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All You Need To Know About One Person Company

Let’s explore today about One Person Company. Companies Act, 1956 is now replaced with the new Companies Act, 2013. The Companies Act, 2013 has introduced the concept of ‘One Person Company’ in India. The concept is already prevalent in many foreign countries and now finally introduced in India.

What is One Person Company (OPC)?

The concept of One Person Company [OPC] is a new vehicle/form of Business, introduced by The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework.
One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with concessional/relaxed requirements under the Act.

Features of One Person Company (OPC)

Only One Shareholder:
Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company. Explanation: The term “Resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

Nominee for the Shareholder:
The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder.  Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder.  Only a natural person, who is an Indian citizen and resident in India, shall be a nominee for the sole member of a One Person Company.

Director: 
Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.

Benefits of OPC:

There are several advantages of an OPC in comparison to other companies, some of which have been enlisted below:

  • An OPC requires minimum paper work as compared with other companies, for example, an OPC is not required to file audited statement of accounts with the MCA (Ministry of Corporate Affairs)
  • Only one member is required to start the company.
  • OPC has perpetual existence i.e. the company will continue to exist even after the death of the promoter (or member). This is because the OPC has a separate legal identity from that of its promoter.
  • Limited liability is another important feature of an OPC i.e. the liability of the owner is limited to the investment made in the business and cannot extend to personal assets of the promoter. It entails lower risk for business as compared to what would have been faced as a sole proprietorship.
  • Only one director is required and the sole shareholder can be the sole director.
  • It requires minimum compliance in comparison with private or public company, e.g. there is no need to hold annual general meeting, it poses lower risk for business as would have been faced as a sole proprietorship, only one director is sufficient, and there is relaxation in filing and signing of financial statements.

Conclusion:

The concept of OPC is novel and previously has been unheard of concept in India. Thus, it is a unique concept which will help in providing legal protection to the unorganized Indian businesses. With the new ‘Make in India’ and ‘Ease of Business’ policies of the new government the future seems promising, but what remains to be seen is the government regulations and clarifications in this regard.

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The post All You Need To Know About One Person Company appeared first on BDS.



This post first appeared on All You Should Know About Legal Notice In India, please read the originial post: here

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