What is a One-Person company: The Companies Act in India was implemented in the year 2013. As per this rule, a single person can form a 'One Person Company' (OPC).
What is a One Person Company in India?
A One Person Company (OPC) is a type of private company in India that is owned and managed by a single person. OPCs were introduced by the Indian government as a way to make it easier for sole proprietors to start and run a business.
An OPC has some features of a sole proprietorship and some features of a private limited company. Like a sole proprietorship, it is easy to set up and manage, and the owner has complete control over the company. But like a private limited company, it is a separate legal entity from its owner, and the owner's personal assets are generally protected from the company's liabilities.
In order to register as OPC, the company should have only one member, should have a Nominee Director, and also should be a private Limited Company.
One Person Company Act, and it's purpose
The One Person Company (OPC) concept was introduced in India by the Companies Act, 2013. The act provides for a new type of company called the One Person Company (OPC), which can be incorporated with only one person as a member. Prior to the introduction of OPC, it was mandatory for a company to have at least two members and two directors.
The Companies Act, 2013, lays out the rules and regulations for the incorporation, management, and dissolution of OPCs. OPCs are required to comply with the same laws and regulations as other private companies in India, including accounting and auditing requirements, and filing of annual returns. Additionally, an OPC also need to appoint a Nominee Director who will take charge of the company in case the sole member is unable to do so.
The main advantage of an OPC is that it provides the benefits of a private limited company, such as limited liability and separate legal entity status, while also allowing for single ownership and management, which makes it simpler and less costly to set up and run.
In how many ways a company can be registered?
Generally, a company can be registered in three ways, such as:
- One Person Company: Only one person can start a company.
- Private Company: At least 2 persons
- Public Company: 7 persons are required
How did One person company start in India
The concept of One Person Company (OPC) was first introduced in India in the Companies Act, 2013, which aimed to provide a more streamlined and less burdensome option for individuals who wanted to start and run their own businesses.
Before the introduction of OPCs, the minimum requirement for incorporating a company in India was that it must have at least two members and two directors. This made it difficult for sole proprietors to start and run a business, as they were required to find at least one additional person to serve as a member and director.
The introduction of OPCs was a part of the larger efforts made by the Indian government to simplify the process of starting and running a business in India, which was also aimed to increase entrepreneurship and promote ease of doing business. The concept was also aimed to encourage entrepreneurship, particularly among small-scale entrepreneurs, who would otherwise find it difficult to comply with the requirements for incorporating a private limited company.
The Companies Act 2013 provided for the incorporation of OPC's which have only one member and a nominee director, providing the sole member the flexibility of single ownership and control over the company and also the advantage of a separate legal entity along with the limited liability of shareholders.
In 2005, J.J. The Iranian Expert Committee advised the creation of the OPC. He suggested that through legal exemptions, such a simple and comfortable entity should be made available so that the small entrepreneurs of the country do not have to face trouble with the complex and complex legal system.
What are the benefits and Features of One Person Company?
There are several benefits to registering as a One Person Company (OPC) in India, including:
Limited Liability: As an OPC is a separate legal entity from its owner, the owner's personal assets are generally protected from the company's liabilities.
Ease of Formation and Maintenance: OPCs are relatively easy to set up and manage, and require less compliance and reporting compared to other types of companies.
Single Ownership and Management: OPCs are owned and managed by a single person, which makes decision-making and management simpler and more streamlined.
Perpetual existence: OPC's have perpetual existence and would not be dissolved on the death or incapacity of their member
Easier to Raise Funds: OPCs have the potential to raise funds through equity or debt and can also accept deposits from their members.
No restriction on the number of employees: OPC can have any number of employees and are not restricted like other types of companies.
Nominee Director: OPCs are required to appoint a nominee director, who will take charge of the company in case the sole member is unable to do so.
Foreign Ownership: OPCs can have foreign nationals as its members and nominee directors.
It's worth noting that OPCs may be subject to certain restrictions and obligations, such as compliance with accounting and auditing requirements, and filing of annual returns. But overall they are considered an easier and more flexible way to start and run a business in India.
Eligibility to form a one-person company
Instructions for one-person company
1. Only a natural person who is an Indian citizen and a 'resident of India'
- A person is eligible for amalgamation of the company.
- A person is nominated as a single member of the company.
Explanation. For the purpose of this rule, a 'resident of India' is a person who has lived in India for a minimum of 182 days in the exact previous calendar year.
2. No person is eligible for amalgamation of more than one ' one-person company or to be enrolled in more than one such company.
