Have Limited funds!!!
Want to start your own business!!!
Want to be your own boss!!!!
Want to be a successful Entrepreneur!!!
Any of this statement hits your mind then your best business option is to incorporate a One Person Company. So let us explore about OPC.
The concept of One Person Company was introduced for the first time in Companies Act, 2013. One person Company means a Company managed and run by 1 person i.e. single person. So the OPC gives a separate identity to the business of the sole proprietor in the form of Company. OPC is a combination of Sole proprietorship and Company where a single person is the owner and simultaneously enjoying the benefits of a company. In case of the death of the person, the ownership passes to the nominee directly without affecting the perpetual succession feature.
Therefore, OPC is a Private Limited Company which is run and managed by single person and enjoying the benefits of a Company by being its own boss.
The benefits of forming a OPC are:
- Artificial Person: OPC is an artificial legal person created by law having its own identity.
- Separate Legal Entity: OPC can acquire and transfers assets in its own name and enter into a contractual relationship with any other person.
- Perpetual Succession: In case of the death of the Sole member, the power vest with the nominee.
- Limited Liability: The liability of member is limited to the extent of shares subscribed. Therefore the members are not personally liable.
- Easy access to loan: OPC being a Company can easily avail loans from banks and financial institutions as compared to sole proprietorship.
- Decision making power: The power to take decision solely vests with the sole member. Therefore, the business is managed only at the discretion of the sole member.
Also Read: How is One Person Company different from Sole Proprietorship?
Terms and Restrictions of OPC
- A person shall not be eligible to register more than a One Person Company or become nominee in more than one such company.
- An OPC cannot be converted into a company under Section 8 of the Act. [Company not for Profit].
- An OPC cannot start financing activities including investment in shares of any company.
- An OPC cant convert at its own discretion into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit of paid up share capital is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e., if the Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.