One Person Company was introduced in India through Companies Act 2013, a new concept which brought a great relief for many Entrepreneurs. For the first time, the possibility of one man opening a company without the need of another member or partner was open. This sole property made One Person Company so popular, especially among the lone Entrepreneurs. Ones who don’t want to share their powers or duties, ones who don’t want to be bossed around. Also, a One Person Company is considered to be a separate legal entity which is a further bonus for the lone Entrepreneurs. Since its inception, One Person Company has introduced many new and aspiring Entrepreneurs to the world. The much hyped, OPC is definitely a trending topic nowadays. We bring you some of the trending stuff about One Person Company.
- It is a separate legal entity yet only one person is responsible for the workings of the company. A total contrast from what Sole Proprietorship offers.
- There can be only one member at a time. However, one nominee is mandatory to be appointed. This member and nominee cannot be a minor.
- Only a natural person is a citizen and resident of India can start a One Person Company. A resident of India here refers to a person who has lived in India for more than 182 days in the preceding year. Even a nominee of an OPC must fulfil these requirements.
- Anyone can start his own company due to its easy and cheap registration, limited liability and legal identity.
- An OPC can be limited by guarantee or limited by shares or an unlimited company.
Requirements Of OPC
- Shares will not be allowed to be transferred to anyone else.
- An OPC is prohibited from giving any invitations to the public to subscribe for the securities of the company.
- No OPC can voluntarily convert into any other kind of company within two years from the date of incorporation of One Person Company, except when the threshold limit of paid up share capital, being fifty lakh rupees, is crossed or its average annual turnover during the relevant period exceeds two crore rupees.
- An OPC cannot convert into a company registered under Section 8.
- An OPC is required to give a legal identity by specifying a particular name under which the activities of the company can be carried on. The words ‘One Person Company’ must be mentioned below the name of the company, wherever the name is affixed, used or engraved.
Exemptions of One Person Company
(a) Sign on annual returns
(b) Hold Annual General Meetings and Board Meetings
(c) Sign on Financial Statements
(d) Option to dispense with the requirement of holding an AGM.
(e) The power of Tribunal to call meetings of members.
(f) Calling of an extraordinary general meeting.
(g) Notice of meeting
(h) Statement to be annexed to notice.
(i) The quorum for meetings.
(j) Chairman of meetings.
(l) Restriction on voting rights.
(m) Voting by show of hands.
(n) Voting through electronic means.
(o) Demand for the poll.
(q) Postal ballot.
(r) Circulation of members’ resolution.
Advantages of One Person Company
The Advantages of One Person Company are as follows:
- A Separate legal entity
- Easy Funding
- More opportunities, Limited liability
- Benefits of being a Small Scale Industries (SSI)
- Single Owner
- Credit rating
- Benefits under Income Tax Law
- Increased Trust and prestige
- General Points
- An OPC is subject to the same taxes as a Private Limited Company.
- An OPC increases the borrowing capacity of individuals. Investors and banks prefer to give funds to companies rather than proprietorship and partnerships.
- When an OPC limited by shares or by guarantee enters into a contract with the sole member of the company, who is also the director of the company, the terms of contract or offer must be recorded in writing or contained in a memorandum or recorded in the minutes of the Board meeting held next after entering into the contract.
- An OPC must Inform the Registrar about every contract entered into by the company with the sole member of the company within a period of fifteen days from the date of approval.
- A boost in the country’s economy is seen due to the less hassle and many opportunities given by One Person Company. Many Sole Proprietorship is converting themselves due to these very same reasons.
- The registration is comparatively easy and not much compliance is to be maintained. Paperwork required is minimal. This makes the company all more desirable.
- According to BSE, One Person Company can act as a stock or sub broker.
Apart from all these features, One Person Companies are helping tremendously in increasing the overall economy of India. More and more Entrepreneurs are coming up and setting up their business. Since no intervention from any third party is seen, it makes it more beneficial.
One Person Company, which is a new concept in India, already sees a big boom. A huge impact on the economy and development of a nation is expected. It gives opportunities to many and will, therefore, bring creative and young minds in front of everyone. So, if you want to start up your own business, you don’t have to worry about all the complex and tedious processes.