One Person Company
An OPC is a hybrid structure, wherein it combines most of the benefits of a sole proprietorship and a company form of business. It has only one person as a member who will act in the capacity of a director as well as a shareholder.
The concept of One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. However, in case of an OPC, only 1 person is required who can be a shareholder as well as the Director. Hence, the name of this Business Structure is known as One Person Company.
The process of incorporating the OPC is almost similar to that of a Private Limited Company with minor differences.
- OPC will be formed like a ‘Private Limited Company’ only, hence, minimum paid up capital requirement will be Rs. 1 Lakh
- It will have only one person as a shareholder
- Memorandum of Association of such a company will mandatorily prescribe the name of the person (Nominee), who in the event of death or disability of the subscriber, shall assume his position. However, the Shareholder of the OPC will have the right to change the nominee at any time with due intimation to the Registrar of Companies.
- The words ‘One Person Company’ will have to be mentioned in brackets below the name of such company, wherever its name is printed, engraved or affixed.
- One person can form only one OPC.
- An OPC can be formed only by an Indian Resident and citizen.
Advantages of OPCs in comparison to general Private Limited Companies
- OPC has a separate legal entity from its owners. In case of sole proprietorship, there is no distinction between the two entities. This means that the liability of the owner is separate from the entity. Or in other words, the threat of lien on personal property in case of unmet liabilities is non-existent.
- Provisions of Annual General Meeting (AGM) and Extra-Ordinary General Meetings are not applicable to an OPC
- An OPC should have a minimum of one (1) director and a maximum of fifteen (15) directors. In case the Board consists of only one director, then the OPC is exempted from conducting a Board Meeting as well
- Personal financial trustworthiness and credit ratings of the owner does not affect the ratings of the OPC, at least not directly
- Owing to the feature of it having a separate legal entity from its owners, the OPC is taxed separately, unlike a sole proprietorship
- It will be deemed to have complied with the provisions relating to Board meetings, if at least one meeting is conducted in each half of the calendar year. However, the gap between the two meetings should not be less than ninety days.
- It will be deemed to have complied with the provisions relating to Board meetings, if at least one meeting is conducted in each half of the calendar year. However, the gap between the two meetings should not be less than ninety days.
- There is no requirement of appointing a first director for the company and the sole member is deemed to be the first director of the Company
The OPC is exempted from various provisions relating to meetings, its quorum, Proxies, Voting Rights, Voting related regulations, etc.