One Person Company (OPC)

What is One Person Company?

- Introduced by Companies Act 2013 with effect from 01st April 2014
- Private Limited Company with ONLY ONE PERSON AS A DIRECTOR AND SUBSCRIBER
- All provisions as applicable to Private Limited Company are also applicable to One Person Company in the same manner if act does not provide otherwise.
- It is not a sole proprietorship

How is OPC different from Proprietorship?

- It has separate status than it’s Director or Member or Nominee
- It has Limited Liability. In case of liquidation, personal property of Director or member cannot be considered
- It has to do annual compliances every year and few event based filing such as obtaining Loan
- All above things are not found in case of proprietorship form of business

How is OPC different from normal Private Limited Company?

- OPC can have only one member and only one director with paid up capital not more than Rs. 50.00 lakh and turnover not more than Rs. 2.00 Crore (It can cross limit but only after converting it to a normal private limited company). In case of Private Limited company, there is no such condition and number of members can be increased upto 200.
- Private Limited Company had to convene an Annual General Meeting every year within 6 Months of end of financial year. In case of OPC, act does not impose such requirement.
- The last date by which OPC can do the annual filing is 30th September of year. In case of private limited company, this date can be increased upto 29th October.
- In case of OPC, the subscriber or member of OPC has to mandatorily appoint nominee. In case of Private Limited Company, no such requirement.

Conditions for Conversion of OPC into Private Limited Company?

- Compulsory: OPC has to get it converted into Private Limited Company in case
o OPC crosses it’s upper limit of paid up capital i.e. Rs. 2.00 Cr orOPC crosses it’s upper limit of Turnover i.e. Rs. 20.00 Crore
o Debts, Liabilities, Obligations or Contracts entered into before such conversion shall be affected.
- Voluntary: OPC can voluntarily convert itself into Private Limited Company after following procedure specified in Companies Act 2013. However it has to comply with following condition:
o It has completed minimum two years of Incorporation.
o Debts, Liabilities, Obligations or Contracts entered into before such conversion shall be affected.

Documents

- Proof of address of place of Registered office : Electricity bill/ Telephone Bill/ Tax Receipt
- Proof of residence of Subscriber/ Director/Nominee : Bank Statement/Electricity bill/ Telephone Bill
- PAN of Subscriber/ Director/Nominee
- Photograph of Subscriber/ Director/Nominee
- Adhar Card of Subscriber/ Director/Nominee
- Few signed Documents such as INC 3, INC 9, DIR 2 which shall be drafted after getting above documents

FAQs

• Who can start a Sole proprietorship business? Ans: Any individual having an idea to establish a business can start a sole proprietorship business, sole trader, individual entrepreneurship is type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
• What should I do to start a proprietorship business? Ans: Create a business name and decide on a location for your business, File for a business license with your city or county and get permission from your locality.
• Can I register my residential address as the sole proprietorship business in India? Ans: Sole proprietor business can be registered and operated from any location or places.
• How long does it take to establish a sole proprietorship business? Ans: A sole proprietorship business does not take more than a week to open-up and get running. This simplicity makes it popular among the small traders and merchants.
• What documents are needed for opening a bank account in the name of sole proprietorship firm? Ans: Any valid document or certificate issued by authorized authority that act as a legal existence proof of business, ID Proof and Address proof of the Sole member is sufficient to open bank account in the name of Proprietorship Firm with the Bank.
• What business are commonly established as a sole proprietorship business? Ans: Most local businesses are registered and established as sole proprietorships, from your grocery store to a fast food vendor and even small traders and manufacturers. This is not correct to say that larger businesses do not operate as sole proprietors. Even some jewellery shops and wholesaler are sole proprietors, but this is not recommended.
• Where I can apply for Registration of sole proprietorship business? Ans: An individual can itself apply for registration of sole proprietorship business through various portal over the internet provided by respective authorities and through offline mode by visiting the premises of respective Authorities and get registered.
• What If I want to convert sole proprietorship business into any other form of business organization? Ans:It is very common for sole proprietors to convert into partnerships and private limited companies at a later stage.The procedure is a little tedious but it is possible by following the procedure of The Partnership act or The Companies Act and all other rules and provisions governing such of business.