The concept of One Person Company [OPC] is a new form of business, introduced by The Companies Act, 2013, thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate World. One Person Company means a company which has only one member. One Person Company is a hybrid of Sole-Proprietor and Company form of business. It is a registered private company who has one shareholder. The shareholder must nominate one person as nominee; act as shareholder in case promoter is disabled.
- Minimum paid up share capital of One Person Company is one lakh rupees (Rs. 1,00,000) only.
- One Person Company is a Private Company, may be a Company limited by share/a Company limited by guarantee / an unlimited Company.
- In case of the death of member/shareholder or his incapacity to contract, then nominee/other person become the member of the Company.
- Cash Flow Statement may not include in the financial statements of One Person Company.
- One Person Company need not to hold any AGM (Annual General Meeting) in each year.
- One Person Company’s Annual Return is required to be signed by Director. The mandatory requirement of company secretary signature is not applicable.
- Separate legal entity:
One Person company is a separate legal entity and capable of doing everything that an entrepreneur would do.
- Organized Sector of Proprietorship Company:
OPC will bring the unorganized sector of proprietorship into the organized version of a private limited company. Various small and medium enterprises, doing business as sole proprietors, might enter into the corporate domain. The organized version of OPC will open the avenues for more favorable banking facilities. Proprietors always have unlimited liability. If such a proprietor does business through an OPC, then liability of the member is limited.
- Minimum compliances:
One Person Company have to face little compliance burden as compared to private limited companies . It is easy to manage the OPC With minimum Compliances Such as:
- Only the resolution shall be communicated by the member of the company and entered in the minutes book and signed and dated by the member and such date shall be deemed to be the date of meeting.
- A One Person Company may conduct at least one meeting of the Board of Directors in each half of a calendar year and the gap between the two meetings shall not be less than ninety days.
- Where the company is having only one director, all the businesses to be at the transacted meeting of the Board shall be entered into minutes book maintained. No need to hold Board Meeting .
- Adequate safeguards:
In case of death/disability original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the member .
- Flexibility in tax 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 reduce the profitability of the Company and ultimately bring down taxable income of your business.
- Decision Making:
The owner is eligible in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.
- Credit rating:
The One Person company with bad credit rating may even get the loan. Credit rating of One Person Company will not be material if the rating of One Person Company is as per norms.