One Person Company

Minimum Requirement for One Person Company

• At least one Director must be Indian Resident & Citizen of India. A minor person can’t become its member.
• (Resident in India means a person who had resided in India for a period not lesser than 182 days in the prior calendar year.)
• 1 Shareholders and minimum 1 director which can be extended upto 15 (The directors and shareholders can be same person with minimum share capital of Rs. 1)
• DSC (Digital Signature Certificate) for the directors & member
• Minimum 1 Nominee.

Procedure of One Person Company

Overview of Web forms

A new Web based Form named ‘SPICe+‘ (pronounced as ‘SPICe Plus‘) is an integrated Web based form offering multiple services like ‘name reservation’, incorporation, ‘DIN allotment’, mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and ‘Opening of Bank Account’ & GST (Optional).

Name Reservation

Company has two option available either first reserve the name in Spice+ Part-A and then apply in Spice+ Part-B or directly apply name with incorporation form then challan will not be required to be paid. In case company reserves the name first than challan needs to be paid of Rs. 1000 SRN will be mandatory required.

Filling Part B of Spice+

• All first subscribers of SPICe+ MOA (INC-33) must have DSC, if they are less than 7 then it will be signed in the form itself no annexure will be required & in case if more than 7 then separate attachment of MOA will be annexed without DSC.
• Articles of Association is entrenched with brief description about the clause (Make sure the article number matches with form SPICe+ AOA (INC-34) )-Select the particular table which is applicable and make the appropriate changes and incorporate first directors name and in case subscribers are more than 7 then AOA will attached separately (as there are only 7 member so DSC slot available in the form)
• Get Consent of a person to become Nominee in Form INC -3.
• Declaration by the subscribers and the first directors in INC – 9 shall be auto-generated in PDF format and submitted electronically.
• Capital structure of the company in case of One Person Company can be started with Rs.1 as share capital.
• The object clause should be relevant and company must be engaged in that business only.
• There is no separate application to be filed for allotment for DIN .it will be allotted with the details filled in the form in the tab directors not having DIN.
• After filling all the details stamp duty fees need to be paid which can be done through MCA or without MCA portal.
• Application for PAN number and TAN number also will be processed with spice e Plus form by selecting respective area code, AO type, Range code & AO No.
• Spice + AGILE PRO form is mandatory for all companies which includes following registration that is GST Registration which is optional, ESIC(Employee State Insurance Corporation) Employees' Provident Fund organization (EPFO) Registration (Mandatory) and Profession Tax Registration in case if company is of Maharashtra and Opening of Bank Account is compulsory.
• After filling up Part B, we have to carry out a ‘pre-scrutiny’ check. Once the ‘pre-scrutiny; is successful, click on ‘submit’. A confirmation is displayed upon successful submission of the form.
• After submission of these form, it should be acknowledge by DSC of CS/CA/CWA.A Service Request Number is generated for making a payment towards company incorporation. Once the payment is made successfully, the forms would be processed.
• In case form is need to be resubmitted due to any error or omission, then form will be resubmitted in the same manner.

Certificate of Incorporation

After completion of process and successful approval of form, certificate of incorporation, Tan allotment letter, PAN card of Company and DIN of directors will be issued. Along with GST Registration certificate, ESIC and EPFO certificate, Professional tax registration (For Maharashtra), Opening Bank account.

Documents Required for One Person Company

• PAN card and address Aadharcard of directors and shareholders are mandatory.
• ID Proof: Self attested Passport / Voter-ID / Driving License (any one)
• Address Proof: Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries(any one)
• Passport size Photograph for each Director/ Shareholder.
• Email and contact details of each director/member
• Registered office Address proof :
  1. Taken on Rent by Company- Property Tax receipt in the name of Lender/Electricity bill (not older than 2 month)-any one + Rent Agreement(After Name Approval with the proposed name of Company) + Rent Receipt of latest month.
  2. Owned by any of the Director- Property Tax receipt/Electricity bill (not older than 2 month)-any one in the name of owner.

Forms to be Filed for One Person Company

• Spice+ (INC 32)
• Spice+ MOA (INC-33)
• Spice+ AOA (INC -34)
• INC-3(Nominee Consent)
• Spice+ AGILE PRO (INC-35)

Nominee in One Person Company

• Only one person requires for OPC but it must require nominate a nominee who will become a owner of the OPC in case of sole member is disabled.
• The Nominee must be given a written consent in INC-3 which will be filed with the Registrar during incorporation along with the MOA and AOA.
• The sole member of one person company may agree to change in nominee person with any reason by giving a written notice to the Company for such change and then One person company will file such intimation of change with consent of new member in form INC-4 within 30 days of receiving such intimation for change.
• In case Nominee becomes in charge of one person company due cessation of original member by way of death or incapacity, then it is mandatory to appoint new nominee as substitute within 15 days of becoming member.

