An OPC is a good alternative to running a sole proprietorship, largely because it gives limited liability to the business owner. This means that your liability is limited to the amount you’ve invested in the business; business debts cannot be recovered from personal possessions. Also, a sole proprietorship ceases to exist on the death of its promoter. In the case of an OPC, the nominee director takes over and the entity continues to exist. Single entrepreneurs who do not have another partner to start a private limited company may also consider it.

Only Indian residents can register an OPC, and that, too, only one at a time, as per the specifications of the Ministry of Corporate Affairs.

All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.

There is no difference in capital requirement between an OPC and a private limited company. It needs an authorized capital of Rs. 1 lakh to begin with, but none of this needs to be paid-up. This means that you don’t need to invest any money into the business.

No general advantages; though some industry-specific advantages are available. Tax is to be paid a flat rate of 30% on profits, Dividend Distribution Tax applies, as does Minimum Alternate Tax.

The MCA is skeptical about a single person in charge of a large corporation. Therefore, it requires all OPCs to be converted into private limited or public limited companies on crossing a certain revenue number. Currently, in case of an average turnover of Rs. 2 crores or more for the three consecutive years or a paid-up capital of over Rs. 50 lakh, the OPC must mandatorily be converted into an OPC.

An OPC has certain limitations. The person starting the business is its only director and shareholder. There can be a maximum of 15 directors in OPC. There is also a nominee director, but this person has no power whatsoever for raising equity funds or offer employee stock options. The nominee exists only to take over in case of the death or incapacitation of the director. The nominee is chosen by the director and can be anyone, such as your spouse, parents or siblings. The nominee will need to provide identity proof during registration.

Yes, One Person Company will be formed as similar to a “Private Limited Company”. It can be formed a company limited by share capital or limited by guarantee or unlimited company. The words “One Person Company” will have to be mentioned in brackets below the name of such a company, wherever its name is printed, engraved or affixed.

OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct the Annual General Meeting (AGM), so lesser compliance cost than a private limited company.

Only a person, who is an Indian citizen and resident in India, shall be eligible to incorporate a One Person Company. For becoming a director in a company, no professional or educational qualification is required. Any individual can become a shareholder in a one person company.

Only a natural person who is an Indian citizen and a resident in India is eligible to be a nominee member. A nominee must also be over 18 years of age.

Voluntary conversion When a One Person Company gets incorporated, it cannot convert itself to a Private or Public company for a period of not less than two years from the date of incorporation. Means if you want to get converted voluntarily you have to wait for two years to over. Compulsory Conversion When a One Person Company has a paid-up capital more or equal to Rs. 50 lakhs or, the Annual turnover for the relevant financial year exceeds Rs. 2 crores, then in such conditions, the company has to compulsorily convert itself into Private Limited Company or Public Limited Company.

Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and may be struck off from the register after some time. A struck-off Company can be revived for a period of up to 20 years.

No, an NRI or Foreign National cannot be a shareholder for an OPC.

Yes, a salaried person can become the director in an OPC, there is no legal bondage in this, but you have to go through with your employment agreement if it contains any restrictions on doing so.

Change in membership to be informed in Form INC-4 for providing new member’s details. • Inform RoC in Form INC-5 about the requirement of conversion into the private or public company if the threshold limits exceed within 60 days.

Form INC-6 shall be filed by an OPC for conversion into the private or public company within 30 days in case of voluntary conversion & within 6 months in case of mandatory conversion.

Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in the case of intimation of change in nominee by the member.