3. When a natural person becomes a member of that company by virtue of being a member of 'one person company' as well as being enrolled in another 'one person company' in accordance with this rule, he can meet the eligibility criterion specified in sub-rule (2) within 180 days.
4. A person cannot become a minor member or nominee in the company or hold a share of beneficial interest.
5. Such a company cannot be amalgamated or converted into a company under Section 8 of the Act.
6. Such a company cannot undertake non-banking financial investment activities, including investment in securities of the corporate body.
7. Before the expiry of two years of amalgamation of an individual company, such a company cannot voluntarily convert into any other form of the company except those companies whose paid-up share capital limit has been raised beyond Rs. 50 lakhs or its average annual turnover in the associated period exceeds Rs. 2 crores.
How to register One Person Company in India
- To get register One Person Company you have to follow these 6 steps
- Create a digital signature certificate
- Apply for Director Identification Number
- Register your preferred company name through SPICe+ 32 application form
- Documents- Declaration and consent of the Proposed Director of memorandum of association, Articles of Association, Form INC-9, and DIR-2.
- Upload appropriate documents to the MCA site.
- The Registrar of Companies (ROC) will issue a certificate of incorporation.
After getting issued the certificate for ROC incorporation we can start a one-person company business.
FAQs: Know more Questions asked by our readers for One Person Company
Q. how many one-person companies can be created by an individual
As per the Companies Act, 2013, an individual can register and incorporate only one One Person Company (OPC) in India. An individual cannot have multiple OPCs under his or her name.
However, there's no restriction on the number of companies that a person can be a member of, an individual can be a member of multiple companies, but he can be the sole member and director in only one OPC. It's not allowed to register multiple OPCs with the same PAN (permanent account number) or to act as a nominee for more than one OPCs.
Additionally, if an individual wants to create more than one companies, he/she can create multiple Private Limited Company, Public Limited Company, Limited Liability Partnership (LLP), etc.
Q. Famous one person company examples
There are many One Person Companies (OPCs) in India, which are active in a variety of sectors. Here are a few examples of famous and successful OPCs in India:
- Flipkart: The popular Indian e-commerce platform was started as an OPC by Sachin Bansal and Binny Bansal in 2007. They later incorporated it as a private limited company.
- Ola Cabs: The ride-hailing service was started as an OPC by Bhavish Aggarwal and Ankit Bhati in 2010.
- Paytm: The digital wallet and e-commerce platform was started as an OPC by Vijay Shekhar Sharma in 2010.
- Swiggy: The food delivery service was started as an OPC by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini in 2014.
- Zomato: The food delivery and restaurant discovery platform were started as an OPC by Deepinder Goyal and Pankaj Chaddah in 2008.
These are a few examples of successful OPCs in India, which have grown and expanded significantly since their inception. These companies started as OPCs and later incorporated as private limited companies as they needed more capital and have multiple stakeholders. This shows that OPCs can be a good starting point for entrepreneurs in India, as they provide a simpler and less burdensome option for starting a business.
Q. One person company Wikipedia?
A new term of "one-person company" is included in this act that will be a private company and with only 98 sections of the Act notified. if you are looking to more about the One Person Company Wikipedia there read here.
Q. Difference between One Person Company (OPC) Vs Sole Proprietorship India
One Person Company (OPC) and Sole Proprietorship are two different types of business entities in India, with some similarities and some important differences.
A Sole Proprietorship is a type of business that is owned and run by a single person, who is personally liable for all the debts and obligations of the business. It is the simplest and most common form of business organization in India. It has no legal existence separate from the owner and doesn't require any registration.
On the other hand, an OPC is a type of private company in India that is owned and managed by a single person, and it has a separate legal existence from its owner. OPCs were introduced by the Indian government as a way to make it easier for sole proprietors to start and run a business.
The main difference between the two is that OPC is a separate legal entity from its owner, whereas a Sole Proprietorship does not have a separate legal entity. This means that in case of OPC the owner's personal assets are generally protected from the company's liabilities, whereas in case of Sole Proprietorship the owner is personally liable for all the debts and obligations of the business
Additionally, OPCs are required to comply with the same laws and regulations as other private companies in India, including accounting and auditing requirements, and filing of annual returns, while a Sole Proprietorship does not have such obligations. Moreover, OPC can have any number of employees, while a Sole Proprietorship is usually a one-person business.
In summary, while OPC and Sole Proprietorship both offer simplicity of ownership and management, the key difference is that OPC offers limited liability protection and requires compliance with legal regulations while Sole proprietorship does not have legal protection and minimal compliance requirement.
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