Q. What is One Person Company (OPC)?

Ans. The One Person Company (OPC) is a new form of company in India introduced by the Companies Act 2013 to incorporate a company with only one person. To register an OPC, only one director cum shareholder with 1 family nominee are required instead of 2 director cum shareholder in private limited company. OPC can also enjoy some special privileges and exemptions under the Companies Act.

Q. Who is eligible to act as a member of an OPC?

Ans. Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.

Q. What are the Advantages of Registering a One Person Company (OPC)?

Ans. The following are the advantages to register an OPC in India, over the private limited or public limited companies or other forms:

• Only One Director cum shareholder with One Nominee.
• Only Two Board Meetings in year.
• General meetings provisions are not applicable.
• Does not require any capital (up to your choice).
• There is no need to rotate/change auditor after every Five Year.
• Great identity than a propritorship firm.

Q. What is minimum annual compliance for an OPC?

Ans. A OPC have to get done Statutory Audit every year from a practicing CA and get file annual filing forms namely MGT-7 (annual return) & AOC-4 (financial statement) with ROC and Income tax return (ITR-6) to be filed with income tax department annually. Forms are compulsory to file with ROC/IT Department whether you have any business or not in any year.

Q. Who cannot get register a OPC in India?

Ans. Foloowing person cannot form a OPC in India:

a. A minor

b. Foreign citizen

c. Non-Resident

d. Any person incapacitated by contract.

Q. Whether can I get convert an OPC to a Private limited company, what is the conditions?

Ans. Conversion can made as per the following:

Mandatory Conversion

i. If paid up share capital increase beyond rupees fifty lakhs; AND

ii. Increase of average annual turnover for preceding three (3) financial years is beyond rupees two crores.

In the above cases, OPC shall have to be converted itself into either a private or a public company within a Period of Six Months.

Voluntary Conversion

OPC cannot convert itself to Private or Public company voluntarily before two years from the date of incorporation.

Q. Whether 'Foreign Direct Investment' allowed in One Person Company?

Ans. No, FDI is not allowed for One Person Company.

Q. Can a foreigner/ NRI become Nominee of One Person Company?

Ans. No, nominee can only be an Indian resident citizen.

Q. Whether a OPC become a member of another private Limited company?

Ans. The Act has not made any restriction for a One Person Company to become a member of another Private Limited Company.

Q. What are the Disadvantages of an One Person Company (OPC)?

Ans. Following can be disadvantages of an OPC:

• Mandatory naming of nominee.
• No voluntary conversion up to 2 years from incorporation.
• Mandatory annual compliances and meetings.
• Mandatory coversion in private limited after certain fianncial limits crossed.
• Same tax structure as company.
• 'OPC' word has to be mentioned with its name.
• Not suitable for high turnover

Q. Whether forming of a OPC is suitable for every level of business?

Ans. As per our opinion, a small business should get register their business under OPC form.

Q. What is the tax structure of OPC under Income Tax Act in India?

Ans. Final profit of company generally get taxable @ 25% (surcharge extra) if company's turnover is up to Rs. 250 Crores or else 30%. New relaxed rate of 22% has been introduced by Section 115BAA of income tax act with effect from FY 19-20 by not availing the certain exemptions under income tax act.

Q. Is there any special income tax rate for newly registered manufacturing companies in India?

Ans. Yes, a low income tax rate of 15% (surcharge and cess extra) has been introduced by section 115BAB of income tax act with effect from FY 2019-20 and applicable to companies registered after 1st Oct 2019, also commenced manufacturing on or before 1st Oct 2023.

Q. What is the minimum time required to register a OPC?

Ans. Around 2 to 5 working days subject to govt approvals and providing all documents on time.

Q. What is advisable by filingdigits to choose between a OPC & Private limited company?

Ans. You can choose to register private limited company if you are thinking to raise funds from investers or outside India and hoping for a great business growth in coming future. We will also advise to go for it because of registration with widely recognized by public, widely known among start-ups and lower cost, less formation time and no strings attached.