One Person Company
In order to encourage entrepreneurs and sole proprietors to enter a corporate framework, Companies Act, 2013 introduced the concept of One Person Company. OPC’s is the ideal choice for those individuals who wants to independently commence the business and does not believe in involving any other person. The one person company is a business structure owned and run by one individual with no distinction between the business and the owner and who must be a resident of India.
OPC cannot voluntarily convert into any other kind of company before expiry of 2 years of its date of incorporation except if paid up capital is increased beyond Rs. 50 lakhs or annual turnover crosses Rs. 2 Crores, it becomes mandatory for OPC to convert into private or public company. One Person Company is set to organize the unorganized sector of proprietorship firms. OPC has been provided with concessional/relaxed compliances under the Companies Act.
Some of the prime highlights One Person Company are:
- The act compels conversion of One Person Company in private limited if the capital of OPC exceeds 50 lakh rupees.
- Only one Director and one shareholder wherein the sole shareholder can be the Sole director himself.
- Mandatory requirement of Nomination of one person to take forward the reins of OPC in event of death or inability of original shareholder
- Only Indian citizens and Indian nationals are allowed to start OPC
- Minor cannot become member or nominee of OPC
- Non eligibility of one person to form multiple OPC
- Separate legal entity and Easy to establish with less cost of formation
- Single ownership concept involves results into faster decision making.
- Encouragement to small and medium enterprises.
- Sufficient to hold one board meeting and the requirement to annual general meeting is not applicable.
- One Person Company is not allowed to carry-out non-banking financial activities.