Understanding the Legal Requirements for a One-Person Company Registration in Chennai
Understanding the Legal Requirements for a One Person Company Registration in Chennai
The Companies Act of 2013’s proposal for the most modern business structure in India is the one-person company (OPC).
The Companies Act of 2013 and the legislation that follows make it simple to register OPCs because they allow companies to operate without the complicated nature of having partners. The OPC is appropriate for small firms whose annual revenue is unlikely to exceed Rs. 2 crores.
It is crucial to remember that the candidate or the director must reside in India when registering with the one person company.
In light of the aforementioned, we examine in this blog for the benefit of interested readers the legal prerequisites for an OPC registration in Chennai.
- Understanding the Legal Requirements for a One Person Company Registration in ChennaiThe Companies Act of 2013’s proposal for the most modern business structure in India is OPC.
- Importance of understanding legal requirements for an OPC registration in Chennai Prior to the Companies Act of 2013.
- The applicant must provide the necessary paperwork to the certifying authority in order to get a DSC.
- An organization’s internal matters and business operations, as well as the rules in Table A of Schedule I, are governed by the articles of association.
Definition of an OPC
OPCs are single companies with a single member, according to Section 2(62) of the Companies Act. The only people who are regarded as members of the company are stockholders or subscribers to the memorandum. An OPC is a company with only one stakeholder.
Importance of understanding legal requirements for an OPC registration in Chennai
Prior to the Companies Act of 2013, a business could only be founded by two people. According to the 2013 Companies Act, OPCs may be incorporated in India. It has jurisdiction over the OPC’s establishment and management in India. A public company, on the other hand, necessitates the incorporation of at least two directors and two members, but an OPC does not.
Eligibility criteria for an OPC registration in Chennai
Minimum and maximum number of shareholders
Due to the fact that a single individual holds 100% of the shares in an OPC, there can only be a maximum of one owner and one nominee.
Minimum and maximum share capital requirements
No minimum share size is required. If capital is greater than Rs. 50 lakhs, OPC is transformed into a Pvt. Ltd.
Status of the nominated director
- After obtaining the person’s previous written approval, the subscriber to a memorandum of an OPC registration should nominate a person who will, in the event of the subscriber’s death or inability to enter into a contract, become a member of that OPC.
- With the nominee’s permission received in Form No. INC-3, the nomination in Form No. INC-2 and the memorandum of consent must both contain the nominee’s name.
Preregistration legal requirements
Obtaining a digital signature certificate
In order to check and confirm the identity of the person who owns this certificate, certifying authorities (CAs) will issue digital signature certificates (DSCs), which are cryptographically secure keys. When enterprises need to digitally sign documents online, securely authenticate the signature, and validate the signed copy, DSCs are typically issued and used.
It is required for numerous government forms, including those for company formation, goods and services tax registration, trademark registration, income tax filings, and others.
The applicant must provide the necessary paperwork to the certifying authority in order to get a DSC. Depending on the applicant category, several sorts of documents are needed for obtaining a DSC.
Obtaining a director identification number
A “director’s identification number” (DIN) is a number assigned by the central government to any person who intends to be appointed as a director of a business or to any director who is currently serving on the board for the purpose of identifying that person as a director of the firm.
Process for obtaining a DIN
- Hold a board meeting
- Pass a board resolution
- The applicant must download Form DIR-3 from the portal, complete it with the necessary information, and attach the appropriate supporting papers.
Photograph proof of identity (self-attested and along with sign and seal of existing director of a company)
Proof of residence (self-attested and along with sign and seal of existing director of a company)
Board resolution considering the candidature and authorization of the board for the proposal of the name of the person for application of allotment of DIN
Authorization-cum-consent letter for appointment as director of the company along with the application of DIN
Validity of the name reservation form
From the date of approval, the authorized name will be reserved for 20 days. The applicant must submit the application for incorporation within that time frame, or the name will expire.
