The Indian Companies Act of 2013 created an entirely novel company structure in India called the One Person Company (OPC). Only one member and one director are needed to set up an OPC, and they can both be the same individual. Therefore, this one-person company has the advantages of a properly formed limited company as well as a sole proprietorship. Furthermore, this OPC enjoys the great benefits of less complicated legal and governance frameworks for its operations and activities, as well as less stringent requirements for compliance with regard to board and general meeting procedures than private limited companies and public limited companies in India.
Therefore, it is clear that an OPC is a great option for professionals or businessman looking to launch a legally sound and safe company to further their own professional or entrepreneurial goals. It should be mentioned that a one-person business cannot be changed into or formed as a section-8 corporation. Prior to its launch in India, one-person businesses enjoyed great success throughout a wide range of nations, including the United States, the United Kingdom, China, Australia, Singapore, and others. These one person companies, however, are not permitted to do the business of an Indian non-banking financial organization.
Features of One Person Company
Some of the essential features of One Person Company are:
Nominee
An OPC’s single member is required to choose his nominee. Whether or not they live in India, the candidate must also be a natural person and an Indian citizen. Additionally, a minor cannot be nominated, and a person may only be appointed as a nominee in one OPC. The purpose of appointing a nominee is to guarantee that, in the event of the only member’s demise or incapacity, he will become the member and manage the OPC; this is one of the main features of One Person Company.
No Perpetuity
Having no perpetual succession is also one of the features of One Person Company. The nominee has the option to accept or become the company’s single member upon the passing of the existing member. Other types of businesses adhere to the idea of eternal succession.
Single-Owner
One of the key features of One Person Company is that there is only one owner. Unlike other businesses, OPCs are required to have single-person ownership. One of OPC’s primary attributes is its exclusive ownership of a business, venture, or firm.
Conversion into Alternative Business Models
Conversion of OPC is one of the other important features of One Person Company. By adding more directors and members, an OPC can become a private company or a public company, among other business forms. The number of directors and members must be raised to two in order for the business to convert to a private limited company. The number of directors and members must be increased to three and seven, respectively, in order for the firm to be converted into a public limited company. On the other hand, an OPC cannot change its status to that of a Section 8 Company- a business established to engage in charity endeavours.
Private Company
The Companies Act’s section 3(1) (c) states that only one individual may establish a business as an entrepreneur for whatever reason. This highlights one of the other features of One Person Company, which is that it is a type of private enterprise.
Annual General Meetings
One of the significant features of One Person Company is that they do not require AGMs. OPCs are exempt from hosting AGMs. Rather, the member of the company has to convene a meeting with the Board of Directors to go over the company’s financial accounts.
Limited Liability:
Last but not least, among the features of One Person Company is the limited liability. An OPC member’s liability is limited to the amount of stock they have put in the business. This implies that in the event that the firm suffers financial difficulties, the member’s personal assets are safe. In order to incorporate an OPC, a minimum of Rs. 1 lakh must be authorized, and the paid-up capital must be at least that amount.
Distinct Legal Identity
An OPC’s unique legal identity is one of its core characteristics. Independent of its owner, the company is acknowledged as a distinct legal entity. This division guarantees that the company may sign agreements, possess property, and take on debts in its own name. Hence, a distinct legal identity is also one of the features of One Person Company.
Mandatory Incorporation
In contrast to other company forms, the Companies Act governs the necessary steps involved in forming an OPC. By formally incorporating the business, you may increase accountability and transparency by ensuring that it complies with legal requirements.
Impact of One Person Company
One person companies, or OPCs, are regarded to have had a good influence on India after the year 2014. Owners of businesses have benefited greatly from it and have been promoted. Some experts believe that it will stimulate the Indian economy in the near future. The OPCs or one person companies will also have access to the global market. A vast number of companies have registered for the OPCs between 2015 and 2018. Individuals who had already registered made significant contributions to India’s financial industry. Small business owners have recently adapted new strategies to track their company’s development under OPCs.
Helping the new OPCs has also been greatly aided by the Indian government. It has also helped to finance the new business owners. It is anticipated that outside investors will support Indian business owners in the future. A multitude of fresh and creative concepts will surface. The paradigm of commerce and economics has undergone a transformation with the emergence of one-person businesses.
OPC Registration with Corpbiz
For companies looking for a hassle-free OPC (One Person Company) registration process, Corpbiz provides streamlined and effective services. People can easily handle the complexities of OPC registration with Corpbiz owing to their professional advice and efficient processes. The platform ensures accuracy and speed in the registration process by fusing technical innovation with a dedication to regulatory compliance. The dedicated workforce at Corpbiz makes sure that businesses wishing to form an OPC have a seamless experience, from paperwork to filing.
Frequently Asked Questions
Can an NRI register a one-person company in India? If so, what prerequisites must be met for the same?
No, a one-person company cannot be registered anywhere in India by anybody other than an Indian citizen or resident. This implies that a foreign national or non-resident Indian (NRI) cannot establish an OPC in India.
Is FDI permitted in India for OPC?
No, foreign direct investment (FDI) into sole proprietorships is prohibited in India.
What is an OPC as per the Companies Act, 2013?
As per Companies Act, 2013, OPC is a company incorporated by a single person.
Who is not qualified to incorporate an OPC?
A foreign national, a person below the age of 18, or anyone who is not a resident of India or who lacks the capacity to enter into a binding contract is ineligible to join an OPC.
What is the minimal amount of money that can be permitted to launch a one-person business?
One lakh rupees is the minimum permitted capital to establish a one person company.
How many shareholders and directors are required to start a one person company?
One nominee and one director are needed to register a one person company. A One Person Company can only be formed with one stakeholder. The nominee joins the company as a member in the case of the promoter's demise or incapacity to do so.
In a one person company, who is a nominee?
In a one person company, the nominee must be a natural person who resides in India and is an Indian citizen. “Resident in India” refers to an individual who has spent at least 182 days in India in the year prior to the current one.
Can a minor join an OPC as a candidate or member?
A minor is not permitted to hold shares of an OPC with a beneficial interest or to become a nominee or member of the organization.
Is the appointment of a nominee required for an OPC member?
Yes, designating a candidate is a requirement for an OPC member.
Who can join an OPC and become a member?
A natural person who is an Indian citizen, regardless of whether they live in India or not, can form a one person company.
Read Our Article: Know All The Documents Required For OPC Registration
