For solopreneurs in India, the One Person Company (OPC) model is often the go-to option. This model was introduced under the Companies Act, 2013. It totally revolutionized Indian entrepreneurship by blending two key concepts, i.e., the private limited company’s structural framework and the sole proprietorship’s freedom of decision-making. So basically, it takes the best of both models and combines them into one model.
OPC is a suitable corporate structure for solopreneurs who want to enjoy limited liability protection, higher corporate credibility and independence when it comes to making business decisions. In this guide, we will break down the latest MCA framework for OPC registration in India.
In India, for a solopreneur, an OPC is a great business structure. When we say this, it is because there are several benefits of One Person Company that make it attractive for a person who wants to run a business independently. Below, we have listed the prominent benefits solopreneurs get to enjoy when they choose OPC model:
OPC is set up by a single member only. During its course of business, the OPC is run by a single member and there can never be more than one member in this model. One person owning and running the business means the owner gets full control over business decisions and is also entitled to the profits of the business.
Also, as there is no involvement of multiple members, arguments and disputes that may arise between different members within the same company can be avoided by forming an OPC. All this makes OPC registration a suitable option for someone who wants to operate a company without bringing in other members or shareholders.
A loose proprietorship is an unregistered business and is not registered with the Ministry of Corporate Affairs (MCA), unlike an OPC. A proprietorship is also not governed by a specific corporate law in the same way an OPC is. In contrast, an OPC is registered with the MCA through the Registrar of Companies and is governed by the Companies Act, 2013, along with applicable compliance requirements.
Because of this, clients may find it harder to verify or trust a proprietorship, especially when large transactions are involved. However, in an OPC, important company information is available through official records and can be verified. This can make it easier for clients to check the business details and build trust.
Banks may find it easier to evaluate registered corporate entities because their company information and records are available through official channels. An OPC is a registered company with Registrar of Companies, MCA, so its business details, financial information and compliance records can be checked as part of the lending process.
This can make an OPC more structured from a bank's point of view when compared with an unregistered sole proprietorship. Therefore, for a solopreneur who may need business financing in the future, having a registered corporate structure can be useful.
An OPC enjoys the status of a separate legal entity. What this means is that an OPC is legally different from its owner in the eyes of the law. Being a separate legal entity, it can own property, sue or be sued in its own name. It can also enter into formal business agreements under the company’s name. What’s more, legal actions take place in the company’s name and not in the owner’s personal name.
This is totally different from a sole proprietorship where the business and the owner are legally considered one and the same. Because of this, a sole proprietorship does not have a separate legal identity from its owner. Contracts, agreements, property ownership and legal actions are therefore carried out in the proprietor’s name and not in the name of a separate business entity.
One of the most attractive benefits of an OPC is that it provides limited liability protection to the sole owner. This means that if the business incurs debts or losses during its operations, the owner’s liability is generally limited to unpaid amount on shares held by them. The owner’s personal savings and property are generally separate from the company’s liabilities thanks to the limited liability protection.
A sole proprietorship ceases to exist with the death of the proprietor. However, in the case of an OPC, things are totally different. An OPC has perpetual succession, which means the company can continue to exist even after the death of its sole member. This is possible because a nominee is required to be appointed during the OPC incorporation process.
So, if the sole member passes away, the nominee can become the member of the OPC and the company can continue its business. This is different from a sole proprietorship, where the business is directly linked to the proprietor and does not have a separate legal identity.
Learn More: What is OPC?
Below, we have provided the mandatory checklist and documents for OPC. To fast-track your application on the MCA portal, make sure you gather the digital copies of them beforehand so you don’t get stuck once you initiate the process.
PAN of both the Indian national director and the nominee.
Identity Proof like Voter ID, Passport or Driving Licence.
Address Proof like Aadhaar Card, latest Bank Statement, Electricity Bill or Mobile/Telephone Bill not older than 2 months.
Recent Passport-Size Photographs for both director and nominee.
Nominee Consent (Form INC-3). Every OPC must appoint a nominee at the time of incorporation. Nominee selection is a mandatory part of OPC registration eligibility criteria. The registration process cannot be completed without it.
Address Proof like Electricity, Gas, Telephone or Water Bill clearly showing the premises address. Must not be older than 2 months.
If premises are owned by self, Sale Deed or Property Tax Receipt is needed to prove ownership. If the premises are rented, then a Valid Rent/Lease Agreement is needed.
No Objection Certificate from property owner permitting the use of the premises as the company’s registered office.
OPC registration is a modern process that can be completed entirely online with no need to visit any government offices. This makes it easier for more solopreneurs to get started as they can complete the process online with ease.
In this section, we will explain the entire modern one person company registration process along with detailed OPC incorporation steps MCA. Once you go through these steps, you will understand exactly how to register OPC in India.
DSC is the digital equivalent of a handwritten signature. It is required for e-signing MCA forms, including the SPICe+ form for OPC (OPC incorporation form). To obtain a DSC, file an application with a Certifying Authority like eMudhra or Capricorn. For assistance in this step, connect with OPC consultants at Registrationwala.
After obtaining the DSC, the next step is to apply for name reservation for one person company. For doing so, the prescribed form SPICe+, specifically its Part A, must be filed on the MCA portal. The applicant can propose up to two company names using this form.
After filing Part A, it’s now time to file Part B. In this part, provide all the necessary company details and attach necessary documents for proposed director and nominee. If the proposed director does not have DIN, apply for it using SPICE+ Part B.
Now, draft the e-MOA and e-AOA. The e-MOA must outline the objectives of the OPC. The e-AOA must outline the internal management rules of OPC. Both the documents must carry the DSC. Thereafter, proceed to file these documents.
Once the Registrar of Companies receives the complete application and documents, it will carefully review the submission. If satisfied with all the details, the ROC will issue the Certificate of Incorporation to the OPC. The OPC is then considered a legally registered company in India.
Also Read: OPC Compliance: Everything You Need to Know
Whether you need assistance with filing the SPICe+ form for OPC incorporation or ensuring compliance after incorporation, our OPC consultants at Registrationwala can provide the guidance and support you need for a smooth process and complete peace of mind. Connect with us to get started!
Q1. Which Act governs the One Person Companies in India?
A. The Companies Act, 2013, governs One Person Companies in India.
Q2. What’s the minimum capital required to start an OPC in India?
A. To start an OPC, there is no minimum paid-up capital requirement prescribed by the law. You can incorporate OPC with just Re. 1 if you want.
Q3. Do OPCs need to hold annual general meetings like private limited companies do?
A. No. The OPCs do not need to hold annual general meetings unlike the pvt ltd companies.
Q4. Can an OPC convert into a pvt ltd company?
A. Yes. An OPC can opt for conversion into a Pvt Ltd company if the business requires two or more members/shareholders or two or more directors. For OPC to pvt ltd conversion, the OPC must follow prescribed process and file required forms with MCA.
Sunny Goel is a Chartered Accountant (CA) and the Senior Finance & Regulatory Consultant at Registrationwala. He has expertise in accounting, taxation, finance, regulatory compliance, and insurance compliance. He writes simple and easy-to-understand content to help businesses understand financial rules, tax laws, insurance regulations, compliance requirements, and other regulatory matters.
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