Documents required for OPC registration in Chennai
Memorandum of association
The charter of a firm is represented by a memorandum of association (MOA). It is a legal document created during the process of forming and registering a company. It outlines the company’s connection with shareholders and the goals for which it was established.
Six clauses, namely the name clause, circumstance clause, object clause, liability clause, capital clause, and affiliation clause, are included in the MOA’s contents.
Articles of association
An organization’s internal matters and business operations, as well as the rules in Table A of Schedule I, are governed by the articles of association (AOA), which are by-laws or rules and regulations. It also covers the rights of the members. Subordinates are in charge of and under the supervision of articles. Limited-liability firms, private companies, and corporations with unlimited liability shall each have their own AOA. It must be typed, printed, divided into paragraphs, consecutively numbered, properly witnessed, duly stamped, and acknowledged by each subscriber to the memorandum.
Content of AOA
It contains the following information:
- Provisions on the company name
- Share capital
- The organization of the company
- Purpose of the company
- Provisions on shareholder meetings
Consent and declaration by the first director (Form DIR-2)
An individual declares his approval to be appointed as a director of a specific firm in Form DIR-2. This effect is proven by verified evidence. The form includes the person’s name, residence, occupation, and contact information. It also contains information about DIN and PAN.
PAN card and ID proof of the director and nominee
A copy of the director’s and nominee’s PAN card and ID proof must be submitted during an OPC’s registration process (voter card, driving license, PAN card, or Aadhaar card).
Address proof of the director and nominee
As acceptable address proof, you may use your driver’s license, passport, Aadhar card, voter ID, or ration card. As evidence of residency, a recent telephone bill, electricity bill, or bank statement in the nominee’s name may be used.
OPC registration process in Chennai
Filing of Form SPICe+
“Simplified Proforma for Incorporating Company Electronically Plus” is known as SPICe+. The Ease of Doing Business(EoDB) initiative by the Ministry of Corporate Affairs (MCA) will include the introduction of the EoDB form. The new SPICe+ has come into effect as of February 15th. This rule will apply to the incorporation of new businesses. The current SPICe forms will be replaced by the new ones.
Procedure for Filing SPICe+
SPICe+ offers two different types of services. The name reservation is covered in Part A, while the remaining services are covered in Part B. The applicant has two options: either he or she can apply for part A and part B services simultaneously, or first for the name reservation and then for the other services. The application for a company’s incorporation is an ongoing process after the name reservation.
Payment of registration fees
Fee for one person and small companies in India
|Authorized Capital||Registration Fees||Additional Fees|
|Under Rs.10,00,000||Rs. 2,000||Nil|
|Rs. 10,00,000 to Rs. 50,00,000
|Rs. 2,000||Rs. 200 will be charged for every addition of Rs.10,000 of nominal share capital|
|Rs. 50,00,000 to one crore Rupees||Rs. 1,56,000||Rs. 100 will be charged for every addition of Rs. 10,000 of nominal share capital|
|Above one crore Rupees||Rs. 2,06,000||Rs. 75 will be charged for every addition of Rs.10,000 of nominal share capital to a max of Rs. 250 crore|
Verification of documents and approval by Registrar of Companies
The documentation supplied by an OPC for registration will be electronically verified by the Registrar of Companies (ROC), who will then grant registration.
The Companies (Incorporation) Third Amendment Rules, 2022, have been altered by the MCA, and a new rule 25B has been added that specifies how the registered office of a company should be physically verified.
According to this new regulation, the ROC shall perform the physical verification of the company’s registered office in the presence of two impartial witnesses from the neighborhood where the company’s registered office is located. Moreover, ROC might ask the local police for help with this verification if necessary.
Post-registration legal requirements
To obtain PAN
After incorporation, a PAN application can be submitted online to obtain a PAN allotment letter. The director of the one person company registration must sign the letter; it must be embossed with the business stamp; and it must be delivered to the National Securities Depository (NSDL) office. After getting the hard copy, the PAN card will be provided within 15 days.
