How OPC Registration Is Revolutionizing Small Business Ownership?

The introduction of OPC (One Person Company) by the amended Companies Act 2013 was a strategic move to encourage corporatization of small businesses. The OPC system provided entrepreneurs simpler legal regime, minimal compliances, and easy way to establish a company that contributes to economic growth.

Company Formation for One Person was mooted in the recommendations of Dr. JJ Irani’s Committee. The act legalized OPC which can be registered by just a single person, unlike private companies that require a minimum of 2 members and public companies that need at least 3 members. It mandated such companies to suffix the term ‘OPC’ with its name. One of the most important features of OPC is that the liability of its members is limited to the extent of shares value held by them.

This comprehensive blog outlines how One Person Companies (OPCs) offer a streamlined and legally distinct structure to form a company and what requirements it must fulfill to stay operational.

How OPC Registration is Transforming Small Businesses?

As per the Companies Act 2013, section 2(62), OPC refers to a company that has only one individual as its member. The act mandates the owner of OPC to appoint a nominee who cannot be a minor or hold beneficial interest. Both the nominee and member must be a natural person, a citizen of India, and must have resided in India for a minimum of 182 days in the previous calendar year. Such companies cannot undertake any financial investment activities and cannot convert into any other type of company unless 2 years have expired. Similarly, an OPC cannot be incorporated as a section 8 company under the Companies Act 2013.

OPCs are transforming the corporate landscape by allowing small businesses to not be bothered by too many compliances. It provides an outlet to those individuals who aspire to execute their entrepreneurial ideas and venture into the corporate world with ease and streamlined procedures. In addition, it provides the following benefits to small businesses:

• Single Ownership and Control: OPCs introduced by the Companies Act 2013 allow a single individual to incorporate and manage a business. This individual holds complete control over the business, empowering him/her to make all decisions related to the company’s operations, management, and strategies. Complete autonomy further allows for efficient and quicker decision-making in the business.
• Limited Liability: One-person companies provide a layer of protection to their members or shareholders. The liability of members remains limited to the unpaid amount on their shares as mentioned in the MOA (Memorandum of Association). It means that creditors cannot go after the personal assets of the owner to cover the company’s debts and liabilities. Limited liability allows small entrepreneurs to take the risk of doing business without any liability or legality getting attached to their personal assets.
• Separate Legal Entity: OPCs also have separate legal entity from its members and shareholders. It means a company and their member are two different entities for all purposes. This way, the company can manage its own assets where it can buy or sell properties and other assets under its own name. Similarly, OPCs can enter into contracts and engage in legal proceedings just like any other company. Further, it can sue or get sued in its name.
  
• Simplified Compliance: Such companies enjoy certain exemptions from some procedures and filings. For instance, OPCs are not required to hold annual general meeting and get their annual returns signed by a company secretary. Similarly, they are not mandated to file CFS (Cash Flow Statement) which is necessary for the majority of the companies. In addition, OPCs are exempt from auditor rotation if their turnover is less than INR 2 crores.
• Perpetual Succession: An OPC’s existence is not dependent upon the existence of its member(s) and thus it has a perpetual succession. Sole proprietors (which are also established by a single person) do not offer this feature and cease to exist at the demise or incapacity of the owner of the business. However, OPCs provide small businesses the right to continue existing despite the change in their ownership, membership, or management. The company continues to operate even after the demise or incapacity of the member and allows the nominee to take over.
• Nominee Requirement: In OPC registration, a nominee ensure business continuity and protect the interest of stakeholders. Nominee takes over a business when its sole member is unable to continue due to demise or incapacity. A nominee step in to take over the company’s affairs and fulfil obligations in the absence of the sole member. It also ensures smooth transition of management and control in instances of original member’s death or disability.

Also Read This – OPC V/s Foreign Company: Which Is Better For Entrepreneurs

OPC Growth in 2025 Key Trends include rise in AI and technology backed One Person Company where process is becoming automated, decision making is getting optimized with the help of data analytics and AI-powered tools.

Annual Return Filing by One Person Companies in India

Every OPC is required to prepare an annual return in the prescribed format, including the following particulars:

• Details of principal business activities, registered office, and information regarding holding, associate, and subsidiary companies.
• Details regarding indebtedness.
• Shared, debentures, shareholding patterns, and holding of other securities.
• Information regarding promoters, directors, KMPs (Key Managerial Personnel), along with changes made since the last financial year.
• Remuneration of KMPs and directors.
• Members and debenture-holder data.
• Meetings of the board of members along with details about various committees, including attendance details.
• Punishment or penalty imposed on the company, directors, officers, etc.
• Details in respect of shares held by investors, including their names, address, percentage of shareholding, etc.

