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Overview

A sole proprietorship is owned and managed by a single person. Sole proprietorships are attractive to small investors because they are relatively easy to start. In addition, the owner is entitled to all the profit that the sole proprietorship earns as well as the business owner is also held directly responsible for any losses, debts, or violations coming from the business. For example, if the business must pay any debts, these will be satisfied from the owner's own personal funds and also business does not continue if the owner becomes deceased or incapacitated since they are treated as one and the same.

Starting a One Person Company removes all the above problems and gives more advantages for the small traders, businesspersons and entrepreneurs, as the registration and maintenance cost for the company is minimal. Incorporating business as a One Person Company would render it as a Separate Legal entity with perpetual succession and also with limited liability. A One Person company (OPC), as a name suggest, can be registered with a single person as a Director cum shareholder. One-person company provides more advantages compared to proprietorship such as Limited Liability, legal Status and Corporate Identity, Quick Decision Making, Flexible in Management, easy bank operation, reduced taxation burdens.

Prerequisites

  • One shareholder who shall be a Indian resident.
  • Minimum one director, Only individuals can be designated as directors of a company.
  • A person appointed as nominee.
  • The name of a One-Person Company shall end with the words ‘(OPC) Private Limited’

Documents

Identity Proof: Scanned copy of PAN Card of all directors, nominee and Aadhar card/ Voter ID/ Passport/ Driving License.

Address Proof: Latest Bank statement/ Utility bill in the name of director and nominee  which should not be older than two months

Registered Office Proof: No Objection Certificate (NOC) from the owner, Utility bill (should not be older than two months) and Notarized Rent agreement (in case of rented property)/ Registry Proof or House Tax Receipt (in case of owned property)

Consent of nominee: Written consent of nominee is required to be filed with the Registrar of Companies (RoC)

Passport size photograph: Latest Passport sized photograph of the directors and nominee.

Procedure

Below is the procedure of converting Sole Proprietorship into One Person Company:

1. DIN: Obtaining Director Identification

2. DSC: Acquiring Digital Signature Certificate

3. COMPANY NAME: Apply for name approval

4. MOA AND AOA: Drafting Memorandum of Association and Articles of Association

5. FILE E-FORMS: Signing and Filling various documents including MOA and AOA in respective E-forms with respective of Companies

6. CERTIFICATE OF INCORPORATION: Receipt of Certificate of Incorporation from Registrar of Companies.

Benefits

No Minimum Capital: There is No minimum capital is required to form a One Person Company.  It can be registered even with Rs. 10,000 as total Authorized Share capital.

Separate Legal Entity: An OPC enjoys the benefit of Separate Legal Identity which clearly states that assets and liabilities of the business are not the assets and liabilities of the Directors or shareholders.

Limited Liability: A shareholder or the owner of a Company has a limited liability towards the company. His/her liability is limited up to the shares subscribed by him/her.

Minimum compliances: For the purpose of Annual filing and other compliances, One Person Company is treated as a Private Limited Company. However, it is exempted from many compliances. It does not have to hold AGM every year.

Builds Credibility: All the information relating to the one person company are made available in a public database. This feature makes it easy to authenticate the existence of the business that ultimately helps in improving business credibility.

Perpetual succession: The company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its member or shareholder. It continues as a legal person until it is legally dissolved.

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