One Person Company (OPC) is a business structure where only one person owns and manages the company. It is a popular form of business entity in India as it offers several benefits to entrepreneurs who wish to start a business on their own. According to Section 2 (62) of the Companies Act, 2013, One Person Company means a company that has only one person as a member.
It is incorporated as a private company which has only one member. Therefore, a company can be registered even when it only has one shareholder or member.
To set up an OPC, the owner must first register the company with the Registrar of Companies (ROC) under the Companies Act, 2013.
The registration process involves the submission of various documents, such as the memorandum and articles of association, proof of identity and address of the owner, and other details related to the company’s operations and management.
Once the registration is complete, the owner becomes the sole shareholder and director of the company.
Every OPC must have a nominee. The nominee is a person who will become a member of the OPC in the event of the death or incapacity of the original member.
The nominee must be a natural person who is an Indian citizen and resident in India.
One of the main advantages of an OPC is that it provides limited liability protection to the owner. This means that the owner’s personal assets are not at risk if the company incurs any debts or liabilities. In addition, an OPC has a separate legal identity from its owner, which means that it can enter into contracts, own assets, and sue or be sued in its own name.
Another benefit of an OPC is that it offers greater flexibility and control to the owner. As the sole shareholder and director, the owner has complete control over the company’s operations and decision-making.
This allows for faster and more efficient decision-making without the need to consult with other stakeholders. It has perpetual succession, which means it can continue to exist even after the death or incapacity of the member, as the nominee will take over the company. In a sole proprietorship, the business ceases to exist when the owner dies or becomes incapable.
Additionally, an OPC is subject to lower compliance requirements compared to other types of companies. For example, it is not required to hold annual general meetings or appoint auditors unless its turnover exceeds a certain threshold.
It has easy access to loans and funds from banks and other financial institutions, as it has better credibility and stability than sole proprietorship.
However, there are also some limitations to an OPC. For instance, it cannot raise capital by issuing shares or accepting deposits from the public. It also cannot convert into a public company, which may limit its growth potential.
Conclusion
Furthermore, the owner of an OPC must ensure that they comply with all legal and regulatory requirements related to their business operations. This is a brief overview of One Person Company in India. I hope you found it helpful. If anyone wants to start or looking for business registrations or seeking any kind of documentation support and guidance such as Company registration services in India, including Private Limited Company registration services in India, One Person Services In India, or any other government-related services or registration process details our team of experts will guide you at every step. We are one of the best service providers in the registration of companies, taxation, loans, Income tax, GST services, returns, etc, and many more under one roof.