As per provision of section 2(62)
of the Companies Act, 2013 defined (62) “one person company” means a company
which has only one person as member. For the formation of OPC [Rule 3] the following conditions must be
followed:
Only a natural person who is an Indian citizen and resident in India-
-
shall
be eligible to incorporate a One Person Company;
-
Shall
be a nominee for the sole member of a One Person Company.
The term “resident in India” means a person who has
stayed in India for a period of not less 182 days immediately preceding
one calendar year.
m One Person company can be registered only as a Private Company.
m The paid up capital of the OPC cannot
exceed 50 Lakhs.
m Its average annual turnover cannot exceed 2
crores.
m A person can incorporate a maximum of 5
OPCs.
m One Person Company can appoint maximum 15
Directors, but minimum should be one Director.
m An
OPC is required to give a legal identity by specifying a name under which the
activities of the business could be carried on. The words ‘One Person Company’
should be mentioned below the name of the company, wherever the name is
affixed, used or engraved.
m Member/Shareholder of the One Person Company
acts as first Director, until the Company
appoints Director(s).
Here are the 10
reasons why any entrepreneur or business ENTITY SHOULD opt for OPC. The
advantages of being an OPC are as follow:
1.
A Separate legal entity
OPC is separate legal entity and capable of doing
everything that an entrepreneur would do.
2.
Annual general meetings
In OPC there is no need to hold such meetings
only the resolution which shall be required to communicate to the members. The
date on which is signed by the members are considered as meetings. One
Person Company need not to hold any AGM (Annual General Meeting) in each year
Holding Annual General Meetings.
3.
Exempted
from performing certain formalities
Under OPC in case the
Board consists of only one director, then the OPC will not be required to
conduct a Board meeting as well. There is no requirement of appointing a first
director for OPC. Apart from this, OPC is also exempted from provisions
relating to notices of the meetings and any other such stipulation related to
meeting like Quorum for Meetings, Proxies and Appointment of Chairman for
Meeting, and restriction on Voting Rights etc.
4.
Cash Flow Statement
One Person Company is not required to prepare this.
5.
Easy Funding
OPC can raise its funds through venture capital,
financial institutions, angel investors, etc. It can raise funds from others
like thus graduating itself to a private limited company.
6.
Additional risk, limited liability
The liability of the OPC is limited to the extent of the
value of the share a person hold, the individual could take more risk in
business without affecting loss of personal assets.
7.
Minimum regulations
OPC have to face little compliance burden and regulation
as compared to other companies, hence OPC can more focus on other functional
areas.
8.
Benefits of being a Small Scale Industries
(SSI)
An OPC can avail the various benefits provided to Small
Scale Industries like lower rate of Interest on loans, easy funding from bank
without depositing any security to a certain limit, manifold benefits under
Foreign Trade policy and others.
9.
Benefits under Income Tax Law
Any remuneration paid to the director will be allowed as
deduction as per income tax law unlike proprietorship. Other benefits of
presumptive taxation are also available subject to income tax act.
10. Receive interest on any late Payment
OPC avails all the benefits under Enterprises development
Act, 2006. The newly start up OPC is micro, small, or medium; hence they are
covered under this act. As per the Act, if buyer or receiver receives any late
payment (receives payment after specified period), then he is entitled to
receive interest which is three times the bank rate.
11. Increased Trust and prestige
Any business entity that runs in the form of
company always enjoys an increased trust and prestige.
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