EnglishA new concept has been introduced in the Company’s Act 2013, about the One Person Company (OPC). In a Private Company, a minimum of 2 Directors and 2 Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 members. A single person could not incorporate a Company previously.
One Person Company (OPC) is a company incorporated by a single person. Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company.
As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. It is a form of a company where the compliance requirements are lesser than that of a private company.
The Companies Act, 2013 provides that an individual can form a company with one single member and one director. The director and member can be the same person. Thus, one person company means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.
The Advantages of ONE PERSON COMPANY are given below:-
Independent Existence:
The One Person's Company is considered a separate legal entity. In the eyes of the law, a company is a person, having a common seal, and perpetual succession. It gets the authority to exercise all the functions of an incorporated person.
Limited Liability:
Unlike public limited companies & private limited companies, the concept of limited liability of One Person Company in India implies that the liability of the member is will be up to the extent of his share in the company. In an OPC, one person holds the entire share and has complete authority over the operation of the business. So, it can be elucidated that the liability of the person will be to the extent he has invested in the business.
Separate Property:
An OPC will have its own separate property as it gains its own identity and functions as a separate legal entity. The OPC will become the owner of its assets, and the members will not have any insurable rights in the assets of the company.
Transferability Of Shares:
OPC has only one shareholder. The issue of transferring a portion of the share does not arise at all because if it is done, the company will cease to be a “one person” company. Transferring all the shares is also not practicable as it’ll change the entire structure of the company as the owner of the company is changing. The issue has not yet been dealt with, and interpretation of the law may provide us with the explanation that in an OPC, the transfer of shares is not allowed.
Tax Flexibility And Savings:
OPC 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 advance money to your own company and earn interest. Directors’ remuneration, rent and interest are a deductible expense which reduces the profitability of the Company and ultimately brings down the taxable income of your business.
Complete Control Of The Company With The Single Owner:
OPC is completely controlled and managed by the Single Owner. It leads to quick decision-making and execution. The sense of belonging motivates to grow the business further.
Legal Status And Social Recognition For Your Business:
A one-person company is the most popular business structure in the world. Large organizations prefer to deal with private limited companies instead of proprietorship firms. Private Limited business structure enjoys corporate status society which helps the entrepreneur to attract a quality workforce and helps to retain them by giving corporate designations, like directorships.
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