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Company Setup
 
One Person Company (OPC)
 
The concept of One Person Company (OPC) is a new form of business, introduced by The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework.
One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with concessional/relaxed requirements under the Act.

One of the biggest advantages of a OPC is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership. Similar to a Company, a OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is easy to incorporate. However unlike a Company or a Proprietorship, a OPC is required to nominate one person to take charge in case of death of disability of the sole member. OPC also have to comply with many of the statutory requirements similar to that of a Company; but are also exempt from a few procedural formalities, like conducting Annual General Meetings and Extraordinary General Meetings.

The concept of OPC is set to systematize the segment of proprietors, enabling them to commence business with limited personal liability as compare to unlimited personal liability as in case of Sole Proprietorship. it opens various avenues for more favorable banking facilities, particularly loans, to such proprietors and will reduce the paper work as well. Proprietors always have unlimited liability. If such a proprietor does business through an OPC, then liability of the member is limited. It gives solution to Entrepreneurs under one roof, with the best suitable options available for business and will also provide confidence to all types of entrepreneurs (Small & Medium) to enter into the Corporate World.

THE ADVANTAGES OF REGISTRATION OF ONE PERSON COMPANY

A One Person Company (OPC) Private Limited has many advantages as compared to Proprietorship firm.

Limited Liability Protection To Directors and Shareholder

All unfortunate events in business are not always under an entrepreneur’s control; hence it is important to secure the personal assets of the owner, if the business lands up in crises.
While doing business as a proprietorship firm, the personal assets of the proprietor can be at risk in the event of failure, but this is not the case for a One Person Private Limited Company, as the shareholder liability is limited to his shareholding. This means any loss or debts which is purely of business nature will not impact, personal savings or wealth of an entrepreneur.

Legal Status And Social Recognition For Your Business

One Person Company is a Private Limited Structure, this is the most popular business structure in the world. Gives suppliers and customers a sense of confidence in business. Large organizations prefer to deal with private limited companies instead of proprietorship firms.
Pvt. Ltd. business structure enjoys corporate status in society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations, like directorship. These designations cannot be used by proprietorship firms.

Complete Control Of The Company With The Single Owner

This leads to fast decision making and execution. Yet he/she can appoint as many as 15 directors in the OPC for administrative functions, without giving any share to them.

Helps for Testing of business model and enables Funding

The OPC business helps Startup Entrepreneurs to easily test the business model, a prototype and upon building a marketable product approach Angel investors, Venture capitalists for funding and easily convert into multi shareholder Private Limited company.

Easy to Get Loan from Banks

Banking and financial institutions prefer to lend money to the company rather than proprietary firms. In most of the situations Banks insist the entrepreneurs to convert their firm into a Private Limited company before sanctioning funds. So it is better to register your start up as a One Person private limited rather than proprietary firm.

Tax Flexibility and Savings

In an OPC, it is possible for a company to make a valid contract with its shareholder or directors. This means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can lend money to your own company and earn interest. Directors’ remuneration, rent and interest are deductible expenses which reduces the profitability of the Company and ultimately brings down taxable income of your business.

Easy To Manage and Freedom Compliance

OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct Annual General Meeting (AGM)

Terms and Restrictions of OPC

A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
Minor cannot shall become member or nominee of the One Person Company or can hold share with beneficial interest.
An OPC cannot be incorporated or converted into a company under Section 8 of the Act. (Company not for Profit).
An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond Rs. 50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e., if the Paid-up  capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.
Prohibits any invitation to the public to subscribe for the securities of the Company.
Restricts the right to transfer its shares

 

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