🧾 Introduction
In the evolving landscape of Indian entrepreneurship, the introduction of the One Person Company (OPC) model under the Companies Act, 2013, has served as a revolutionary step. Designed for solo entrepreneurs who aspire to start a company with limited liability and corporate status, an OPC provides the flexibility of a sole proprietorship while ensuring the legal benefits of a private limited company.
The concept of OPC has unlocked immense opportunities for individuals who wish to operate as a corporate entity without the complexities of managing multiple shareholders. It allows a single entrepreneur to enjoy the status of a company with a separate legal entity, perpetual succession, and limited liability protection. This structure is especially suitable for start-ups, consultants, traders, freelancers, and anyone with a unique business idea wanting to formalize their operations under a legally recognized framework.
However, with these advantages come a set of structured legal requirements and responsibilities. Establishing and running an OPC is not devoid of legal formalities. It requires thorough compliance with company law provisions, tax regulations, and other statutory mandates that govern corporate operations in India.
This comprehensive guide explores the legal requirements for setting up and running a One Person Private Limited Company in India . We'll cover registration procedures, compliance requirements, taxation, annual filing mandates, mandatory forms, record-keeping obligations, and potential penalties for non-compliance. This article aims to empower entrepreneurs with a clear understanding of what it takes to legally operate an OPC and how to ensure smooth, risk-free business continuity.
As per Section 2(62) of the Companies Act, 2013, an OPC is defined as a company that has only one person as a member. It combines the advantages of both sole proprietorship and company form of business.
🔹 OPC must be incorporated as a Private Company .
🔹 The words “One Person Company” must be mentioned below the name of the company.
🔹 Only a natural person who is an Indian citizen and resident in India is eligible to form an OPC.
✔️ Only one director and one shareholder is allowed.
✔️ The same person can act as both shareholder and director.
✔️ The individual must be a resident of India (staying in India for at least 120 days during the financial year).
✔️ No person is allowed to incorporate more than one OPC or become a nominee in more than one OPC.
✔️ An OPC cannot be incorporated or converted into a company under Section 8 of the Act.
✔️ An OPC cannot carry out Non-Banking Financial Investment activities.
The process of incorporating a One Person Company is streamlined through the MCA’s SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) portal.
Obtain DSC (Digital Signature Certificate)
Apply for DIN (Director Identification Number)
Name Reservation via SPICe+ Part A
Filing SPICe+ Part B with e-MoA (INC-33), e-AoA (INC-34), AGILE-PRO, INC-9
Declaration by the subscriber (INC-9)
Consent of Nominee (INC-3)
Filing of SPICe+ form with MCA
📄 Documents Required:
MoA and AoA define the operational scope and rules of the company.
✔️ Must include the name of the nominee who will take over in case the sole member dies or becomes incapacitated.
✔️ Needs to be signed digitally and submitted with the incorporation forms.
Section 3(1)(c) of the Companies Act mandates that the sole member of the OPC must nominate another person who shall, in the event of the subscriber's death or incapacity, become the member of the company.
📌 The nominee's consent is to be obtained using Form INC-3.
📌 The nominee can be changed at any time by filing the necessary forms with the ROC.
Once the OPC is incorporated, several legal and regulatory compliance obligations follow:
📅 Annual General Meeting (AGM) is not required for OPCs.
✅ If the OPC’s paid-up share capital exceeds Rs. 50 lakhs or average annual turnover exceeds Rs. 2 crores , it must convert into a private or public limited company.
✅ Statutory audit under the Companies Act is mandatory for OPCs regardless of turnover.
✔️ Maintain proper books of accounts
✔️ Appoint a statutory auditor within 30 days of incorporation
✔️ Audit the financial statements annually
Like other private limited companies, OPCs are taxed at the rate of 22% under the new regime (subject to conditions).
✔️ GST Registration: Mandatory if turnover exceeds Rs. 40 lakhs for goods and Rs. 20 lakhs for services.
✔️ TDS Deduction: Required if liable under the Income Tax Act.
✔️ Advance Tax: Applicable in quarterly installments if income exceeds Rs. 10,000 per annum.
Voluntary Conversion: Mandatory Conversion:
OPCs must maintain statutory registers such as:
Documents should be stored at the registered office and be open for inspection.
Non-compliance with the legal obligations can attract significant penalties:
✔️ Failure to file annual returns can lead to fines up to Rs. 10,000 and Rs. 100 per day of default.
✔️ Late appointment of auditor attracts a penalty of Rs. 300 per month.
✔️ Failure to convert when required may attract ROC intervention and statutory action.
The OPC model in India is ideal for individual entrepreneurs seeking the benefits of incorporation without the hassles of multiple shareholders. However, with great flexibility comes the responsibility of legal compliance. From registration to taxation, maintaining records, and adhering to corporate laws—compliance is essential to avoid penalties and ensure smooth operations.
At Taxaj Corporate Services LLP , we specialize in guiding entrepreneurs through the entire lifecycle of an OPC, from incorporation to regular compliance, taxation, and conversion. For any assistance, feel free to connect with our team.
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Created & Posted by Himanshu Shakya
Account Executive at TAXAJ
TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business , Trademark & Brand Registration , Digital Marketing , E-Stamp Paper Online , Closure of Business , Legal Services , Payroll Services , etc. For any further queries related to this or anything else visit TAXAJ
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