As per Section 2(62) of the Companies Act, 2013, One Person Company is a company that comprises a single person as a shareholder and can be contrasted with private companies. The members of a company are nothing but subscribers to its Memorandum of Association (MoA), or its shareholders. These companies get all the benefits of a private company such as they to have access to credits, bank loans, limited liability, legal protection, etc. It is to be noted that private companies comprise a minimum of two members. Apart from One Person Company mode, an individual can get into the business through a sole proprietorship mode too.
Features of One Person Company
1- An individual can form a company for any lawful purpose. As per the Companies Act, 2013, OPCs are private companies.
2- While registering the company as OPC, an individual is required to mention a nominee.
3- In case of the death of the owner of OPC, the nominee has the right to choose or reject to become the sole owner of the company.
4- OPCs can have a maximum of 15 directors.
Benefits of One Person Company
Only One Shareholder – Only a natural person who is an Indian resident shall be eligible to incorporate an OPC. The person must have stayed in India for a period of at least 182 days in the preceding one year.
Single Promoter – OPC is the only corporate entity that can be started and operated by a single promoter with limited liability protection in India and ensures the perpetual existence if the business along with easy ownership transferability.
Nominee for the Shareholder – The only owner of the OPC shall nominate another person who shall become the director in case of incapacity/death of the original director. Only a natural person who is an Indian resident is eligible to become a nominee of the OPC.
Uninterrupted Existence – The incorporated OPC has a ‘perpetual succession”, i.e., uninterrupted existence until it’s been legally dissolved. Since the company has a separate legal existence, it is unaffected by the death or departure of any member and continues to be in existence irrespective of the changes in its ownership.
Easy Transferability –The ownership of an OPC can be transferred easily by transferring the company shares. The signing, filing, and transfer of share certificates and shares transfer forms are sufficient to transfer the ownership of the company. In OPC, ownership can be either transferred by altering the nominee director’s information, shareholding, or the directorship.
Borrowing Capacity –It is very much noticeable that the banks and other financial institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns. However, an OPC cannot issues multiple types of equity security as it is owned by one person at all times.
Owning Property – A company enjoying the status if artificial person is eligible to acquire, own enjoy and alienate property in its name. The property that is owned by the company could be buildings, land, machinery, intangible assets, factory, residential property, etc. Additionally, the nominee director is prohibited to claim any ownership of the company while serving as the nominee director.
Income Tax Rate For One Person Company
For taxation purpose One person company is treaded similar to Private Limited Company. Each OPC company registered in India need to file income tax return. OPC ITR filing is mandatory even though OPC have no profit or no transactions. Income Tax Rate for One Person company is 25% . Below is details of Income Tax rate for One person company. Over and above income tax surcharge & Education cess is applicable.
One Person Company (OPC) Annual Filing
As far as the OPC Annual Filings (OPC Annual Compliances) are concerned, these are just fewer as compared to those required by a private or public limited company; and hence, its compliance cost is just medium.
An OPC is required to file 2 forms annually namely, MGT 7 and AOC 4.
E-Form AOC 4 due date
This is to be filed with relevant ROC, within 180 days of the close of financial year.
That means the due date for AOC 4 for OPC shall be 27th September, every year. (If we count 180 days from 1st April )
This compliance offers information about all monetary transactions and finances made by the OPC in the mentioned financial year.
In case of an OPC, the annual financial reports contain only particulars such as Balance Sheet, Profit and Loss Account, Auditor’s Report, and the Consolidated Financial Statement.
ROC Form MGT 7 Due date
This is one most important ROC return filing for an OPC (One Person Company), which contains current/updated information about the directors and shareholders of the OPC.
The due date of filing this compliance with the relevant ROC is within 60 days from the date of AGM.
That means if AGM is on 30th then ROC Form MGT 7 due dates for FY 2020-21 would be 28th November, 2021.
However, One Person Company does not require to hold AGM, yet the due date for filing Form MGT 7 shall be 60 days from the completion of the 6 months from the end of financial year, that means the due date shall be 28 November.
Incorporation through SPICe (Without filling RUN)
Stakeholders can avail of 5 different services (Name Reservation, Allotment of Director Identification number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN) in one form by applying for Incorporation of a new company through SPICe form (INC-32) - Simplified Proforma for Incorporating Company electronically (SPICe) - with eMoA (INC-33), eAOA (INC-34). In case eMoA, eAoA are not applicable, users are required to attach the pdf attachments of MoA and AoA. There is no need for reserving a name separately before filing SPICe. One name for the proposed company can be applied through SPICe (INC-32).
Incorporation through SPICe (With RUN)
Name reservation: RUN service shall be used for name availability. Incorporate OPC: After name approval, form SPICe shall be filed for incorporation of the OPC within 20 days from the data of approval of RUN. The company shall file form INC-22 within 30 days once form SPICe is registered in case the address of correspondence and registered office address is not same.
Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.
Yes, the private company will also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.