To grow a solopreneur in India One Person Company Registration can be a great option. A person company is a company that has only one person as a member defined in the Companies Act. One Person Company is owned by only a single owner who is also appointed as a director of the Company. One Person Company has limited shares and liabilities. Only sole person can hold the shares of the company. This write-up delves into the benefits of One Person Company that collectively contributes to understanding why one should opt for OPC’s structure empowering one to make informed decisions on his entrepreneurial journey.
What are the Benefits of One Person Company in India?
The following are the benefits of One Person Company in India:
Legal Status
- The one of the main benefits of One Person Company in India is the legal status of an OPC is a separate independent legal entity incorporated as a private limited company.
- OPC is a form of a private limited company that can be registered under the Companies Act.
- As per Section 149 (1) shall be one director in the case of One Person Company. This director must also be the sole member of the company.
Limited Liability
- One Person Company has limited liabilities by shares so any default or loss owner of the company is personally not held liable for it.
- A sole person is protected from liabilities due to their distinct legal status.
- Where One Person Company is limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company.
- In case any liability arises, personal assets will not be considered for the repayment of any business debt or loss as OPC creates a distinct legal entity. It protects personal wealth which builds a sense of security and risk minimisation for business owners.
Easy Incorporation and Fewer Compliances
- OPC can be formed with only one person as a private company by subscribing to a name in the memorandum.
- The minimum authorised capital requirement for incorporating OPC is Rs.1 lakh.
- In case of the death of the company owner/subscriber, a nominee can take over the company.
- In the absence of a company secretary, an Annual Return can be signed by a company director.
- OPCs may have only one director on its Board as it benefits from a flexible Board Structure.
- All necessary business can be transacted at this single director’s board meeting.
- One OPC doesn’t hold formal Annual General Meetings and is exempted from holding formal annual general meetings (AGMs).
- Any resolution required for OPC can be deemed to be passed without holding a general formal meeting.
- It has minimum additional compliances like audits or balance sheet filings.
Easy to obtain funds
- OPCs have more fundraising options than sole proprietorships. One Person Company as the name itself clearly states that you cannot raise capital by issuing shares but as OPC any Private equity fund (like a Venture capitalist or angel investment) company can infuse capital.
- Find raising can depend on various factors like the company’s business model, financial projections, and overall market perception.
OPC can Avail of MSME Benefits
- OPC has the perfect structure for MSMEs as it requires minimal paperwork, more flexibility, and lower capital requirements than a Private Limited.
- Incorporation by NRIs
Non-Resident Indians (NRIs) can establish one-person companies.
Individuals who have resided in India for a minimum of 1220 days. immediately preceding the financial year can initiate the registration process for an OPC.
- Easy Conversion: OPC can be converted into PVT LTD after two years if turnover exceeds 50 lakhs.
- Shares transferability: OPC share transfer can be done by altering the Memorandum of Association (MoA).
- Perpetual Succession: OPC enjoys the perpetual succession. It can be done by the nominee’s name by giving a notice. OPC shall intimate such change in the name of the nominee to ROC and it continues to exist even after death or incapacitation.
Easy to Manage
OPC being a sole Shareholder and Director enjoys complete control over the company’s operations and decision-making processes. This avail for quick decision-making, streamlined decision-making structure, and empowers for fast growth.
Conclusion
A One Person Company with limited liabilities is owned by a single shareholder who is entitled to all its shareholding and profits. The shares of the OPC are also restricted in terms of their transfer to the general public or on public platforms like Stock Exchange Markets. They can only be transferred to the rightful shareholder or nominee at the time of the death of the company owner. Since the company operates as a Private Company, its shares cannot be sold on public platforms like stock exchanges, or to the general public at large.
FAQs
- What are the compliance requirements for OPC Registration?
1. One must be an Individual/Indian Citizen/A Non-Minor.
2. The OPC must have only one shareholder.
3. The shareholder can be the director.
4. The OPC must have a nominee who is at least 18 years old and is not a director in any other OPC.
- Can a single person hold 100% shares of One Person Company?
Yes, a single person holds 100% shares of One Person Company.
- How many maximum shareholders can have if One Person Company has a future expansion plan?
OPC can have up to 200 shareholders if it has a future expansion plan.
- What are the Compliance Requirements for OPC under the Companies Act?
The compliance requirements for One Person Company it must file its Annual Return to the Ministry of Corporate Affairs (MCA) and its Income Tax Returns (ITR) to the Income Tax Department. Also, One Person Company shall get their Annual Audit done.