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One Person Company
Register your One Person Company for solo entrepreneurs with limited liability protection.
Overview
Introduction to OPC
A One Person Company (OPC) is a perfect business type for solo entrepreneurs in India who want the advantages of a registered company coupled with the ease of a single-owner business. A sole person can start and run a business with the benefit of limited liability protection, which protects personal assets from the liabilities of the business. This format is best for small companies and new ventures, offering the advantage of a sole proprietorship with the protection from liability of a private limited company.
Registering a One Person Company (OPC) in India is straightforward but involves several legal steps. First, you must choose a unique business name and get it approved through the Ministry of Corporate Affairs (MCA) portal using the SPICe (Simplified Proforma for Incorporating Company Electronically) form. Next, you need to prepare and file the required company documents namely, the Memorandum of Association (MoA) and Articles of Association (AoA) which define the company’s objectives and operational structure as per the Companies Act, 2013.
Then you'll have to produce evidence of your registered office address and corroborating identity documents. After submitting these documents and having them accepted by the Registrar of Companies (RoC), the company is issued a Certificate of Incorporation, which makes it a registered entity. OPCs have less compliance obligations than other business entities, like private or public limited companies, which means less hassle and less regulatory burdens.
This business type suits businesspersons who want sole authority over their business decisions but would like to enjoy the formal stature of a registered company. Our experienced OPC registration service provides you with guidance at each step to achieve a hassle-free, compliant, and efficient setup process so that you can concentrate on growing your business confidently.
Legal Definition
Section 2(62) of Companies Act, 2013 defines a one-person company as one that has only one person as its member. Furthermore, members of a company are nothing but shareholders to its memorandum of association. So, an OPC is effectively a company that has only one shareholder as its member.
Features of One Person Company
Single Ownership
An OPC is formed by a single person, who is both the shareholder and director.
Limited Liability
The liability of the member is limited to their shares, protecting personal assets.
Perpetual Succession
An OPC can continue its existence even after the death or incapacity of the owner, through the nomination of another person.
Separate Legal Entity
An OPC is a distinct legal entity from its owner, allowing it to own property, sue, and be sued in its own name.
Minimum Compliance
OPCs have fewer compliance requirements compared to other types of companies, making them easier to manage.
Privileges of One-Person Companies
Simplified Annual Returns Filings
OPCs are required to file fewer documents with the Registrar of Companies.
Exemptions from Holding Annual General Meetings (AGMs)
OPCs are not required to hold AGMs, simplifying their operational processes.
Access to Loans
Banks and financial institutions are more likely to offer loans to OPCs due to their formal structure and limited liability.
Legal Status and Ownership Pattern
A One Person Company has a special legal status, different from that of sole proprietorships. The ownership pattern of an OPC provides for a single person to own the entire company but with the additional advantage of having a nominee in place. This provides continuity and stability to the business even under unforeseen conditions.
Benefits of OPC Registration
Full Control
As a sole owner and director, the person has full control over the operation of the company and the decisions.
Ease of Administration
Since there are less regulatory requirements, OPCs are easier to administer than other forms of company structures.
Flexibility
OPCs are easily convertible to other forms of companies as the business expands, offering flexibility for future growth.
Limited Liability Safeguard
The assets of the owner are safeguarded since their liability is restricted to the amount of investment in the company.
Separate Legal Entity
OPCs possess a separate legal personality and a straightforward business structure which allows them to make contracts, own assets, and sue or be sued in their own name.
Less Compliance Requirements
OPCs are free from the different compliance requirements that are mandatory for other forms of companies like conducting annual general meetings, having minimum capital requirements and are best suited for small business.
Higher Credibility
Since an OPC is a registered company, it usually finds it easier to get bank and financial institution funding.
Succession Arrangements
The nominee director facilitates succession if the owner dies or becomes incapacitated, leaving a clear plan of succession.
Eligibility Criteria for OPC Registration in India
Single Shareholder
An OPC can be incorporated by only a natural person, who should be an Indian citizen and resident.
Nominee Director
The sole shareholder has to nominate a person who will assume charge in the event of their death or disability.
Not a Minor
The person incorporating the OPC cannot be a minor.
Capital Requirement
Minimum authorised capital to incorporate OPC is ₹1 lakh but no minimum paid-up capital is required.
Sole Director
A sole member may also serve as the sole director of the company.
Nominee Director
The nominee director replaces the sole shareholder in case of his death or incapacity.
Director's Duties
Directors have to abide by statutory duties and obligations as provided in the Companies Act, 2013.
