As the name defines it, OPC means that a single person owns and manages a company, providing a combination of flexibility and limited dependency. This article explores the intricacies of OPC formation and defines its benefits for solo entrepreneurs.
What is OPC formation?
OPC formation is a full-fledged process designed for aspiring business enthusiasts who want to venture into entrepreneurship without the burden of involving multiple owners. This structure provides the benefits of a private limited company while removing the need for a board of directors. The major feature that makes OPC unique is the provision of limited dependency, ensuring that the personal assets of the businessperson remain safeguarded.
Steps involved:
- Selecting the name
The journey of OPC formation begins with selecting a suitable and unique name for your new business. It is important to ensure that the chosen name complies with the guidelines set by the regulatory authorities to avoid any complications during the registration process.
- Obtain a digital signature certificate.
To file the required documents online, the availability of a digital signature certificate is mandatory. The DSC acts as a secure digital key to sign documents digitally, ensuring the authenticity of the information provided during OPC formation.
- Director identification number
The next step is gaining a director identification number. This unique identification number is provided to businessmen intending to become directors of a company. It is a straightforward process that includes submitting the required documents and details online.
- Drafting the Memorandum of Association and Articles of Association (AOA)
The MOA and AOA are important documents that outline the objectives and rules governing the OPC. Drafting these documents accurately is essential, as they serve as the foundation of the company’s constitution.
- Filing the incorporation documents
With all the requirements in place, the businessperson can proceed to file the incorporation documents with the Registrar of Companies. This step marks the official initiation of the OPC formation process.
- Fee payment
Paying the mentioned fees to the RoC is the most important factor in OPC formation. The fee structure varies depending on factors such as authorized capital and the state in which the company is registered.
- Certificate of incorporation
Once the Registrar of Companies approves the submitted documents and fees, they issue the Certificate of Incorporation. This certificate serves as the final evidence of the existence of the OPC, securing the way for the entrepreneur to begin business activities.
Benefits of OPC formation
- Limited dependency
One of the major benefits of OPC formation is the limited dependency it offers the entrepreneur. This means that the personal assets of the businessperson are separate from the assets of the company, protecting business liabilities.
- Flexibility and control
Solo entrepreneurs often value the flexibility and control that OPC formation affords. With no requirement for a board of directors, decision-making processes are seamlessly regulated, allowing for quicker responses to market changes.
- Legal recognition
OPCs are recognized as legal entities, enabling entrepreneurs to enter into contracts, acquire assets, and conduct business transactions in their company’s name. This legal recognition increases the credibility of the business in the eyes of clients, customers, and partners.
- Ease of compliance
OPCs benefit from simplified compliance requirements compared to larger corporate structures. This makes it easier for solo entrepreneurs to fulfill their legal obligations, reducing the administrative burden associated with running a business.
- Tax benefits
OPCs enjoy certain tax benefits, including the ability to carry forward losses and avail of tax exemptions available to small businesses. This can contribute significantly to the financial viability of the venture.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.