One Person Company - Characteristics and Registration process

One Person Company Registration

The Companies Act, 2013 introduced the concept of One Person Company in India in order to support entrepreneurs capable of raising their own venture. This venture allows them to create a single person economic entity. In case of a One Person Company registration, only one member should be there while registering this form of a company while in the case of a Limited Liability Partnership firm or a Private Limited Company, there must at least be 2 individuals in order for registering the company.

Rules of One Person Company as per the Companies (Incorporation) Rules, 2014

As per Rule 3 of the Companies (Incorporation) Rules, 2014, it states that only a natural person will be able to form a One Person Company. It is mandatory for the sole director or the shareholder to be an Indian Citizen as well as an Indian Resident, being which he will be permitted to initiate a One Person Company. The term 'Indian Resident' indicates about a person who has stayed in India for a span not less than 182 days of the immediately preceding one calendar year.

As per Section 9 of the Citizenship Act, 1955, Indian Citizenship would be deemed void or terminated of that person who obtains citizenship of any other country. As per Section 7A of the Citizenship Act, a person who acquires an Overseas Citizenship would be recognized as as a citizen not having complete citizenship of India.

A One Person Company Nominee

As per Companies (Incorporation) Rules, 2014, the sole director and shareholder must propose an individual as his/her nominee in the Memorandum of Association and Articles of Association while incorporating a One Person Company. During an untoward circumstance like the demise or incapacitation of the sole promoter, the sole promoter's position is transferred to the nominee who would have to commence the responsibilities of the sole promoter. A One Person Company must file audited financial statements with the Ministry of Corporate Affairs at the end of every financial year. In case a One Person Company's turnover exceeds Rs. 2 crores, the OPC must be converted into a Private Limited Company.

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

Characteristics of a One Person Company

Corporate Body

It is a type of company that can be initiated and operated by a sole promoter with limited liability protection in the country. A One Person Company, considered as a legal entity, allows easy transferability of ownership and does not end until dissolved. Also in the event of any legal case, the company would be liable and not the individual.

Minimum Capital not required

In order to start a One Person Company, a minimum capital amount is not required. The company can be started as per the capacity of the sole promoter.

Seamless Procedure for Registration

The procedure to register a One Person Company is very simple which consists of the following steps:

The Sole Promoter and a nominee are required for registering a One Person Company.

Documents of the sole promoter and the nominee which consists of PAN Card, Bank Statement and Aadhaar Card are required.

The Electricity Bill and the No Objection Certificate of the location, where the company is incorporated, are required while incorporating the company.

Stakeholders can avail of 5 different services (Name Reservation, Allotment of Director Identification Number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN) in one form by applying for Incorporation of a new company through SPICe form (INC-32) - Simplified Proforma for Incorporating Company electronically (SPICe) - with eMoA (INC-33), eAOA (INC-34). In case eMoA, eAoA are not applicable, users are required to attach the pdf attachments of MoA and AoA. There is no need for reserving a name separately before filing SPICe. One name for the proposed company can be applied through SPICe (INC-32).

Requisite Documents for a One Person Company Registration

Following are the Documents Required for Registering a One Person Company:

(a) Identity Proof of the Director and Nominee Director

The Permanent Account Number of the Sole Promoter and the Nominee Director are required. In addition, both the Sole Person and the Nominee must be Indian Nationals.

(b) Residential Address of the Sole Person/Director and Nominee Director

Documents like Passport, Driver's License, Bank Statement, Electricity Bill that is not older than 2 months are required in order to register a One Person Company.

(c) Proof of the Registered Office in India

Documents like Property Tax Receipt, Electricity Bill copy, Rental Agreement or Sale Deed, No Objection Letter form Landlord in order for using the premises as a registered office.

(d) Signed Documents of Company Incorporation

The Signed Digital Signature Application Documents (hard copy), soft copy of signed incorporation documents need to be uploaded.

The Steps to be followed for Registering a One Person Company

(1) Obtain DSC

In order to obtain the Digital Signature Certificate (DSC), the following are the documents to be submitted by the sole promoter:

-Proof of address

-PAN Card

-Phone Number and Email ID

-Photo

-Aadhaar Card

(2) Obtaining the DIN

The next important step during the incorporation of the company in India is to obtain the Director Identification Number (DIN) whose name is proposed in the the SPICe (Simplified Proforma for Incorporating Company electronically) by providing the name and the address proof of the sole promoter/director. The Director Identification Number can be applied for in the SPICe form itself.

(3) Application for Name Approval (RUN )

The next step in the One Person Company Registration Process is to determine the name of the company. The Ministry of Corporate Affairs, with effect from March 23, 2018 has decided to permit two proposed names of the One Person Company and one resubmission while reserving Unique Names (RUN Service) for the companies. Post receiving approval from the Ministry of Corporate Affairs, the further process needs to be looked into. You can conduct your Company name check here.

(4) Requisite Documents

The One Person Company also has to prepare the following documents which are required to be submitted to the Registrar of Companies:

(i) The Memorandum of Association (MOA) - It is a document which is prepared during the formation and registration process of a company that states the relationship with the shareholders. It signifies the objectives for which the company has been formed.

(ii) The Articles of Association (AOA) - It is a documents which mentions the by-laws of the company operations.

(iii) A nominee is appointed on behalf of the sole director or promoter for performing his duties in case the sole promoter is incapacitated or dies. The sole director's consent for the nominee to take his place at such a circumstance is considered along with his PAN Card and Aadhaar Card.

(iv) To start a One Person Company, the sole director has to submit the Registered office proof of the proposed company along with the proof of ownership and a No Objection Certificate from the owner or the location/office premise.

(v) The sole promoter's affidavit and consent of Form INC-9 and DIR- 2 respectively.

(vi) The sole promoter also has to submit a declaration from a professional authority which certifies that the company has met all the compliances.

(6) Certificate of Incorporation to be issued

After the documents are verified, the Certificate of Incorporation will be issued by the Registrar of Companies (ROC) after which the business can be started legally.

The firm registration process is not a difficult task and can be done correctly and accurately on the Ministry of Corporate Affairs portal.