This article describes elucidation, benefits and procedure of formation of One Person Company in India.
The concept of One Person Company was introduced in Companies Act (2013). It encompasses the features of both the sole proprietorship and a company. Further, just like sole proprietorship firm only one person owns and manages the affairs of the one person company. However, unlike sole proprietorship firm, the identity of the one person company is separate from the identity of the members.
Benefits of One Person Company :-
- Limited Liability- The liability of the sole members of the one person company is limited to his own share as the one person company is considered as a separate legal entity from its member.
- Fewer Compliance requirements-The compliance requirements for one person company is comparatively very less as compared to other forms of companies like the private limited company, public limited company etc.
- Legal status- Registration of one person company helps them to attain a legal status and recognition in the business world. Further, it gives the suppliers and customers a sense of confidence in the business entity.
- Perpetual succession- The life of the one person company is not affected by the life of its sole member. As in case of death/disability of the sole person another individual nominated as nominee director can be appointed. On the demise of the original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member.
- Easy to obtain loans- Due to their legal status many Banking and financial institutions prefer to lend money to the company rather than proprietary firms. So it is better to register your startup as a One Person private limited rather than proprietary firm.
Requirement for Incorporating One Person Company
- One Director
- One member
- One nominee
- Digital Signature Certificate(DSC)
- Director Identification Number(DIN)
Procedure for Registering One Person Company in India
Step-1- Acquiring DIN through E-fORM DIR-3
Director identification number is the unique number that is issued by the ministry of corporate affairs to the person who is intending to be the director of the proposed company. DIN can be obtained by filing DIR-3 with the ministry of corporate affairs. A valid DIN number can be obtained by any person by filing the below -mentioned documents-
- Self-attested PAN card copy.
- Four Photographs.
- Self-attested copy of any one of the Identity Proof like Driving License, Passport, Voter ID & Aadhar Card
- Self-attested copy of any one of the Address Proof like Bank Pass Book/Bank Statement, Telephone Landline Bill, Mobile Bill & Electricity Bill
- Company Address proof Electricity Bill, Telephone Bill, Mobile Bill & Gas Bill AND Rent Agreement (If Rented) AND NOC for doing Business & for taking Registration
Step-2 – Application for digital signature certificate
Every person who is proposed to become the director of the company is required to obtain a digital signature certificate. DSC is required as it is mandatory to be attached with the documents filed electronically for the purpose of verification. Further, a person is required to file following documents to obtain DSC-
- Photocopy of PAN card.
- Address Proof like Bank Pass Book/Bank Statement, Telephone Landline Bill, Mobile Bill & Electricity Bill
- DSC application Form
- One passport Size Photo
Step-3 Application for Name Availability
The proposed company is required to make an electronic application in FORM INC-1 with the registrar of companies for name availability. The proposed name shall end with the words private limited (OPC). Further, the various guidelines of the MCA regarding the same shall be considered.
Step-4- Drafting Of memorandum of Association and article of association
Further, the MOA and AOA of the proposed company shall be drafted.
Memorandum of Association- Memorandum of association is a document which defines the relationship of the shareholders with the company. It basically contains the objectives and powers of the company.
Articles of association- They are the bye-laws which define the relationship of the company with outsiders. Information such as the total number of members, share capital, rules for a meeting of the company, voting power of members must be included in the Articles of Association.
Step-5-Filing of electronic Forms with ROC
The applicant is required to file the following documents with FORM INC-2
- Memorandum of Association’
- Article of Association
- Identity proof of member and the nominee
- Address proof of member and the nominee
- Copy of Pan Card of member and the nominee
- Consent of nominee in INC-3
- Affidavit from the subscriber and the first director to the memorandum in FORM INC-9
- List of the all the companies having the same registered office.
- Specimen signature in INC-10
- Proof of Registered Address of the company.
- Consent of Directors
- Particulars of subscribers t MOA and AOA
- INC-8 declaration by CA or CS.
- Two passports of member and nominee.
Step-6 Issue of Certificate of incorporation by ROC
As soon as the application submitted along with the documents are approved by the ROC the Certificate of Incorporation is generated and is shared with the directors.