To obtain TAN
The tax deduction account number (TAN), which consists of a 10-digit alphanumeric number, is given to any individual or company that is in charge of withholding taxes from employees’ pay at the source or who collects taxes at the source on behalf of the income tax department.
The applicant receives the TAN number from the income tax authorities. Every tax deductor must include the tax deduction number in all TDS returns and other communications with the tax authorities, as required by Section 203 A of the Income Tax Act of 1961. Failure to do so will result in a fine of Rs 10,000.
Structure of a TAN number
A TAN number has 10 digits. The first three alphabets stand for the jurisdiction code; the fourth alphabet is the first letter of the TAN holder’s name, which may be that of a corporation, firm, individual, etc.; and the remaining five numbers and last digit make each person’s TAN number unique.
Documents required for obtaining a TAN number
When applying for a TAN number, the following paperwork is necessary:
- Applicant’s proof of identity
- Form 49-B for filing application
How to apply for TAN
There are two ways to submit a TAN application: online or offline.
Any TIN-FC should get Form 49B in duplicate upon submitting an application for TAN allocation. The TIN-FC addresses are listed on the NSDL-TIN website.
If the applicant is a business not yet registered under the Companies Act of 2013, Form No. INC-7 may be used to request the allocation of a TAN number.
Form 49B must be submitted in order to start the process of getting a TAN online.
- The Rs. 62 filing fee for the TAN application must be paid by the applicant. Payment options include cash, cheque, demand draft, and net banking.
- A 14-digit acknowledgment number is generated after successful payment. Within 15 days of the date of the online application, the applicant must send the NSDL the legally signed acknowledgment and all necessary papers.
- The applicant will be informed of the TAN number following NSDL’s verification of the application and supporting documentation.
Opening of a bank account
It is important to open a current account in the company’s name with any nationalized bank in India following the company’s incorporation. Only the company bank account should be used for any transactions made in the firm’s name.
The paperwork and information needed to open a current account with a bank are as follows:
- The company’s certificate of incorporation
- Copy of the company’s memorandum and articles of association, which serve as its founding documents
- The company’s PAN
- Board decision regarding the opening and maintenance of a bank account
- Information on the company’s directors’ and shareholders’ KYC
- A check for the initial money deposited to create a bank account (this deposit can be considered the initial capital infusion by the shareholder).
Getting a business license in India
- The process for obtaining a license is dependent on the type, position, nature, and size of the company.
- To find out precisely what kind of business license is necessary to operate in India, get in touch with a legal provider, a chartered accountant, or a company secretary and ask for their assistance in obtaining the required permissions and licenses for your company.
- Obtaining legal advice before applying for a business license will help you determine whether you require a certain type of license.
- It would also expedite the process of obtaining a permit and help to ensure that no mistakes are made.
According to the market systems in India, there are many licenses and permissions available, including:
- Company or LLP registration license
- Udyog Aadhar
- License for import-export code
- Air and water pollution permit
Annual compliance requirements for OPCs in Chennai
- Annual returns must be submitted to the ROC by each OPC each year.
- Form MGT 7 must be filed as an attachment to the return.
The company secretary must sign the annual report. Due to the fact that it consists of only one member, an OPC is not required to choose a company secretary. In this case, the return must be signed by the director.
Financial statements that have undergone an audit must be filed online, per the Companies Act of 2013.
- The financial statement must be submitted to the ROC using Form AOC 4.
- The financial statement needs to be signed by each director.
- The statement must be delivered no later than 180 days following the end of the fiscal year on March 31.
- The financial statements should contain the balance sheet, profit and loss account, audit report, and account notes.
- Within 30 days of the company’s incorporation, the financial accounts must be delivered. An authorized chartered accountant must serve as the OPC’s first auditor.
- The auditor, who must serve until the corporation’s first annual general meeting (AGM), is not required to file Form ADT-1. Yet the documentation needs to be sent in to get the next auditor appointed.
- The OPC must submit Form ADT-1 to name an auditorium within 15 days of the conclusion of the first AGM.
