An OPC or a One Person Company is a kind of business structure where there is only a single person who not only owns but also manages the company. Such an enterprise ensures limited liability protection and thereby allows individuals to run their own businesses independently.
The registration of an OPC is very important for individuals looking to establish a business on their own as it offers a unique business model that combines the benefits of a sole proprietorship and a private limited company, while also providing entrepreneurs with the opportunity to operate as a separate legal entity and the ability to raise funds for business expansion.
Benefits of Starting an OPC
Starting an OPC brings with it several advantages that make it an attractive choice for entrepreneurs. Some of these are:
- Firstly, limited liability protection ensures that the personal assets of the business owner are safeguarded in the event of any legal or financial liabilities incurred by the company.
- Secondly, an OPC allows individuals to establish their brand and build credibility in the market.
- Another benefit is the ease of compliance and governance, which reduces the administrative burden and allows entrepreneurs to focus more on business operations and growth.
- Additionally, OPCs enjoy perpetual succession, which means that the company continues to exist even if the owner changes or passes away. This ensures continuity and stability for the business.
Document Preparation
The following documents are must for getting the registration process started:
A. Preparation of the MoA and AoA:
The MoA i.e. Memorandum of Association and AoA i.e. Articles of Association are the significant documents that have to be prepared first.
The role of the MoA is that it outlines the company’s objectives, the scope of its operations and its relationship with shareholders, while the AoA covers the internal rules and governance structure of the company.
B. Drafting the consent letter and declaration by the nominee director:
The nominee director plays a crucial role in an OPC and their consent to act as the nominee director must be obtained. A consent letter is drafted, where the nominee director expresses their willingness to assume the responsibilities associated with the position. Additionally, a declaration stating that the nominee director is not disqualified from being appointed as a director is also prepared. These documents ensure that all parties involved are aware of their roles and responsibilities and provide legal confirmation of the nominee director’s acceptance.
C. Collection of required documents, such as address proof, identity proof and photographs:
Several documents are required during the OPC registration process. These include address proof, identity proof and photographs of the proposed director and nominee director. The address proof can be in the form of a utility bill, bank statement or passport. The identity proof can be a PAN card, Aadhaar card or passport. Collecting these documents in advance ensures that the registration process can proceed smoothly and without delays.
Online Registration Process
The following process must be followed in order to get an OPC registered as per the MCA portal:
A. Creating account on the Ministry of Corporate Affairs i.e. MCA portal:
The very first step to initiate the online registration process for an OPC is to create an account on the MCA portal, by providing basic details such as name, email address, etc.
B. Filling out the SPICe+ (Simplified Proforma for Incorporating Company Electronically) form:
The next step in the online registration process is to fill out the SPICe+ form. This comprehensive form replaces the earlier incorporation forms and consolidates various services related to company incorporation. The form requires details such as the proposed company name, registered office address, details of the director and nominee director, share capital information and other relevant information. It is important to ensure accuracy and completeness while filling out the form to avoid any delays or rejections.
C. Uploading the necessary documents and payment of fees:
Once the SPICe+ form is filled out, the next step is to upload the necessary documents. These include the MoA, AoA, consent letter, declaration by the nominee director and the identification and address proofs of the directors. It is essential to have these documents prepared in advance in the prescribed formats. Along with the document upload, the required registration fees must be paid online as per the schedule provided by the MCA.
D. Verification of the application and generation of Certificate of Incorporation (CoI):
After the form submission and document upload, the application goes through a verification process by the MCA. If there are no discrepancies or issues found during the verification, the MCA approves the application and issues the Certificate of Incorporation (CoI).
Post-Registration Formalities
Even after the registration procedure is complete, several post registration compliances and formalities need to be fulfilled which include:
A. Obtaining the PAN and TAN:
Once the OPC is successfully registered, it is essential to obtain the PAN from the IT Department. PAN is a unique identification number required for various tax-related transactions. Additionally, if the OPC is liable to deduct or collect tax at source, it is necessary to obtain a Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. These numbers are crucial for complying with tax obligations and filing tax returns.
B. Opening a bank account for the OPC:
Opening a bank account in the name of the OPC is an important post-registration formality. For this, the bank needs to be approached with the CoI, PAN, etc. to open a current account/savings account. This formality is essential to facilitate the day-to-day financial transactions of the OPC.
C. Registration of GST:
This formality applies if the turnover of the OPC exceeds the prescribed limit under GST after which it becomes mandatory to register for the GST. The OPC needs to provide the necessary details and documents to the GST authorities for registration.
D. Compliance with miscellaneous legal requirements:
The OPC, based on the nature and kind of business, may be required to obtain specific licenses, permits and other such legally required documents. These could include licenses from regulatory bodies or specific industry permits. In this step, it is important to identify the relevant licenses and permits applicable to the OPC’s operations and thereafter ensure timely compliance with the said regulations.
The Final Note
In conclusion, the step-by-step process for OPC registration involves several important stages and post-registration formalities. OPC registration holds significant importance for individuals seeking to establish their own businesses, providing them with the benefits of limited liability protection and the ability to raise funds for expansion.
By following the given process and completing the necessary formalities, entrepreneurs can successfully register an OPC and thereby lay a foundation for their business venture. It becomes essential to adhere to the legal requirements as well as compliance obligations to ensure a smooth and legally compliant foundation and operation of the venture.
For more details, connect with our experts at StartupFino.