Attachment Required for One Person Company

• Consent to act as Directors (DIR-2)
• PAN & Adhar card of Directors & member
• Proof of office address
  Taken on Rent by Company- Property Tax receipt in the name of Lender/Electricity bill (not older than 2 month)-any one + Rent Agreement(After Name Approval with the proposed name of Company) + Rent Receipt of latest month.
  Owned by any of the Director- Property Tax receipt/Electricity bill (not older than 2 month)-anyone in the name of owner.
• Interest of first director(s) in other entities (if any)
• Proof of identity and residential address of the Directors & member
• INC-3 (Consent of nominee)

Government Fees for One Person Company

Spice form Fees
• In case of company having share capital

• In case of company not having share capital

Stamp duty for MOA and AOA is Rs. 7550 (Madhya Pradesh)
Pan and Tan Fees is Rs. 131
Name Reservation Fees: In case applied separately in Part A for Name Reservation than Rs 1000

Advantages of One Person Company

• Sole member: The biggest advantage of OPC is that it can be register with single member only whereas in case of private limited company and Limited liability partnership requires minimum two members to register.
• Less legal compliances:
  1. No Annual General meeting: One Person Company is not required to hold an annual general meeting or extraordinary general meetings. Only resolution signed by the single Director and entered into the minutes book is sufficient instead of a holding General / Extraordinary General Meeting.
  2. Less Board meetings: One person company may hold only 2 board meetings in a calendar year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.
  3. CARO, cash flow statement and various provisions of companies act does not apply on one person company.
• Limited liability protection: The concept of OPC is a form of Organization which is introduced by Companies Act,2013 which helps entrepreneurs to carrying sole business into Corporate framework and to run the corporate entity with limited liability where the liability of the member of the company is limited to the extent of its share holding amount due to company. In other words, it can be said as personal assets of member is safe.
• Minimum capital requirement: There is no bound for minimum capital requirement. The Capital structure of the company in case of One Person Company can be started with Rs.1 as share capital.
• Rapid Decision Making: There is single owner of the Company who helps the one person company in rapid decision making without discussion with others as control of the company with single owner.
• Benefits under Tax law: Benefits of presumptive taxation is available subject to the income tax act.Any Remuneration Paid to Director will be allowed as deduction as per Income Tax .MAT is applicable to One person company.
• Separate legal entity: One person company is a separate legal entity and capable of doing everything that an sole member will do.
• Easy Funding: One person company can raise funds through venture capital, financial institutions, angel investors, etc. as it is registered in form of private limited company.
• Better credibility: One person company is having good credibility & recognition in the market as it is registered form of business with the central government.
• Government Benefits: A One person company can avail all advantages of small scale industries such as lower interest rate of loans, easy funding from the bank without depositing any security to a certain limit, benefits in foreign trade policy, receives interest on any late payment.

Income Tax for One Person Company

TDS compliance: Currently, all companies and LLP’s, irrespective of their amount of turnover have a liability to deduct TDS. The same is not true for an individual. An individual has a liability to deduct TDS only when the turnover of his business exceeds Rs. 1 Crore. (Gross receipts of Rs. 50 Lakhs in case of a professional). But, if a person forms a One person Company, he will be liable to deduct TDS from the first day itself.

TDS compliance has its own associated costs. TDS payments to the Government have to be made monthly while TDS returns are to be filed quarterly. Further communication with the Government regarding TDS Mismatch and other issues is not very streamlined. For an individual not having a large turnover, such compliance increases its operating costs.

Since the OPC can be formed only if turnover is below 2 crores, the intention of the Government seems clear, that OPC’s are meant for the small scale industries. Had the individual carried the business or profession in his individual capacity, there would not have been a TDS liability until the turnover limit had been reached. Therefore an amendment in the Act should be made to provide the same benefit of TDS compliance as is provided to an individual.

This will also safeguard the OPC from the disallowance of expenses in case of non-deduction and payment of TDS until the turnover limit is not reached. This will also simplify the law for OPC’s, since TDS compliance would have to be made only if the OPC is liable to tax audit under section 44AB of the Act.

In case of OPC following tax rates are applicable

Limitations of One Person Company

• As per the Companies act, The maximum paid up share capital is allowed Rs. 50Lakhs for OPC and when it exceeded this limit then has to be convert into Private limited company.
• OPC is suitable for small businesses having annual turnover less than Rs. 2 crores and When a OPC crossed threshold limit of Rs. 2 crores annually , then it is mandatory to convert the same in private limited company.
• Only one person requires for OPC but it must require nominate a nominee who will become a owner of the OPC in case of sole member is disabled.
• OPC Company cannot carry on businesses related to financial activities like Non-Banking Financial Investment activities including investment in securities.
• Voluntary, a One person company can’t be converted into any other form of company unless two years are completed from the date of incorporation except the threshold limit is exceeded as mentioned above for turnover and paid up share capital.