Most of the times, you may don’t want to interrupt your free lifestyle and at the same time setup a business. Well, one person company is just for the same individuals who are either freelancers or home based solo entrepreneurs.
So, what are the legal aspects and how one can setup such company? Here are the details for one Person Company or OPC. It’s a company liability corporate entity in legal aspects.
It is a very new concept in India, passed by Parliament through The Companies Act, 2013; although, this concept is widely in trend in other countries like UK, Australia and China, USA etc.
As mentioned in the section 2(62) of the act, OPC refers to a firm setup and managed by one single person.
You can setup a Company through 3 methods as given in section 3(1):
- Share Limited
- Guarantee Limited
- And, Unlimited
Here is how you can setup a new company:
- First of all apply for your DIN and Digital Signature. (DIN – Director’s Identification Number)
- Choose the name of your Company.
- Draft the Memorandum as well as AOA. (Article of Association)
- Get all the documents duly stamped and filled online (also, sign them electronically).
- Pay all the dues and get the Certification for Incorporation.
- Now, it’s the time to avail the Certificate for Company Commencing.
PRE Incorporation Requirements:
One Person Company needs some requirements to achieve for Pre Incorporation:
- There must be minimum 1 Promoter
- An Individual as a Director (Promoter could be the director himself)
- DIN (Most Necessary)
- Digital Signature for Director
- Foreigners, NRIs, Non – Living Persons can’t be the director or promoter.
- One person, one OPC.
- There could be maximum 15 directors.
After the completion of pre incorporation process the next step is to go for post incorporation process, i.e. for the Certificate of Commencement; as per the requirements of Section 11 of the act. It will be the declaration issued by the Directory of the Company that will be on Stamp Paper (E form INC -21).
Things to Make Sure
- Minors can’t be the nominee or share holders.
- One Person Company can’t be converted to any other company that is listed under section 8.
- Non-Banking economical transactions are not allowed.
- It can’t be converted in any other type of company before fulfilling the below given restrictions:
- Two years of Incorporation
- Annual turnover gets more than 2 Crores
- Threshold crosses 50 lacs.