One Person Company

The Companies Act, 2012 passed by the Lok Sabha provides for the concept of an OPC. Sec 2(1)(zzk) of the Companies Bill, 2009 brought in the concept of a “One Person Company”. It is essentially a legal entity which functions on the same principle as a Company, but with only one member and one shareholder. It was an alternative for Indians, who typically operate using the risky concept of a proprietorship. A One Person Company (OPC) Private Limited has many advantages as compared to Proprietorship firm.

1. Limited Liability Protection to Directors and Shareholder

All unfortunate events in business are not always under an entrepreneur’s control; hence it is importantto secure the personal assets of the owner, if the business lands up in crises.While doing business as a proprietorship firm, the personal assets of the proprietor can be at risk in the event of failure, but this is not the case for a One Person Private Limited Company, as the shareholder liability is limited to his shareholding. This means any loss or debts which is purely of business nature will not impact, personal savings or wealth of an entrepreneur.

2. Legal Status and Social Recognition for your Business

One Person Company is a Private Limited Structure, this is the most popular business structure in the world. Gives suppliers and customers a sense of confidence in business. Large organizations prefer to deal with private limited companies instead of proprietorship firms.

3. Complete Control of the Company with the Single Owner

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.

4. Helps for Testing of business model and enables Funding

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.

5. Easy to Get Loan from Banks

Banking and financial institutions prefer to lend money to the company rather than proprietary firms. In most of the situations Banks insist the entrepreneurs to convert their firm into a Private Limited company before sanctioning funds. So it is better to register your startup as a One Person private limited rather than proprietary firm.

6. Tax Flexibility and Savings

In an OPC, it is possible for a company to make a valid contract with its shareholder or directors. This means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can lend money to your own company and earn interest. Directors’ remuneration, rent and interest are deductible expenses which reduces the profitability of the Company and ultimately brings down taxable income of your business.

7. Easy to Manage and Freedom 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 Annual General Meeting (AGM)

MINIMUM REQUIREMENTS:

    •   Minimum 1 Shareholder
    •   Minimum 1 Director
    •   The director and shareholder can be same person
    •   Minimum 1 Nominee
    •   Minimum Share Capital shall be Rs. 1,00,000/- (INR One Lakh)
    •   DIN (Director Identification Number) for all the Directors
    •   DSC (Digital Signature Certificate) for all the Directors

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