Note: Annual returns is a document that includes the above mentioned details including company’s share capital, promoters, directors, registered office, etc.

What are the Exemptions Available to OPCs in India?

Company Formation for One Person is eligible for certain exemptions provided under the Companies Act 2013. These exemptions are as follows:

• Section 96: This section of the Companies Act 2013 exempt OPCs to hold AGMs (Annual General Meetings). Instead, OPCs are required to prepare minutes of the meeting which must be communicated to the member and recorded in the statutory minutes book.
• Section 98: The section empowers the tribunal to call, hold, and conduct meetings of the members which is not applicable to the OPCs.
• Section 100: Since OPCs typically have one director, the provision of this section which deals with the calling of EGMs (Extraordinary General Meetings) does not apply.
• Section 101: Deals with notice of meetings to be provided at least 21 days before the date of general meeting. This too is not applicable on OPCs.
• Section 103: This section deals with the minimum quorum requirement for company meetings.
• Section 111: OPCs are exempted from the requirement of this section that deals with the circulation of members’ resolutions.

By Incorporating Sustainable Practices in OPC Operations, such companies can avail the maximum benefit of exemptions which streamlined and reduce the burden of various compliances on them. OPCs can implement strategies to responsibly source their raw materials, minimize waste generation, and establish
reuse and recycling programs, among others.

What is the Registration Process of One Person Company?

• Obtain a Digital Signature Certificate (DSC) for the proposed director(s)
• Obtain DIN (Director Identification Number) for the proposed director(s)
• Select suitable name for the company and make application to the MCA (Ministry of Corporate Affairs) and check whether the proposed name is available or not.
• Draft MOA (Memorandum of Association) and AOA (Articles of Association)
• Sign and file required documents along with MOA and AOA with the ROC (Registrar of Companies) electronically.
• Pay the required fee to the MCA and stamp duty.
• ROC will then scrutinize the submitted application form and documents.
• Upon successful verification, ROC will grant the Certificate of Incorporation to the applicant.

Also Read This – How Technological Advancements Are Shaping OPC Management?

E-Filing Rules of Company Formation for One Person

The following are the important instructions for e-filing the OPC registration form:

• After obtaining name approval, an applicant is required to file e-Form INC 2 (e-filing) for incorporation of a One Person Company (OPC).
• It is mandatory to pay stamp duty electronically via MCA (Ministry of Corporate Affairs) portal in states which have authorized the central government to take stamp duty on their behalf.
• In case a company have share capital, it is necessary to provide break up details of authorized and subscribed share capital.
• Applicants are required to enter the address details of the police station under whose jurisdiction the company’s registered office is located.
• Users are required to file DIR 12 e-Form in case director and promoter of the company are not the same persons.
• In case the subscriber and director are the same person, it is necessary to attach a consent declaration.
• Every OPC is mandated to provide a name in the nominee clause. The individual must be a natural person and a resident of India.
• The name of the nominee should be mentioned in the MOA (Memorandum of Association).

Is It Necessary to Hire a Professional for OPC Registration? Although not mandatory, hiring professionals like a Chartered Accountant, Company Secretary, or Cost Accountant is highly recommended to ensure a smooth and speedy registration and compliance process.

Final Thoughts

Company Formation for One Person is considered ideal for traders and entrepreneurs who intend to operate on a small scale and take as minimal risk as possible. With the introduction of One Person Company (OPC), it has become easier for entrepreneurs to showcase their capabilities and provide the best services in the global arena. When compared to sole proprietors, OPCs are organized business units that are established within the legal supervision and regulation of the Companies Act 2013. The act strengthens the units by making them a separate legal entity, offering the feature of limited liability, and enabling owners to have complete autonomy over their operations.

OPCs are gradually turning into the most preferred form of business organization specially for start-ups and small businesses. OPC registration in India require minimal paperwork and compliances and hold bright future for aspiring entrepreneurs. Consult with Legal Raasta to better understand various aspects of One Person Company formation in India. Avail the benefits of OPC and get detailed insights into the nuances of regulatory provisions for company registration.