Documents Required
Director Documents
Director's PAN Card: Copy of the sole shareholder and nominee director's PAN card
Identity Proof: Aadhar card, Driving License, voter ID, or passport of the sole shareholder and nominee director
Address Proof: Recent utility bills, including water or electricity bill, Mobile Bill or bank statements of the sole shareholder and nominee director
Registered Office Documents
Rent agreement and a no-objection certificate (NOC) of the property owner, or utility bills in case of ownership of the property
Company Documents
Passport-Size Photographs: Up-to-date passport-sized photographs of the sole shareholder and nominee director
Memorandum of Association (MOA)
Articles of Association (AOA)
LLC Forms
Form INC-32, INC-33, INC-34
Consent of Partners: Form 9
Declaration by Designated Partners: Form 1
Registration Process
Step 1: Consultation
Pre-monsoon consultation to comprehend the business needs, government charges and eligibility criteria of OPC registration
Step 2: Documentation
Help in collating and preparing all documents required, such as identity proof, Aadhaar Card, address proof, No Objection Certificate and registered office proof such as utility bill
Step 3: DIN and DSC Application
Submission of Director Identification Number (DIN) and Digital Signature Certificate (DSC) for the sole director
Step 4: Name Approval
We will assist you in registering an exclusive name for your company. We will search for the availability of the name and apply for a proposed company name for name reservation under the Ministry of Corporate Affairs MCA portal
Step 5: MOA and AOA Drafting
Preparing the Memorandum of Association (MOA) and Articles of Association (AOA) according to legal requirements
Step 6: Filing Forms
Submission of the necessary forms (INC-32, INC-33, and INC-34) to the Registrar of Companies (ROC)
Step 7: Incorporation Certificate
Obtaining the Certificate of Incorporation from the ROC, marking OPC company incorporation
Step 8: PAN and TAN Application
Help in obtaining the company's PAN and TAN
Step 9: Post-Incorporation Support
Direction on post-incorporation compliance, trademark registration, professional tax, income tax returns, appointment of Company secretary and other legal formalities
One Person Company (OPC) Compliance
Government Laws Impacting OPCs
OPCs need to comply with some government laws to keep their legal status and run seamlessly. Such laws are annual filings, tax requirements, and compliance with corporate governance standards as prescribed in the Companies Act of 2013.
Significance of One Person Company Annual Compliances
Legal Status: Compliance keeps the legal status of the OPC intact and prevents penalties. Business Credibility: Regular compliance enhances the company's credibility with stakeholders, including customers, investors, and financial institutions. Operational Efficiency: Staying compliant helps in smooth business operations and avoids disruptions due to legal issues.
Benefits of One-Person Company Compliances
Avoid Penalties: Timely compliance prevents fines and penalties imposed by regulatory authorities. Enhanced Reputation: A compliant company is perceived as reliable and trustworthy by clients and partners. Access to Finance: Compliance raises the prospect of obtaining loans and investments from investors and financial institutions.
One-Person Company Mandatory Annual Compliances
Annual Return (Form MGT-7): Submission of annual return within 60 days from the Annual General Meeting (AGM) date. Financial Statements (Form AOC-4): Submission of financial statements, including balance sheet and profit and loss account, within 180 days of closure of the financial year. Income Tax Return: Filing the company's income tax return on 30 September of the assessment year. Statutory Audit: Preparing an audit of financial statements by a Chartered Accountant. Board Meetings: Holding at least one board meeting within six months.
Legal Consequences of Non-Compliance
Fines and Penalties: Non-compliance leads to heavy fines and penalties levied by the MCA and other regulatory bodies. Legal Measures: Repeated non-compliance can result in legal measures, including the dissolution of the company. Director Disqualification: Directors of the company could be disqualified from occupying directorships in other companies.
Taxability of OPCs in India
Corporate Tax
OPCs need to pay corporate tax on their earnings. The rate of tax for OPCs is consistent with the rates for other private limited companies.
Tax Deductions
OPCs can claim a number of deductions under the Income Tax Act, including depreciation of assets, business expenses, and certain allowances.
Dividend Distribution Tax (DDT)
OPCs need to pay DDT on any dividend paid to shareholders.
Goods and Services Tax (GST)
In case of annual turnover above ₹20 lakhs, OPCs shall get registered under GST and file GST returns.
Specific Tax Provisions Applicable to OPCs
Income Tax Rates: OPCs are charged a flat rate of 22% plus applicable surcharge and cess for domestic companies claiming no exemption or incentive. For companies claiming exemption, the rate shall be 30%. MAT (Minimum Alternate Tax): OPCs fall under MAT, which is charged at 15% of book profits (under the Income Tax Act), along with surcharge and cess. Tax Audit: OPCs are required to undergo tax audit if their turnover is more than ₹1 crore (in case of businesses) or ₹50 lakhs (in case of professionals).
Frequently Asked Questions
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