Setting up a One Person Company
A Public Limited Company is a widely preferred business structure in India, especially for enterprises looking to expand and raise capital. Governed by the Companies Act, 2013, it provides a well-defined legal framework, ensuring transparency, limited liability, and greater credibility.
Whether you are a growing business or an established enterprise planning to go public, registering as a Public Limited Company offers significant advantages, including easier access to capital through public investment, enhanced trust among stakeholders, and legal protection for shareholders, making it an ideal choice for large-scale business growth.
A One Person Company (OPC) is a type of business entity in India governed by the Companies Act, 2013. It allows a single individual to operate a company with limited liability, a separate legal identity, and minimal compliance requirements. OPC is an ideal structure for solo entrepreneurs who want the benefits of a corporate entity without the requirement of multiple shareholders.
Any individual who is an Indian citizen and resident in India can register an OPC. However, an individual can incorporate only one OPC at a time and cannot be a nominee in more than one OPC.
Minimum Number of Directors: At least one director is required, with a maximum of 15 directors.
Minimum Number of Shareholders: Only one shareholder is allowed, and it must be the same person as the director.
Minimum Capital: There is no mandatory minimum capital requirement, but details of authorized and paid-up capital must be provided.
Registered Office: A registered office address is mandatory and must be supported by valid proof, such as a rental agreement or utility bill.
Nominee Requirement: The sole shareholder must appoint a nominee who will take over in case of the shareholder’s death or incapacity.
The following documents are required:
PAN card of the director/shareholder
Aadhaar card or other identity proof
Address proof (e.g., utility bills or bank statements)
Passport-size photographs
Proof of registered office address (e.g., rental agreement or sale deed)
Consent of the nominee (Form INC-3) along with their PAN and Aadhaar card
Email and Mobile number
The registration process typically takes 10-15 working days, depending on the submission of complete documents and approvals from the Government.
Director: The director is responsible for managing the day-to-day operations and making strategic decisions for the company.
Shareholder: In an OPC, the sole shareholder and director are the same person, making the distinction less relevant compared to other types of companies.
Yes, an OPC is specifically designed for a single individual who wants to start a business with limited liability and corporate advantages.
Post-registration, an OPC must comply with:
Commencement of Business
Annual filing of financial statements and returns
Appointment of an auditor (even if no business activity is conducted)
GST, TDS, and income tax filings, as applicable
Mandatory board meetings if more than one director is appointed
No, only Indian citizens and residents can register an OPC. Foreign nationals and NRIs are not eligible to incorporate an OPC. However, they can invest in other forms of business entities such as Private Limited Companies or LLPs.
After incorporation, you receive the Certificate of Incorporation, PAN, and TAN. You can then open a corporate bank account, apply for GST registration, and commence business operations.
The cost varies based on factors like authorized capital, professional fees, and government charges. Contact us for a detailed quote tailored to your business needs.
Do's
For Shareholders:
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Understand Shareholding Rights:
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Familiarize yourself with rights like voting, receiving dividends, and inspecting company records.
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Participate in Meetings:
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Attend Annual General Meetings (AGMs) or Extraordinary General Meetings (EGMs) to stay informed about the company's progress.
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Stay Updated on Resolutions:
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Be aware of decisions requiring shareholder approval, such as issuing new shares or amending the Articles of Association (AoA).
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Transfer of Shares:
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Comply with the transfer process outlined in the company’s AoA.
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For Directors:
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Obtain a Director Identification Number (DIN):
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Ensure your DIN is active and updated in the Ministry of Corporate Affairs (MCA) database.
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Board Meetings:
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Conduct the first board meeting within 30 days of incorporation and hold at least 4 board meetings annually (1 every quarter).
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Maintain Statutory Records:
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Ensure registers like the register of members, directors, and share transfers are updated.
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Compliance Filings:
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File annual returns, financial statements, and other periodic filings (like DIR-3 KYC, MGT-7, and AOC-4) with the Registrar of Companies (RoC).
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Ensure Tax Compliance:
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Deduct and deposit TDS, file GST returns, and adhere to other tax obligations.
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Ensure Proper Governance:
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Implement internal controls, ensure transparency, and prevent conflicts of interest.
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For CEO & CFO:
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Strategic Planning:
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Develop and execute business strategies to achieve the company's goals.
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Financial Oversight:
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Ensure proper maintenance of financial records, budget adherence, and timely audits.
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Regulatory Compliance:
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Stay informed about legal and financial regulations affecting the company.
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Stakeholder Communication:
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Regularly update directors and shareholders on financial performance and other critical matters.
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Performance Monitoring:
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Monitor the company’s operations and take corrective measures when necessary.
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Don'ts
For Shareholders:
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Interfere in Management:
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Avoid micromanaging the day-to-day operations; this is the directors’ responsibility.
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Ignore Company Notices:
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Failing to respond to company resolutions or voting can affect your interests.
