All you need to know about the One Person Company

Last Updated at: January 08, 2020
329
All you need to know about the one-person company

Did you know that many entrepreneurs in the early stages of their businesses prefer to create ‘One Person Company‘ instead of sole proprietorship businesses these days?

We will tell you the reason why!

Here is a look at all you need to know about this useful alternative to the proprietorship model of business.

The revolutionary concept of OPC (One Person Company) was introduced in India by the Companies Act, 2013 and soon it became a game-changer as far as Indian corporate laws were concerned. It accorded the much-needed flexibility to young entrepreneurs to start a business and ensured the protection of limited liability, which was lacked in the proprietorship model of business.

Definition of OPC

As defined in Section 2(62) of the Companies Act, 2013, an OPC is a company with only one shareholder as a member. Any single person can form an OPC for any lawful purpose, but, he needs to be a “natural Indian Citizen”.

Are you having a desire to start a one person company?, one click away to know more about the starting procedure

Features of an OPC

Some of the important features of an OPC are as follows-

  • It is a Private Company

    Section 3(1) (c) of the Companies Act clarifies that for all legal matters, an OPC will be considered as a Private Limited Company. All prevailing rules applicable to an Indian Private Company will be effective for an OPC as well.

  • Nominee

    At the time of the One Person Company Registration, the only member of the OPC will need to mention a nominee.

  • No perpetual succession

    After the death of the only member in an OPC, the nominee will get the option of rejecting or choosing to succeed him as the sole member. This is in contrast to other companies as they go by the method of perpetual succession.

  • No minimum paid-up capital

    The Companies Act has prescribed no amount, in particular as the minimum paid-up capital for a One Person Company.

  • A number of directors

    An OPC needs to have a minimum of one director and can have a maximum of 15 onboard. It needs to file a resolution to increase the number of directors.

  • Special privileges

    The Companies Act bestows certain immunities and privileges on an OPC, which private companies are not eligible to obtain. These are as follows-

  • Section 92 of the Act states that even the director can sign the annual returns of an OPC. A company secretary is not necessary.
  • Section 122(1) of the Act states that the laws in S.98 and S.100 to S.111 are not applicable for OPCs. Therefore, OPCs are not legally necessary to follow the laws governing Executive Meetings and General Body Meetings.
  • OPCs need not hold Annual General Meetings. The decisions from the Board Meeting will meet compliance regulations if one registers the same in a minute book, the member records and acknowledges it.
  • One need not furnish the copies of the financial statements and accompanying documents to the Registrar within 180 days of the fiscal closing every year. The director or a company secretary need to duly attest these statements.
  • The financial statements of an OPC need not include its cash flow statements.

register for your OPC now

Advantages of a One Person Company in India

  • Simple and easy succession procedures

As one registers for the name of the nominee while creating the OPC itself, the succession procedures are fairly simple here. However, after the death of the sole member, all the assets and liabilities accumulated by the OPC are passed on to the nominee without any lengthy legal procedures, as is the case normally with sole proprietorships.

  • Protection of Limited Liability

In the case of an OPC, the liability of the shareholder limits only to the payment of the subscription amount. Therefore, the personal assets of the sole member are not put to risk. Therefore, you can consider the OPC route if you look to limit your personal liability.

  • Same legal status as that of a private limited company

As OPCs are similar to a Private Limited (Pvt. Ltd.) company by the Companies Act, it’s easier for such companies to get better banking facilities.  This also gives the OPCs better recognition and status in their niche industry or market.

  • Easy in compliance

An OPC enjoys less binding and somewhat relaxed compliance regulations. Hence, this reduces paperwork to a considerable extent.

As an end-note, we may state that if you prefer to have limited liability and do not mind a bit of operational transparency, an OPC is the right choice for you.

Click here to know more about the benefits of starting an OPC.

One Person Company Formation Procedure in India

As incorporation is now done online, the director’s signature is needed on electronic documents. To make this possible, the director in the OPC needs a Class-II Digital Signature Certificate (DSC).

Click here for get to know more about the formation procedure.

One Person Company Pros & Cons

The only avenue available to a single businessperson to register his or her company was to opt for a sole proprietorship. In recent years, a second option has been added. A One Person Company can be registered when there is only one owner of the trade. Explained here are the many pros and cons of selecting OPC.

A One Person Company (OPC) is best suited for people who wish to be sole entrepreneurs. While even a sole proprietorship offers the same benefit, unlike a sole proprietorship, an OPC offers limited liability and also a separate entity status, along with a better standing in the market (increased trust and respect).

Visit to the blog for read more about pros and cons.

OPC Complaince  Requirement

The One Person Company was introduced in the Companies Act to make sure a sole entrepreneur could start and manage a legal entity with limited liability. It was brought into existence to help all those enterprises with a turnover less than Rs. 2 crore. There are certain compliance requirements for an OPC

To read more about complaince requirement: click here

 

All you need to know about the One Person Company

329

Did you know that many entrepreneurs in the early stages of their businesses prefer to create ‘One Person Company‘ instead of sole proprietorship businesses these days?

