One Person Company
What Is a OPC ?
Section 2(62) of Companies Act defines a one-person company as a company that has only one person as its member. So, an OPC is effectively a company that has only one shareholder as its member.
Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company. The Companies Act, 2013 provides that an individual can form an OPC with one single member and one director. The director and member can be the same person. Thus, OPC means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.
Difference between Sole Proprietorship and OPC-
Since an OPC is a separate legal entity distinguished from its promoter, it has its own assets and liabilities. The promoter is not personally liable to repay the debts of the company.
On the other hand, sole proprietorship and its proprietor is the same person. So, the law allows attachment and sale of proprietor’s own assets in case of non-fulfilment of the business liabilities.
.Documents required for OPC Registration-
- DSC and DIN of the proposed director.
- Memorandum of Association (MoA).
- Articles of the Association (AoA).
- Atleast 1 Nominee and his/her consent.
- Proof of the registered office of the proposed OPC.
- Declaration and consent of the proposed director.
The PAN Number and TAN is generated automatically at the time of incorporation of the Company. There is no need to file separate applications for obtaining PAN Number and TAN.
Advantages of OPC-
- Seperate legal entity.
- Easy Incorporation.
- Perpetual succession.
- Less Compliance as compared to pvt/public company.
- Easy to obtain fundings/loans.
Disadvantages of OPC-
- Can not carry out NBFC business.
- Suitable for small businesses.
- An OPC can not be converted into Section 8 company.
Mandatorily Conversion-
In case the paid-up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into a private or public company.