What is an OPC.

Why start an OPC?

Why should one start  an OPC? Well, OPCs have Limited Liability. The amount to be paid in case of a loss is limited. While, OPCs only pay the amount invested, no matter how much the loss is. Therefore, they have limited liabilities.

Being a Private company, OPCs are considered as a separate entity. The personal property of the owner is separate. It allows the owner to sell the business, any time, one wants to. A person can be both a shareholder and a director at the same time in an OPC. Thus, an owner can take up the profits as a director as well.

An OPC helps to keep both ways open in terms of the future ownership of a company. Firstly, a Nominee can be appointed to transfer the ownership.  And the second is Perpetual Succession. Therefore, the company can continue once the owner dies. Also, the nominee can decide if one wants to discontinue the business. Or, close it. But, only after the death of the shareholder. In addition, an OPC has less compliances as compared to a Private Limited Company. And has simpler working.

In Short, the key advantages are:

• Limited Liability
• Separate Entity
• Perpetual Succession
• Nominee Appointment
• Limited Legal Work

 

Certificate of Incorporation.

A Certificate of Incorporation is a legal document. It contains the name and the set-up date of the company.  It represents the type of company, its location and registered number. A registered number specifies the existence of the company. Further, legally accepting the incorporation. A Certificate of Incorporation is more of a birth certificate of an OPC. It is a very important document. And, mandatory for an OPC.

 

How to Start an OPC.

As mentioned above, OPC is one person company. Thus, a single person is enough to form an OPC. The Companies Act, 2013 registers all the companies under it. The Ministry of Corporate Affairs is the leading body for the registration. MOA and AOA are two key documents under the above registration. MOA stands for Memorandum of Association.  It defines the powers and objectives of the company. While, AOA, is Article of Association. It stands for all the rules and regulations for running the company. Thus, MOA and AOA safeguard the identity and the working of an OPC.

After the registration under the above act, one gets a Certificate of Incorporation. A certificate of Incorporation holds the very basic details of the company. Thus, A very important certificate. It is important for various documentations as well. Therefore, it is mandatory to get one.

Apart from this, an OPC can have a minimum of 1 director to a maximum of 15. For NRIs, at least one of the directors should be Indian. In case, an NRI wants to start an OPC.

Also, only OPCs have a Nominee. A Nominee acts as a savior for the company. The person nominated, decides whether to end the company or be a succession after the death of the owner. Thus, one must choose a nominee for the company.

After the completion of registry and getting a Certificate of Incorporation, one has to apply for other compliances. The Compliances are quite similar to a private limited company. Further documentation comprises of a PAN card.  Since, OPC is an independent company.  Thus, it needs a separate PAN card. In addition, a new Bank Account needs to be opened. Because, transactions need a Bank Account.

 

Requirements for Incorporation of an OPC.

For registration of OPC

1. PAN Card- The PAN card of the owner.
2. ID Proof- A Passport, Driver’s License. Or, Voter Id card.   
3.   Address proof- It can be NOC from the landlord. A rental agreement is also suitable as an address proof.

For PAN Card of OPC

An independent PAN Card is made in the name of the company. It is not associated with the Individual identity of an owner. A PAN Card is issued during the incorporation process.

 

For Bank Account Opening of OPC

1. PAN Card- The PAN Card here is of the company. Since, the bank account is in the name of the business.
2. Aadhar Card.
3. Address Proof.
4. Certificate of Incorporation- It is very important. As, it proves the identity and existence of the company.

 

Timelines for opening an OPC.

• Registration- A registration takes 7-10 working days. While, the application process is online.
• PAN Card- It takes 7-10 working days to get a PAN Card. While, the physical delivery might delay a bit.
• Bank Account Opening- It takes 7-10 working days. But, it might take a month in some cases as well.

 

Summary.

With this, one can conclude that an OPC resides somewhere in the middle of a Proprietorship and Pvt. Ltd. It enjoys the advantages of both the types. An OPC has one owner but is no less than a private limited. It is easier to start. And, can be developed into other forms any time. A company owner can sell the company when one wishes to. And can be the Nominee of one other company at the same time. OPC has been provided greater support by the Indian government. With an aim to give rise to startups. There are governmental compliances that give a large-scale relaxation. Contrary to the Private Limited Companies. An OPC has more flexibility. Thus, making it a simpler form of business.