We will tell you the reason why!

Here is a look at all you need to know about this useful alternative to the proprietorship model of business.

The revolutionary concept of OPC (One Person Company) was introduced in India by the Companies Act, 2013 and soon it became a game-changer as far as Indian corporate laws were concerned. It accorded the much-needed flexibility to young entrepreneurs to start a business and ensured the protection of limited liability, which was lacked in the proprietorship model of business.

Definition of OPC

As defined in Section 2(62) of the Companies Act, 2013, an OPC is a company with only one shareholder as a member. Any single person can form an OPC for any lawful purpose, but, he needs to be a “natural Indian Citizen”.

Are you having a desire to start a one person company?, one click away to know more about the starting procedure

Features of an OPC

Some of the important features of an OPC are as follows-

  • It is a Private Company

    Section 3(1) (c) of the Companies Act clarifies that for all legal matters, an OPC will be considered as a Private Limited Company. All prevailing rules applicable to an Indian Private Company will be effective for an OPC as well.

  • Nominee

    At the time of the One Person Company Registration, the only member of the OPC will need to mention a nominee.

  • No perpetual succession

    After the death of the only member in an OPC, the nominee will get the option of rejecting or choosing to succeed him as the sole member. This is in contrast to other companies as they go by the method of perpetual succession.

  • No minimum paid-up capital

    The Companies Act has prescribed no amount, in particular as the minimum paid-up capital for a One Person Company.

  • A number of directors

    An OPC needs to have a minimum of one director and can have a maximum of 15 onboard. It needs to file a resolution to increase the number of directors.

  • Special privileges

    The Companies Act bestows certain immunities and privileges on an OPC, which private companies are not eligible to obtain. These are as follows-

  • Section 92 of the Act states that even the director can sign the annual returns of an OPC. A company secretary is not necessary.
  • Section 122(1) of the Act states that the laws in S.98 and S.100 to S.111 are not applicable for OPCs. Therefore, OPCs are not legally necessary to follow the laws governing Executive Meetings and General Body Meetings.
  • OPCs need not hold Annual General Meetings. The decisions from the Board Meeting will meet compliance regulations if one registers the same in a minute book, the member records and acknowledges it.
  • One need not furnish the copies of the financial statements and accompanying documents to the Registrar within 180 days of the fiscal closing every year. The director or a company secretary need to duly attest these statements.
  • The financial statements of an OPC need not include its cash flow statements.

register for your OPC now

Advantages of a One Person Company in India

  • Simple and easy succession procedures

As one registers for the name of the nominee while creating the OPC itself, the succession procedures are fairly simple here. However, after the death of the sole member, all the assets and liabilities accumulated by the OPC are passed on to the nominee without any lengthy legal procedures, as is the case normally with sole proprietorships.

  • Protection of Limited Liability

In the case of an OPC, the liability of the shareholder limits only to the payment of the subscription amount. Therefore, the personal assets of the sole member are not put to risk. Therefore, you can consider the OPC route if you look to limit your personal liability.

  • Same legal status as that of a private limited company

As OPCs are similar to a Private Limited (Pvt. Ltd.) company by the Companies Act, it’s easier for such companies to get better banking facilities.  This also gives the OPCs better recognition and status in their niche industry or market.

  • Easy in compliance

An OPC enjoys less binding and somewhat relaxed compliance regulations. Hence, this reduces paperwork to a considerable extent.

As an end-note, we may state that if you prefer to have limited liability and do not mind a bit of operational transparency, an OPC is the right choice for you.

Click here to know more about the benefits of starting an OPC.

One Person Company Formation Procedure in India

As incorporation is now done online, the director’s signature is needed on electronic documents. To make this possible, the director in the OPC needs a Class-II Digital Signature Certificate (DSC).

Click here for get to know more about the formation procedure.

One Person Company Pros & Cons

The only avenue available to a single businessperson to register his or her company was to opt for a sole proprietorship. In recent years, a second option has been added. A One Person Company can be registered when there is only one owner of the trade. Explained here are the many pros and cons of selecting OPC.

A One Person Company (OPC) is best suited for people who wish to be sole entrepreneurs. While even a sole proprietorship offers the same benefit, unlike a sole proprietorship, an OPC offers limited liability and also a separate entity status, along with a better standing in the market (increased trust and respect).

Visit to the blog for read more about pros and cons.

OPC Complaince  Requirement

The One Person Company was introduced in the Companies Act to make sure a sole entrepreneur could start and manage a legal entity with limited liability. It was brought into existence to help all those enterprises with a turnover less than Rs. 2 crore. There are certain compliance requirements for an OPC

To read more about complaince requirement: click here

 

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