OPC Registration

By Filing up form INC4, in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.

When paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.

The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.

Form INC-5 shall be filed within sixty days of exceeding threshold limits.

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.

A person can be member in only one OPC.

? Independent Existence: ? The One Person Company is considered as a separate legal entity. In the eyes of the law, a company is a person, having a common seal, and perpetual succession. It gets the authority to exercise all the functions of an incorporated person. ? Limited Liability: ? Unlike public limited company & private limited company , the concept of limited liability of One Person Company in India implies that the liability of the member is will be up to the extent of his share in the company. In an OPC, one person holds the entire share and has complete authority over the operation of the business. So, it can be elucidated that the liability of the person will be to the extent he has invested in the business. ? Separate Property: ? An OPC will have its own separate property as it gains its own identity and functions as a separate legal entity. The OPC will become the owner of its assets, and the members will not have any insurable rights in the assets of the company. ? Transferability of Shares: ? OPC has only one shareholder. The issue of transferring a portion of the share does not arise at all because if it is done, the company will cease to be a “one person” company. Transferring all the shares is also not practicable as it’ll change the entire structure of the company as the owner of the company is changing. The issue has not yet been dealt with, and interpretation of the law may provide us with the explanation that in an OPC, transfer of share is not allowed. ? Tax Flexibility and Savings: ? OPC make a valid contract with its shareholder or directors. This means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can advance money to your own company and earn interest. Directors’ remuneration, rent and interest are a deductible expense which reduce the profitability of the Company and ultimately brings down taxable income of your business. ? Complete Control of the Company with the Single Owner: ? OPC is completely controlled and managed by the Single Owner. It leads to quick decision making and execution. The sense of belonging motivates to grow the business further. ? Legal Status and Social Recognition for Your Business: ? One person company is the most popular business structure in the world. Large organizations prefer to deal with private limited companies instead of proprietorship firms. Private Limited business structure enjoys corporate status society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations, like directorships.

? Compliance Burden As OPC has more focus on various functional and core areas, OPC have to face a little burden as compared to private limited companies. ? Annual Return Filing One Person Company’s annual return is compulsorily signed by a director. OPC is generally not allowed to receive mandatory requirement of company secretary signature. ? High Tax Rate In the case of One Person Company, you are directly charged 30% income tax. The high tax rate is a big disadvantage of one Person Company. ? OPC included in Name One Person Company is compulsorily mentioned after the company name in brackets. When you initiate the business with a few shareholders, the administration is not dedicated and you end offering impression to the customers. ? Not Suitable for Turnover Experts mostly suggest going for a private limited company than one Person Company when the turnover is a bit high and effective. Setting up OPC, conversion of one Person Company into a private limited company is not believed to be a good decision.

This setup allows a sole proprietor to do business and still enjoy corporate structure. Being a separate legal entity, the liability is limited to the amount unpaid by the members.