The concerned auditor will remain in that position through the conclusion of the sixth AGM.
Appointment of an auditor
The director shall hire an auditor within 30 days after the company’s establishment for the purpose of complying with the OPC. An OPC who neglects to appoint an auditor is subject to a monthly punishment of Rs. 300. Also, the company won’t be allowed to open. He or she must stay in the position until the first AGM is over. Form ADT-1 does not need to be submitted in order to appoint the first auditor.
Maintenance of statutory registers
According to Section 128(5) of the Companies Act of 2013, every company is required to maintain its books of accounts for at least eight financial years prior to a financial year. Minutes and statutory records are the primary company records that must be preserved ever since their creation.
In the following sections of this blog, we’ve gone into great detail on the legal criteria for OPC registration in Chennai:
- Eligibility criteria for OPC registration in Chennai
- Preregistration legal requirements
- Documents required for OPC registration in Chennai
- OPC registration process in Chennai
- Post-registration legal requirements
- Annual compliance requirements for OPCs in Chennai
Importance of compliance with legal requirements for OPCs
By adhering to regulations, your company can lower risks such as data loss and security breaches and keep out of trouble that might lead to license revocation, reputational damage, lost clients, and financial penalties and losses.
Also, by maintaining compliance, your company can protect itself from legal action, maintain business continuity and competitiveness, preserve a positive reputation, prevent cybercrime, and boost profitability.
You can always go to Kanakkupillai.com to make sure your OPC has complied with all legal standards and compliance protocols for a successful OPC registration in Chennai.
The key reason for this is that Kanakkupillai.com, a web portal owned by Govche India Pvt. Ltd., is committed to becoming your dependable partner during your entire business journey. Their main objective is to provide you with information on legal needs, assure compliance, and provide support throughout the lifecycle of your organization. They do this with reasonably priced and knowledgeable advice.
We are confident, based on our conversation thus far, that this blog post will be helpful to all those eager readers who want to comprehend the legal prerequisites for an OPC registration in Chennai.
FAQ on One Person Company Registration in India
Restrictions in OPC is they cannot carry out Non-Banking Financial Investment activities, including the investments in securities of anybody corporates. It cannot be converted to a company with charitable objects mentioned under Section 8 of the Companies Act, 2013
The Conditions in formation of OPC is only natural persons who are Indian citizens and residents are eligible to form a one-person company in India. The same condition applies to nominees of OPCs. Further, such a natural person cannot be a member or nominee of more than one OPC at any point in time.
Registration is compulsory for one person company according to Section 2 (62) of the Company's Act 2013, a company can be formed with just 1 director and 1 member. One Person Company registration in India is a type of entity where there are lesser compliances requirements than that of a Private Limited Company.
Employees of one-person company (OPC) is a type of company where there is only a single member. This type of company is relatively new in India, introduced by the Companies Act of 2013. OPCs are popular because they offer many benefits of traditional companies, but with simpler regulations and compliance requirements.
OPC do not allow who are not Indian citizen. He or she cannot be a nominee or shareholder of more than one OPC. And lastly, they should not be minors.
Minimum capital for OPC can be started with a minimum authorised capital of Rs. 1 lakh. There is no mandatory requirement for a minimum paid up capital.
OPC can have 2 directors as per the companies act, 2013, One Person Company (OPC) amendment has been introduced which states that a private company must require 2 directors and members while there must be 3 directors and 7 members in the public company.
OPC have limited liability amongst the several advantages an OPC has to offer, one striking benefit it renders is the limited liability to the shareholder. An OPC is a separate legal entity and therefore, the liabilities of the company are not shoved on the face of the shareholder.
OPC pay salary to Director, any remuneration paid to the director will be allowed as a deduction under income tax law, unlike proprietorship.
OPC own property, sale, purchase and own the property like individual. Contractual Rights: OPC, being a legal entity different from its members, can enter into contracts for the conduct of the business in its own name.
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