As per Companies Act, 2013, OPC is defined as a company having
one person as its member meaning thereby OPC is effectively a company that has only one shareholder
as its member. One of the biggest advantages of an OPC is that there can be only one member in an
OPC, while a minimum of two members is required for incorporating and maintaining a Private Limited
Company or a Limited Liability Partnership. Similar to a Company, an 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.
Every OPC must nominate a nominee Director in the MOA
or AOA who will become the owner of the OPC in case the promoter Director is disabled. It must file
audited financial statements with the Ministry of Corporate Affairs at the end of each Financial
Year. Therefore, it is important for the Entrepreneur to carefully consider the features of an OPC
before incorporation. Legal Suvidha Providers can help incorporate a One Person Company (OPC) in
India. So, before incorporating OPC following things must be kept in mind:
• Only a Natural
person who is a resident of India can form OPC but not AOP, Body corporate, Company, etc.
• One
can only be the member of one OPC or the nominee of one OPC only.
• Conversion of OPC is
necessary after paid-up share capital exceeds Rs. 50 L or the average annual turnover exceeds Rs. 2
Cr. in 3 immediately preceding financial year.
• Rules of OPC do not permit Non-Banking
Financial Institutions.
• An OPC should not be confused with Sole proprietorship i.e. promoter
is not personally liable in case of an OPC.
STATUS OF PRIVATE COMPANY | As per S. 3 of the Companies Act, 2013, OPC is given the status of Private Companies. |
VARIOUS EXEMPTIONS FROM | An OPC enjoys various statutory exemptions from holding annual or extraordinary general meetings; signature on annual returns can be done by Director himself, restriction on voting rights, demand for the poll, notice for the meeting, Signature on financial statements, etc. |
LIMITED LIABILITY | The liability of the shareholder is limited and personal assets are safe. The liability of the shareholder will only be limited to the unpaid subscription money in his name. OPC is a separate entity and there will be a true distinction between the promoter and the company. |
SINGLE OWNER | There is only one owner who can act both as a shareholder as well as the director. |
COMPLETE CONTROL | 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. |
LEGAL STATUS & SOCIAL RECOGNITION | One Person Company is a Private Limited Structure in the eyes of law, which gives suppliers and customers a sense of confidence in business. |
SEPARATE LEGAL ENTITY | A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has a wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts. |
EASY COMPLIANCES | 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 the Annual General Meeting (AGM), so lesser compliance cost. |
PERPETUAL SUCCESSION | A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. |
BORROWING CAPACITY | A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns. |
EASY TRANSFERABILITY | Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with a share certificate can easily transfer shares. |
OWN PROPERTY | A company being a juristic person, can acquire, own, enjoy and alienate, property in its name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. |
1. Self Attested PAN Card copy
2. Self Attested copy of any one of the Identity Proof(Voter's ID/Passport/Driver's License)
3. Self Attested copy of Address Proof in the name of the director (Any utility bill i.e., mobile bill/water bill/ electricity bill, or bank statement which should not be older than two months)
4. Passport-sized photograph
1. Rent Agreement (Notarised: For rented property)
2. Sale Deed/Property Deed in English (in case of owned property)
3. No-objection Certificate from the property owner
4. Latest Electricity Bill / Mobile or Telephone Bill / Latest Bank Statement/Gas Bill
Private Limited Company | Limited Liability Partnership | One Person Company | Partnership Firm | |
Preferred for | Start-ups | Professional Services Firms | Sole Proprietors | Small-medium sized businesses |
Limited Liability Protection | Yes | Yes | Yes | No |
Minimum Requirement | 2 Shareholders | 2 Designated Partners | 1 Director 1 Nominee |
2 Partners |
Fund Raising Options | High | Low | Low | Low |
Tax Advantage | Few | Most | Few | Minimal |
Statutory Compliance's | High | Low | High | Minimal |
Compliance Cost | High | Medium | Medium | Low |
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