences for the director.
Liability for financial losses:
If the director makes decisions that result in financial losses for the company, the director may be held personally liable for those losses.
Liability for breach of duty:
The director has a fiduciary duty to act in the best interests of the company and its shareholders. If the director breaches that duty, the director may be held liable for any damages caused by that breach.
Liability for tax violations:
The director is responsible for ensuring that the OPC complies with all the applicable tax laws and regulations. Failure to do so may result in penalties or other legal consequences for the director.
Liability for employee-related issues:
The director is responsible for ensuring that the OPC complies with all the applicable employment laws and regulations. Failure to do so may result in penalties or other legal consequences for the director.
Overall, it is important for the director of an OPC to ensure that the company operates in compliance with all the applicable laws and regulations and to take steps to minimize the risk of potential liabilities.
What is the liability of the nominee in an OPC?
The nominee in an OPC (One Person Company) in India is appointed to take over the management and affairs of the company in the event of the death or incapacity of the sole member or owner. The nominee does not have any ownership rights in the company and is only responsible for ensuring that the company continues to operate smoothly in the absence of the owner.
The liability of the nominee in an OPC is limited to the extent of his or her role in managing the company in the absence of the owner. The nominee is not liable for any acts or omissions of the owner or any other directors of the company. However, if the nominee is found to have been involved in any wrongdoing or misconduct, he or she may be held liable to the extent of his or her involvement.
It is important to note that the nominee in an OPC has a significant responsibility to ensure the continuity of the business in the absence of the owner. Therefore, it is advisable to choose a nominee who has the necessary experience and expertise to manage the affairs of the company. It is also important to ensure that the nominee is fully aware of his or her responsibilities and is willing to take on the role in the event of the owner’s death or incapacity.
Can an OPC have more than one director?
As per the Companies Act, 2013, an OPC (One Person Company) in India can have only one director. The idea behind the OPC is to enable a single individual to start and run a company, and hence only one director is allowed. However, the director can appoint a maximum of 15 directors in the OPC, but their role will be only advisory, and they will not have any voting rights in the company.
It is important to note that an OPC cannot be converted into a private or public company if it has more than one director. Therefore, if the owner of an OPC intends to bring in more directors or partners, it may be better to consider converting the OPC into a private limited company or a limited liability partnership, depending on the specific business requirements.
Can an OPC have more than one nominee?
No, an OPC (One Person Company) in India can have only one nominee, as per the Companies Act, 2013. The nominee is appointed by the sole member or owner of the OPC to take over the management and affairs of the company in the event of his or her death or incapacity.
The appointment of the nominee is a crucial aspect of the OPC structure, as it ensures the continuity of the business in case of unforeseen circumstances. However, only one nominee is allowed in an OPC, and the same person cannot be appointed as both the nominee and the sole member of the company.
It is important to ensure that the nominee appointed by the owner of the OPC is someone who is trustworthy and capable of managing the affairs of the company in case of his or her death or incapacity. The nominee should be aware of his or her role and responsibilities and should be willing to take on the position in the event of any unforeseen circumstances.
Is it mandatory to hold annual general meetings for an OPC?
As per the Companies Act, 2013, an OPC (One Person Company) in India is exempted from holding an annual general meeting (AGM) as it has only one member. The requirement to hold AGMs is applicable to companies that have two or more members.
However, even though an OPC is exempted from holding an AGM, it is still required to comply with other annual compliance requirements, such as filing of annual financial statements and annual returns with the Registrar of Companies (ROC). These documents are required to be filed within a specific timeframe every year, and failure to comply with the annual compliance requirements can attract penalties and fines.
It is, therefore, essential for the owner of an OPC to ensure that the company complies with all the applicable annual compliance requirements to avoid any legal or financial liabilities.
Can an OPC issue shares to the public?
No, an OPC (One Person Company) in India cannot issue shares to the public. As per the Companies Act, 2013, an OPC can only have one shareholder or member, and the shares of the company can only be held by that member.
Since an OPC cannot issue shares to the public, it cannot raise funds from the public by way of public offerings. The only way for an OPC to raise funds is through loans or investments from individuals or institutions.
It is important for the owner of an OPC to comply with the provisions of the Companies Act, 2013, and ensure that the company does not engage in any activity that is prohibited by law. Failure to comply with the provisions of the law can attract penalties and fines, and can also lead to legal action against the company and its owner.
What is the maximum number of directors allowed in an OPC?
As per the Companies Act, 2013, an OPC (One Person Company) can have a maximum of 15 directors. However, an OPC may choose to have only one director as well.
It is important to note that even though an OPC can have up to 15 directors, the company must comply with the provisions of the Companies Act with respect to the appointment, resignation, removal, and remuneration of directors. Additionally, an OPC must also comply with the provisions of the law with respect to the conduct of board meetings, the filing of board resolutions, and other corporate governance requirements.
