What is a one person company?

One person company (OPC) is a new form of business introduced by Companies Act, 2013. It is hybrid form of business where a sole proprietorship concern can get a corporate outlook.

An OPC is a hybrid structure, wherein it combines most of the benefits of a sole proprietorship and a company form of business. It has only one person as a member who will act in the capacity of a director as well as a shareholder. Thus, it does away with the hassles of finding the right kind of co-partner/s for starting a business as registered entity. The best part is, legal and financial liability is limited to the Company and not the member.

 What are the Documents required for Incorporation of OPC?

  • PAN card and Residence Proof of directors of the company
  • passport-size photograph
  • Copy of Rental Agreement / EB Card Copy of Registerd Office
  • Specimen signature (blank document with signature [directors only])
  • Copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
  • Aadhar card [director only]

Advantages

Single shareholder
A single shareholder who can also be the sole director can start an OPC.
Separate Legal Identity
OPC gets the status of a separate legal entity.
Fewer rules and compliances
OPC has to comply with fewer rules and regulations when compared to other forms of companies.
Limited liability
The sole shareholder gets to enjoy the limited liability feature of a company.

Disadvantages

Suitable only for small businesses
OPC is suitable only for small businesses, OPC can have maximum Paid up share capital of Rs.50Lakhs or Turnover of Rs.2 Crores. Otherwise OPC need to be converted into Private Ltd Company
Cannot convert into Sec8 Company
One Person Company cannot be incorporated or converted into a company under Section 8 of the Act.
Cannot run NBFC business
One Person Company cannot carry out Non – Banking Financial Investment activities including investment in securities of anybody corporate.
What is the Process for Incorporation of One Person Company?
  • Digital signature for the director of the company to be obtained
  • 4-6 proposed names should be provided that should be unique and suggestive of company business.
  • Memorandum and Articles of Association should be drafted.
  • Sign and file various documents including MOA & AOA with the Registrar of Companies electronically
  • Once the application is duly filed and accepted by ROC, Certificate of incorporation is issued and the company is all set to start it’s operations.