EnglishA-One Person Company is a firm that can be formed in the same way as a Private Limited Company. This type of business was created following the passage of the Companies Act of 2013. This sort of business has been promoted since it allows anyone to create a business without having to worry about other subscribers or shareholders.
According to the Companies Act of 2013, a person can form a company with only one member and one director. It’s possible that the director and the member are the same person. As a result, a One Person Company means that a single person, whether a resident or an NRI, can start a business that combines the benefits of a corporation with those of a Sole Proprietorship.
Following are the disadvantages of an One Person Company:-
Management and Ownership
There will be no apparent line between ownership and management because the only member can also be the company’s director. All decisions must be made and approved by the lone member. The barrier between ownership and control is becoming increasingly blurred, perhaps leading to unethical commercial activities.
Only suitable for small businesses
OPC (One Person Company) is well suited to the structure of a small firm. At any given time, the OPC can have not more than one member. To obtain more funds, OPC cannot recruit more members or shareholders. As a result, more members cannot be joined as the company expands and grows.
Business operations are restricted
The OPC is prohibited from engaging in non-banking financial investment operations, such as investing in corporate securities. It cannot be changed to a charity purpose company under Section 8 of the Companies Act, 2013.