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Transfer Shares Arbitrarily:
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Follow the AoA’s stipulated procedure for transferring shares to avoid legal disputes.
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For Directors:
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Non-Compliance with Legal Duties:
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Failing to maintain records or submit returns can lead to penalties.
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Conflict of Interest:
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Avoid engaging in transactions where personal interests conflict with the company’s interests.
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Neglect Corporate Social Responsibility (CSR):
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If applicable, ensure CSR obligations are met (required for companies exceeding thresholds in turnover, net worth, or profit).
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Default on Statutory Payments:
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Ensure timely payment of taxes, PF, ESI, and other dues.
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For CEO & CFO:
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Mismanagement of Funds:
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Avoid misuse or misallocation of company resources.
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Delay in Financial Reporting:
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Ensure timely preparation and submission of financial reports to prevent non-compliance.
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Ignore Risk Management:
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Overlooking risks like market competition, cybersecurity, or compliance issues can be detrimental.
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Underestimate Stakeholder Expectations:
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Ignoring feedback from stakeholders, including employees and customers, can harm the company’s reputation.
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Limited Liability
Protection
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The personal liability of the owner (single shareholder) is restricted to the amount of capital invested in the company.
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In case of financial losses, personal assets like property, savings, and belongings remain protected.
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This reduces financial risk and makes an OPC a safer choice compared to sole proprietorships.
Perpetual Succession for Business Continuity
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The company’s existence is not affected by the owner's incapacity, retirement, or death.
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A nominee director is appointed at the time of incorporation to ensure business continuity.
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This ensures uninterrupted operations, unlike sole proprietorships, which dissolve with the owner's demise.
Separate Legal
Entity
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An OPC is recognized as a separate legal entity, distinct from its owner.
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It can own property, enter contracts, take loans, sue, or be sued in its own name.
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This enhances credibility and allows long-term business operations without personal interference.
Enhanced Credibility and Market Reputation
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A One Person Company is registered with the Ministry of Corporate Affairs (MCA) and governed by the Companies Act, 2013, making it more trustworthy than unregistered businesses.
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It enhances credibility with clients, investors, suppliers, and government authorities.
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Many corporate and government contracts prefer working with registered entities over sole proprietors.
Full Control with Corporate Structure
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Unlike private limited or public limited companies, an OPC allows a single individual to own and manage the business.
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The owner enjoys complete decision-making power without the need for multiple directors or shareholders.
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Despite single ownership, an OPC maintains a professional corporate structure, offering long-term stability.
Tax Advantages and Government Incentives
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OPCs enjoy lower corporate tax rates compared to individual taxation on businesses.
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They can claim deductions on business expenses, depreciation, and other operational costs.
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OPCs can avail of government subsidies, MSME benefits, and startup incentives.
Easier Fundraising and Loan Approvals
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Compared to sole proprietorships, OPCs enjoy higher credibility among investors and banks.
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Financial institutions are more willing to offer loans to an OPC than an unregistered business.
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The company can raise capital by adding directors or converting into a private limited company in the future.
Ownership Flexibility and Easy Transferability
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The owner can easily transfer ownership to another individual by changing the nominee or selling the company.
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Compared to sole proprietorships, an OPC has a structured ownership transition, making it more suitable for long-term business sustainability.
Simple Compliance Requirements
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OPCs face less regulatory burden compared to private and public limited companies.
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They are exempt from extensive board meetings and shareholder meetings.
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Annual filing requirements are simpler and require fewer documents.
Protection Against Business Risks
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Since an OPC is a separate entity, any legal action or financial liabilities remain limited to the company.
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The owner's personal assets are not at risk in case of company debts or legal disputes.
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This makes an OPC a more secure alternative to sole proprietorships.
Easy Business Expansion and Conversion
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As the business grows, an OPC can be easily converted into a Private Limited Company.
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This allows the company to add shareholders, raise funds from investors, and expand operations.
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Unlike sole proprietorships, which have limited growth potential, an OPC provides a scalable business model.
No Minimum Capital Requirement
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There is no mandatory minimum capital requirement for setting up an OPC.
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The owner can start the company with as little investment as needed, making it accessible for small businesses and startups.
Better Governance and Compliance
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An OPC must maintain financial records and annual filings, ensuring structured operations.
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Basic governance standards ensure business transparency and professional management.
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Proper documentation makes it easier to attract investors, enter partnerships, or secure funding in the future.
Exclusive Legal Rights and Business Name Protection
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An OPC enjoys protection under the Companies Act, preventing others from using the same business name.
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It helps in building a brand identity, ensuring that the business name remains unique in the market.
Suitable for Freelancers, Consultants, and Small Businesses
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An OPC is ideal for freelancers, independent consultants, e-commerce entrepreneurs, and small business owners who want to formalize their operations without the complexities of a private limited company.
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It provides legal protection, tax benefits, and credibility while maintaining simplicity in management.
