One person company is a private limited company but with 1 shareholder.
It is a more legal and reliable form of ownership. It has all the features of a private limited company but only needs 1 shareholder. More details of an individual company can be find here.
What is the minimum requirement for OPC registration?
Only 1 shareholder
2) Minimum 1 director
The nominee is over 18 years of age and is not a director in any other OPC.
One person company registration steps:
Get a digital signature certificate
The first step in OPC incorporation in Bangalore is to get the first digital signature, which is require for many things later in the formation of a one person company. Digital signature is give on application by the concern applicant and is valid for 2 years. To obtain a digital signature certificate, you need a passport size photograph, proof of self-certified address, and the applicant’s page.
Direct identification number
The second step in Opc registration is to get a direct identification number. That is the number give by the Ministry of Corporate Affairs for the individual applicant. Lifetime recognition unless the number is withdraw. Every director of the company will have an intimate DIN, so applying for one is a command.
Reserve name
Before applying to OPC incorporation in Bangalore, the name of the proposed company may be reserved. After paying the designated fee you can reserve the suggested name by filling up the RUN form. You can list a maximum of 2 names in the selected order. The professional will search for the availability of the name before creating the application.
However, approval of the name of the company is at the discretion of the Registrar. After approval, the name will be reserved for 20 days; you should apply for company inclusion within the stipulated time.
Certificate of Company
The final step is to get the certificate of investment by submitting the required application. You can apply online for one person company registration through a simple format to include a company which is also known as Spice Forms.
Comparison between OPC and sole proprietorship
OPC
Meaning
One person company (OPC) means a company formed with only one (single) person as a member, unlike the traditional way of having at least two members. Section 2 (62) of the Companies Act defines an individual company as a company which has only one person as its member. Moreover, the members of the company are nothing but its Memorandum Association or the subscribers of its shareholders. Therefore, OPC registration is effectively a company with only one shareholder as its member.
Private Company: Section (1) (c) of the Companies Act states that any person may form a company for legal purposes. He further describes OPC as a private company.
One Member: Unlike other private companies, OPC registration can have only one member or shareholder.
Nominee: The sole member of the company has to mention a nominee while registering the company.
No Permanent Successor: Since there is only one member in the OPC, the nominee will choose or reject him as his sole member as a result of his death. This does not happen in other companies because they follow the concept of permanent inheritance.
Minimum one director: OPC registration must have at least one person (member) as a director. They can have a maximum of 15 directors.
Liability: The owner’s liability is limit to his / her investments in the company
No minimum paid-up share capital: The Companies Act, 2013 does not specify any amount as minimum paid-up capital.
Sole proprietorship
Meaning
Ownership is a form of business organization in which a single person owns, manages and controls business activities. The person who runs the business is call as the sole owner or sole trader.
Sole Ownership: A single person owns the entire business, i.e. all property and assets belong to the proprietor. Accordingly, it carries all the risks associated with the enterprise.
No profit and loss sharing: Any revenue from a sole proprietorship business belongs to the sole proprietor. As a result, all loss incur by the firm are borne by the sole owner.
Capital of a man: Capital required starting or continuing a business, only through his personal resources or by borrowing, i.e. by bank, financial institutions, friends, relatives, brought into the business to start or continue the business, etc.
Unlimited Liability: The sole proprietorship business liability is unlimited. In the event of a loss, the personal property own along with the business assets will be used to release the business balance.
Less legal forms: The legal requirements for the formation, operation and closure of a sole proprietorship business are almost zero.
One man control: Only one person is in charge of all activities, so he has complete control over it. Thus, the sole owner makes all the decisions and executes them the way he wants.
There is no legal difference between an owner and a business: they are one in the eyes of the law. The sole proprietor uses their own skills, intelligence and expertise to run the business.
Prohibitions faced by an OPC
An OPC registration is also prohibit from conducting any non-banking financial investment activities, converting a wholly own subsidiary into an OPC and offering any type of employee stock scheme. The Companies Act, 201 also discourages the overall purpose of OPC by prohibiting more than one person from having OPC or becoming a nominee in more than one OPC. This, as indicated in the report of the committee, largely defeats the whole purpose of the introduction.
While the government is encouraging large foreign investments in India, restrictions have been impose on the inclusion of foreign investors in the OPC, which has spread an air of frustration. The major disadvantage of OPC is stimulate from a tax standpoint. The Income Tax Act, 1961 does not recognize the concept of OPC and puts the private company in the same slab under the bracket of 30% (plus surcharge) on the total income.