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Getting Started With a One Person Company



The new company act has created an - entirely new business structure - OPC (One Person Company)

An OPC has only one member and can be fully functional with a minimum of one director. An OPC will essentially have the characteristic of a Private Limited Company, but with lesser compliances requirements. Although the OPC model is a new concept in India, it has been working successfully in developed nation since a long time.

Traditionally any for profit business from other than a sole proprietorship requires more than one members. Similarly, a private company also requires more than at least two members. In such addition, how did single addition single fonder or promoters start a company in India . There is a simple workaround which was used by founders/promoters – the company would typically issue one share to a relative of the promoter (for example their father, mother spouse etc). So, that the minimum requirement of two person was satisfied. Having additional shareholder with nominal share did not impact the business commercially.

Some Features of One Person Company (OPC)


The following are the important features of the One Person Company (OPC)

  • One Person Company is one of the type of Company on the basis of number of members only
  • One Person Company has only one person as a member or as a shareholder.
  • One Person Company is a Private Company
  • Minimum paid up share capital of One Person Company is one Lakh Rupees (Rs. 1,00,000)
  • One Person Company may be either a Company limited by share or a Company limited by guarantee / an unlimited Company
  • The words “One Person Company” should be mentioned in brackets below the name of  One Person Company
  • One Person Company shall indicate the name of the nominee or other person in the memorandum, with his prior written consent
  • The written consent above, can  be filed with the Registrar at the time of incorporation of the One Person Company along with its M&A (Memorandum and Articles)
  • The nominee or  other person can withdraw his consent at any time
  • The member/Shareholder of One Person Company may change the nominee/other person at any time, by giving notice to the other person and intimate the same to Company. Then the Company should intimate the same to the Registrar
  • In case of the death of member or shareholder or his incapacity to contract, then nominee/other person become the member of the Company
  • Member or Shareholder of the One Person Company acts as first director, until the Company appoints director(s)
  • One Person Company can appoint maximum 15 directors, but minimum should be one director
  • One Person Company need not to hold any AGM (Annual General Meeting) in each year
  • Cash Flow Statement may not include in the financial statements of One Person Company
  • One Director is sufficient to sign the Financial Statements or Director’s Report
  • Within 180 days from the closure of the Financial Year, One Person Company should file the copy of the Financial Statements with Registrar
  • One Person Company should inform to the Registrar about every contract entered and also should record in the minutes of the meeting with in 15 days from the date of approval by the BOD (Board of Directors)

ADVANTAGE OF ONE PERSON COMPANY


Here are the some reasons why any entrepreneur or business entity should opt for One Person Company. The advantages of being a One Person company are as follows:


A Separate legal entity
One Person company is a separate legal entity and capable of doing everything that an entrepreneur would do.

Easy Funding
Like a Private company, One Person Company can raise funds through venture capital, financial institutions, angel investors etc. A One Person Company can raise funds thus graduating itself to a private limited company.
More opportunities, Limited liability
Since the liability of the One Person Company is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering loss of personal assets. It is the encouragement to new, young and innovative start-ups.
Minimum compliances
One Person Company have to face little compliance burden as compared to private limited companies , hence One Person Company can  more focus on other functional and core areas.
Benefits of being a Small Scale Industries (S S I)
An One Person Company can avail the various benefits provided to Small Scale Industries like lower rate of Interest on loans, easy funding from bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.
The Only Owner – You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.
Credit rating
The One Person Company with bad credit rating may even get the loan. Credit rating of One Person Company will not be material if the rating of One person company is as per norms.
Benefits under Income Tax Law
Any remuneration paid to the director will be allowed as deduction as per income tax law unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act
Receive interest on any late Payment
One Person company avails all the benefits under Enterprises development Act, 2006. The newly start-up One Person company is micro, small, or medium, hence they are covered under this act. As per the Act, if buyer or receiver receives any late payment (receives payment after specified period) , then he is entitled to receive interest which is three times the bank rate.
Increased Trust and prestige
Any business entity that runs in the form of company always enjoys an increased trust and prestige.
OPC provides a whole new bracket of opportunities for those who look towards to start their own ventures with a structure of organized business. OPC will give the young businessman all benefits of a private limited company which categorically means they will have access to credits, bank loans, limited liability, legal protection for business, access to market etc all in the name of a separate legal entity.
Single entrepreneur can manage his business on his own. It can have only one member at any point of time. It may have only one director but as per the provisions of section 149 can however appoint more than 15 directors after passing a special resolution.
OPC company is like an One Man Army. The compliance burden is very less and the liability of the members is very limited is an added advantage. OPC is expected to benefit people who are into self employment and many small scale sectors. It is a remarkable feature of the Companies Act,2013. OPC will boost the confidence of small entrepreneurs.
OPC company registration procedures are both online and offline but you can avail this registration process from lega lraasta through online process without any problem. Also I have seen that the legal raasta provide the information’s online through their article which are posted on their website. Not only OPC I have seen that they provide the various other company registration. They show the legal ways for the startups as well as running business who want any further changes.
An Indian citizen and resident in India shall be eligible to act as a member and nominee of an One Person Company. That the person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

4 Main things to keep in mind:
  1. A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
  2. Person should be above of 18 years can become member or nominee of the One Person Company or can hold share with beneficial interest.
  3. An OPC cannot be incorporated or converted later into a non – profit company.
  4. An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporate.

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