The Companies Act 2013, introduced the concept of One Person Company in Chennai (OPC) in India. This enabled the entrepreneurs to start a venture if they are capable of doing so. It is important to note here that the rules do not permit non-banking financial institutions to register as OPC. It encourages self-employment within the ambit of India’s legal system. There can be only one member in an OPC. Only a natural person who is a resident of India in the preceding calendar year (who has stayed in India for a minimum of 182 days) can form an OPC. The member of the OPC cannot incorporate more than one OPC.
Advantages of One Person Company in Chennai are:
Separate legal entity:
The One Person Company enjoys the status of a separate legal entity from its promoters. Therefore, the entrepreneur is capable of doing what he/she wants.
Easy funding:
It is easier for OPC to raise funds through venture capital, financial institution or angel funding. One may even choose to raise funds by converting into a private limited company.
Limited liability:
The liability of the OPC is limited to the extent of the share held by the individual. Therefore, it enables the individual to take more risk in business. More opportunities are provided without affecting or suffering a loss of personal assets.
Benefits of being a small scale industry:
Benefits can be availed by achieving a lower rate of interest on loans, easy funding from banks without a security deposit, etc. All these benefits help to establish a business in its initial years.
Taxation benefits:
Unlike proprietorship, as per the Income Tax Law, any remuneration paid to the director of an OPC will be allowed as deduction.
Increased trust:
Company form of business allows an increased trust and prestige than the other forms of business.
Receive interest on late payment:
Under the Enterprises Development Act, 2006, an One Person Company can avail benefits because it is newly start-up, micro, small or medium. It is entitle to receive interest that is three times the bank rate.
Compliance requirement:
The compliance requirements are lesser in comparison to the private company.
This single person economic entity also has a certain limitation:
Every OPC will have to nominate a Director in the Memorandum of Association and Articles of Association of the company. It will mention the details of the person who is eligible to become the owner of the OPC if the sole Director is disable.
In case the annual turnover of OPC crosses 2 crore rupees, it must be convert into a Private Limited Company. Further, audited financial statements must be file with the Ministry of Corporate Affairs at the end of each financial year.
A minor, foreign citizen, non-resident, or any person incapacitated by contract are not eligible to form an OPC.
It is important to consider all the advantages and limitations of an OPC before an entrepreneur incorporated.
One Person Company in Chennai (OPC): Process of Registration
According to Ministry of Corporate Affairs, one person company in Chennai registration process can be detailed as:
Application for Digital Signature Certificate (DSC):
To obtain a DSC, the proposed director will require documents regarding; address proof, Aadhar card, PAN card, photograph, and email-id and phone number. DSC is important as all the company registration process are done digitally.
Application for Director Identification Number (DIN):
The proposed director will have to fill the SPICe Form to avail DIN. The details of name and address proof of the Director has to be submit here. In case the company already exists, Form DIR 3 has to be fill.
Name Approval Application:
The name for company registration can be approve either by making an application in Form SPICe 32 or by using RUN web service of Ministry of Corporate Affairs. One prefer name along with the signature have to be given. The ministry will decide to permit two proposed names along with one re-submission. The name of the company once approved shall affix private limited at the end, for instance, ABC (OPC) Private Limited. You can conduct your company name search here.
Documents required for submission to the Registrar of Companies (RoC):
The Memorandum of Association (MoA) stating the business for which an OPC will be incorporate.
The Articles of Association (AoA) stating the bye-laws for the operation of a business. A nominee have to be appoint. The nominee will take charge in case the director dies, or become incapacitated or is unable to perform his duties.
A proof of company registered office: proof of ownership and a NOC of the owner. Affidavit and consent of the proposed director.
A professional declaration certifying that all compliances have create.
Filing forms with MCA: In order to complete the OPC Registration, all the above-mention documents will have to be attach to SPICe Form, SPICe-MoA, and SPICe-AoA along with the DSC of the director and the professional. The same would be upload by the MCA on the website for the purpose of approval. Further, PAN and TAN are generate for the OPC which will be upload to MCA after affixing the DSC of the propose Director.
Note: In January 2020 The Ministry of Corporate Affairs (MCA), notified to issue new form SPICe Plus as a part of India’s Ease of Doing Business initiatives.
The issue of Incorporation Certificate:
After verification, RoC will issue a Certificate of Incorporation. Thereby, the business shall commence.
Post OPC registration, it is the duty of every OPC to follow basic mandatory compliances:
At least one board meetings have to be happen in 6 months. The time gap between the board meetings should not be less than 90 days.
Proper book of accounts has to be maintain.
Statutory audit of financial statements has to be follow
Business income tax returns have to file every 30th September.
Financial statements in Form AoC-4 and RoC annual return in Form MGT 7 have to be fill.
Thus, One Person Company in Chennai is a new form of business that allows an entrepreneur to operate a corporate entity single-handedly. The average time taken to complete the registration process may be around 10 to 15 days. Changes in the same are subject to changes in government processing time.