One Person Company (OPC) is a new concept in India from 2013. A Single Person, who is an Indian National and Resident in India can incorporate a Limited Company.
One Person Company or OPC means a company which has only one person as a member. An OPC is classified as a private company under Companies Act. OPC has all benefits of a private limited company such as protecting personal assets from business liability, separate legal entity and perpetual succession. One Person Company (OPC) is a Company registered with ONLY ONE PERSON as its shareholder.
A One Person Company can have owned by Only a natural person who is Resident in India and Citizen of India. No corporate entity can be as shareholder (owner) of a One Person Company. Every OPC must nominate one nominee who will become the owner of the OPC in case the promoter director is disabled.
There is no minimum or maximum paid-up capital restriction for One Person Company. It can be converted into private limited or public limited at any time.
One Person Company is not allowed to take any partner (Shareholder). But, OPC can convert into private limited or public limited and add partners(shareholders).
The name of a OPC shall end with the words ‘(OPC) Private Limited’.
Benefits of a One Person Company:
- For incorporating an OPC only one person is required and that is the most predominant feature of an OPC. Hence, we can say that it is a registered form of sole proprietorship. One person is responsible for decision-making, controlling, and managing the affairs.
- As it is a registered form of business entity it enjoys the same privileges as a Private Limited Company. The legality of this type of business form makes it popular among banks and financial institutions
- An OPC can avail various benefits enjoyed by small scale industries like loans are available at a lower interest rate.
- Any remuneration made to the director will be allowed under deduction under Income Tax Law, unlike Proprietorship. Also, the benefits of Presumptive Taxation are available subject to Income Tax Law.
- An entrepreneur can take more risks without stressing over the loss of assets as an OPC has limited liability. This is a sort of encouragement to new, young, and innovative business start-ups.
- All Companies are required to hold annual general meetings in addition to other meetings but One Person Company is exempt from this. The Resolution signed by the Director and entered in the minutes book is sufficient, instead of the annual general meeting.
- Every Company is required to prepare and file statements that include the balance sheets, Profit and loss account, cash flow statement, statement of changes in equity, and explanatory notes. In the case of an OPC, a cash flow statement is not required.