In practice, most OPCs have only one director as the company is designed to be managed by a single person.
Can an OPC have more than one shareholder?
No, an OPC (One Person Company) in India can have only one shareholder or member as per the Companies Act, 2013. The concept of an OPC is designed to enable a single individual to operate a limited liability entity.
The shareholder or member of an OPC is responsible for managing the affairs of the company and has full control over its operations. The Companies Act requires that the name of the nominee for the shareholder must be provided during the incorporation of the OPC, and this nominee will become the owner of the OPC in case of the death or incapacitation of the original shareholder.
It is important to note that an OPC cannot have more than one shareholder, and any attempt to do so can lead to the OPC being converted into a private limited company or being dissolved.
What is the minimum and maximum age limit for a nominee in an OPC?
As per the Companies Act, 2013, the nominee for a One Person Company (OPC) must be a natural person who is an Indian citizen and a resident of India. The Act does not prescribe any minimum or maximum age limit for the nominee of an OPC.
However, it is important to note that the nominee must provide their consent to act as a nominee, and the OPC must ensure that the nominee is capable of acting as such. It is advisable for the OPC to choose a nominee who is competent and able to take over the management of the OPC in case of the death or incapacitation of the original shareholder.
Therefore, while the Companies Act does not specify any age limit for the nominee, it is advisable to choose a nominee who is likely to be able to discharge their duties effectively in the event of the original shareholder’s death or incapacitation.
Can a person be both a director and a nominee in an OPC?
Yes, a person can be both a director and a nominee in a One Person Company (OPC) in India. In fact, it is common for the same person to be appointed as both the sole director and the nominee of the OPC.
However, it is important to note that the nominee is only responsible for taking over the management of the OPC in case of the death or incapacitation of the original shareholder. The director is responsible for managing the day-to-day operations of the company and making strategic decisions for the benefit of the OPC.
Therefore, while the same person can be appointed as both the director and nominee of an OPC, it is important to ensure that the person is capable of discharging both sets of responsibilities effectively.
Is it mandatory to have a registered office address for an OPC?
Yes, it is mandatory for a One Person Company (OPC) in India to have a registered office address. The registered office address must be communicated to the Registrar of Companies (ROC) during the incorporation process and must be a valid physical address where official communication from the government and other stakeholders can be sent.
The registered office address can be a commercial or residential property, but it must be a place where the company can receive official correspondence. Additionally, the registered office address must be capable of receiving letters and other communications during normal business hours.
What is the time limit for filing annual returns for an OPC?
As per the Companies Act, 2013, a One Person Company (OPC) in India is required to file its annual returns within 60 days from the date of its Annual General Meeting (AGM). If the OPC has not held an AGM, then the annual return must be filed within 60 days from the date on which the AGM would have been held, if it had been held.
It is important to note that the annual return must be filed with the Registrar of Companies (ROC) in the prescribed format, along with the required fee. Failure to file the annual return within the specified time limit may result in penalties and other legal consequences. Therefore, it is important for OPCs to ensure that they file their annual returns within the stipulated time period.
Can an OPC file income tax returns online?
Yes, a One Person Company (OPC) in India can file its income tax returns online through the Income Tax Department’s e-filing portal. The process of filing income tax returns online for an OPC is similar to that of other types of companies.
The OPC is required to obtain a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) before filing its income tax returns. Once these numbers are obtained, the OPC can file its income tax returns online by logging into the e-filing portal and providing the required information such as income, deductions, tax payments, and other details as required.
It is important to ensure that the income tax returns are filed accurately and within the due dates specified by the Income Tax Department to avoid penalties and other legal consequences.
Can an OPC take loans from banks and financial institutions?
Yes, a One Person Company (OPC) in India can take loans from banks and financial institutions, subject to certain conditions and compliance requirements.
As per the Companies Act, 2013, an OPC is considered a separate legal entity, and therefore, it can apply for loans and borrow money from banks and financial institutions. However, the OPC will have to comply with the necessary documentation and other formalities required by the lender.
Additionally, the OPC should ensure that it complies with the borrowing limits and other regulatory requirements specified by the Reserve Bank of India (RBI) or any other relevant authorities. The OPC should also ensure that it repays the loan amount and interest on time to avoid any legal consequences or penalties.
Can an OPC issue debentures?
No, a One Person Company (OPC) in India cannot issue debentures. The Companies Act, 2013 restricts an OPC from issuing any kind of securities, including shares, debentures, or any other financial instruments, to the public.
OPCs are only allowed to issue equity shares with differential rights as to dividend, voting, or otherwise. This means that an OPC can issue shares to its shareholders, subject to the maximum limit of one shareholder.
In summary, an OPC is not permitted to issue debentures as it is not considered a public company and is restricted from issuing securities to the public.
Can an OPC issue preference shares?
