One Person Company (OPC)

What is OPC?

• OPC is a one shareholder corporate entity, where legal and financial liability is limited to the company only.

• As per Rule 3(1) of the Companies (Incorporation) Rules 2014, only a Natural Person who is an Indian Citizen and resident in India shall be eligible to Incorporation/form a OPC.

What are typical Solo Entrepreneur characteristics?

• The desire for personal freedom that allows them to adopt the lifestyle of choice.

• The drive and passion to implement the business plan and to fulfill their personal dreams.

• The willingness to go the extra mile and the desire to succeed.

• Passionate about what they do and being committed to their venture.

Requirements

• At Least 1 Resident Promoter: who will promote/ incorporate the company.

• At Least 1 Director: Director should be individual only. No Body corporate/ HUF or Partnership Firm can be appointed as Directors.

• Generally, Promoters and Directors are the same in One Person Companies.

• Director must have DIN (Directors Identification Number)

• Director must have Digital Signature

Benefits of OPC

• Its identity is distinct from that of its owner• The personal assets of the shareholders and directors

remain protected in case of a credit default• A range of small and medium enterprises, doing business

as sole proprietors, might enter into the corporate domain• Small single entrepreneurs currently operating under a

proprietorship model, move to the corporate structure with benefits of limited liability

• As there is only one director in company, there is no need to hold Board Meeting

Limitations of OPC• Body Corporate / HUF or Partnership Firm can not be a Director• One person can make only one OPC• Not easy to set up- it requires a lot of paperwork and is a time-

consuming process.• The cost of establishment- you need to get a lawyer or company

secretary to help you draft the memorandum and articles of association.

• The company will be taxed at 30%, which may be higher than the 10-30% for a business that is not incorporated. Other types of taxes, such as the minimum alternate tax and dividend distribution tax, may also be applicable.

Steps of Incorporation

• Apply DIN/ DSC• Selection of name• Nomination by member• Drafting of Memorandum and Articles of Association.• Stamping, digitally signing and e-filing of various

documents with the Registrar.• Payment of fees• Obtaining Certificate of Incorporation

Thank You Author: Alok Patnia

Alok Patnia, CEO of Taxmantra.com has been actively involved in the start-up sector of

India. He has been advising and mentoring a huge number of start-ups by providing

them with necessary hand holding with regards to various issues like Entity Structuring,

Funding, Tax and Regulatory compliances and allied issues. He is great insights on the

business starting-up and maintenance issues. He is a qualified Chartered Accountant

having post qualification exposure with Ernst and Young and KPMG at Bangalore.

For company incorporation and other compliance, visit taxmantra.com