No, a One Person Company (OPC) in India is not allowed to issue preference shares. As per the Companies Act, 2013, OPCs can only issue equity shares with differential rights as to dividend, voting, or otherwise.
In an OPC, there is only one shareholder who owns the entire shareholding of the company, and hence there is no scope for issuing preference shares, which typically carry a preference in terms of dividend or voting rights.
Therefore, an OPC is restricted from issuing preference shares and can only issue equity shares with differential rights, subject to the provisions of the Companies Act, 2013.
What is the maximum tenure of a director in an OPC?
As per the Companies Act, 2013, the maximum tenure of a director in an OPC is five consecutive years. However, a director can be re-appointed after a gap of at least one term of five years. This means that a director can serve a maximum of two terms of five years each in an OPC.
It is important to note that the tenure of the first director of an OPC is calculated from the date of incorporation of the company, while for subsequent directors, it is calculated from the date of their appointment.
Also, it is important for a director to ensure that they meet the criteria for being a director of an OPC at all times, such as not being disqualified under any provisions of the Companies Act, 2013.
Can a director be removed from an OPC?
Yes, a director can be removed from an OPC, but the removal must be done in accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the OPC. The following are some of the circumstances under which a director can be removed from an OPC:
Resignation:
A director can resign from his/her position by giving notice in writing to the company, and the resignation takes effect from the date of receipt of the notice.
Removal by shareholders:
A director can be removed by the shareholders of the OPC by passing an ordinary resolution in a general meeting. The director must be given notice of the proposed resolution and an opportunity to be heard at the meeting.
Disqualification:
A director can be disqualified by the government or the National Company Law Tribunal (NCLT) under certain circumstances, such as if he/she is found to be of unsound mind, is an undischarged insolvent, or has been convicted of an offence involving moral turpitude.
It is important to note that a director can be removed only by following the proper procedures and complying with the legal requirements.
What is the procedure for removing a director from an OPC?
The procedure for removing a director from an OPC in India involves the following steps:
Hold a board meeting:
A board meeting needs to be held to pass a resolution for the removal of the director. The director concerned must be given notice of the meeting and an opportunity to be heard.
Pass a special resolution:
A special resolution needs to be passed at the board meeting for the removal of the director. A special resolution requires at least three-fourths of the votes cast by the members present and voting in favor of it.
File form DIR-12:
Once the special resolution is passed, the OPC must file Form DIR-12 with the Registrar of Companies (ROC) within 30 days of passing the resolution. The form must be signed by a director and a company secretary or another director.
Update the company’s records:
The OPC must update its records to reflect the removal of the director, and the director must be removed from any official documents and registers.
It is important to note that a director can also be removed by the shareholders through an ordinary resolution, subject to the provisions of the Companies Act, 2013 and the OPC’s Articles of Association.
What is the maximum number of loans an OPC can take at a time?
There is no specific limit on the number of loans an OPC can take at a time. However, the total amount of loans taken by the OPC should not exceed 50% of its paid-up share capital or Rs. 50 lakhs, whichever is lower, as per the Companies Act, 2013.
Can an OPC merge with another company?
No, as per the Companies Act, 2013, an OPC cannot be merged with another company.
Can an OPC amalgamate with another company?
No, as per the Companies Act, 2013, an OPC cannot amalgamate with another company. Amalgamation is only allowed between two or more companies, and since an OPC is considered a separate legal entity, it cannot be amalgamated with any other company.
Can an OPC enter into partnerships with other firms?
No, an OPC cannot enter into a partnership with other firms since it is a separate legal entity and has only one owner or member. However, an OPC can engage in business relationships with other firms, such as entering into contracts or joint ventures.
Can an OPC enter into joint ventures with other companies?
Yes, an OPC can enter into joint ventures with other companies as long as it is allowed in its memorandum of association (MOA) and articles of association (AOA). The OPC would need to comply with the necessary legal and regulatory requirements for forming a joint venture, such as obtaining necessary approvals and permissions, drafting a joint venture agreement, and complying with tax and other regulatory obligations. It is important to note that the liability of the OPC in the joint venture would be limited to its share in the joint venture, as specified in the joint venture agreement.
Can an OPC be converted into a public limited company?
No, an OPC cannot be directly converted into a public limited company. As per the Companies Act, 2013, an OPC can only be converted into a private limited company after two years from the date of incorporation or when the paid-up share capital exceeds Rs.50 lakhs, whichever is earlier.
To convert an OPC into a public limited company, the OPC must first be converted into a private limited company and then it can be subsequently converted into a public limited company after fulfilling the necessary compliances and requirements under the Companies Act, 2013.
What is the time limit for conversion of an OPC into a private limited company?
As per the Companies Act, 2013, an OPC can be converted into a private limited company only after the expiry of two years from the date of its incorporation. This means that an OPC can apply for conversion into a private limited company only after two years of its incorporation.