One person company(OPC) is a hybrid of sole proprietorship and company,
Form of business and limited liability is the precious legal inventions in history.
The invention in history. The introduction of OPC in the Indian legal system is considered As the appropriate legislation to be unleashed the entrepreneur talent of emerging Indian businessmen, especially to startup ventures.
DISTINCT OF ONE-PERSON COMPANY
1. One Director
2. One Shareholder
● Paid Up Capital
One more benefit is that it shall have minimum paid-up capital of Rs one lakh(Rs100000)
● Style of writing Name the company
(One person company) is needed to be mentioned in brackets below such the name of the corporate, wherever its name is printed affixed or engraved
FORMATION OF ONE-PERSON COMPANY
A natural person who is a citizen of india and resident in india is eligible to incorporate a one-person company,i.e a person who has stayed in India for a period of not but hundred and eighty-two days throughout the right away preceding.
- The process of incorporating the one-person company is far easier as compared to private limited companies and public limited companies.
- There are many relaxations in terms of legal complex abilities as involved incorporation of other companies under companies act 2013
Below, we can flow the process of formation of a one-person company-
● Process of incorporation of one person company(OPC)
● Obtain Digital signature certificate(DSC) For proposed director
● Obtain Director Identification Number(DIN) for the proposed director
● Select a suitable company name, and make an application to the ministry of corporate affairs for the availability of a name
● Draft Memorandum Of Association and Article of Association (MOA & AOA)
● Sign and file various documents including MOA & AOA with the registrar of companies electronically
● Payment Of Requisite fee to Ministry Of Corporate Affair and also stamp Duty
● Scrutiny of documents as Registrar of the company (ROC)
● Receipt of certificate of registration from ROC
ADVANTAGE OF ONE-PERSON COMPANY
There are various reasons why any entrepreneur or business entity should opt for a one-person company
1. A Separate Legal Entity
The one-person company is considered to be a separate legal entity and is capable of doing everything that an entrepreneur would do.
2. More opportunities and also limited liability
The Main Advantage of the one-person company is that it has a lot of opportunities and also limited liability because we know that the liability of the OPC to the extent of the value of the share you hold so that each and every individual could take more risk in the business which will not affect or suffer the loss of personal assets. It can be a huge encouragement to new and young innovative start-ups. In the case of one person company, it confers a separate legal identity upon single-person business entities thereby it enables the limit of the liabilities of the entrepreneurs to the extent of paid subscription money only. So by limiting all the liabilities of the single shareholders this concept extends a protective cover and encourage their participation in the economy.
3. Minimum Requirements
There are a few minimum requirements for the incorporation of one person company which are as follows:-
- Only 1 Shareholder
- Only 1 Director
- Director and Shareholder can be one individual
- Only 1 Nominee
- “OPC” letter has to be suffixed with the name of the company during registration to distinguish it from other companies
As compared to private limited companies OPC has to face few burdens of compliance so, OPC can focus on other functional and core areas
4. SINGLE OWNER
In one person company one and only person is responsible for taking decisions so being a single owner it is really helpful in quick decision-making and controlling and managing the business without following any elongated processes and methodologies as adopted in the other companies. Also the sense of personal company inspires to grow the business further and give maximum effort one can provide.
5. Perpetual succession
In the case of bad credits rating OPC may even get the loan. If the rating of OPC is as per the norms the credit ratings of OPC will not be material. In the case, one person company the OPC being an incorporated entity shall be a perpetual entity and thereby it differs from a sole proprietorship. In OPC death or incapacity of the sole member would not dissolve the company. The OPC enables many successful ventures to run irrespective of death or any incapacity of the proprietor to run the venture.
6. Income tax law Benefits
Unlike proprietorship, any remuneration paid to the director will be allowed as deduction as per income tax law and moreover, other benefits of presumptive taxation are also available subject to income tax act.
7. Middleman Eliminated
One person company gives special hand to small entrepreneurs to set up a company by allowing the shareholders to directly access the target market which makes it easy for them to avail credit facilities and bank loans rather than being forced to share their profits with middlemen. The OPC will provide a good opportunity for various small entrepreneurs.
The One person companies it is exempted from various procedural formalities which was not available to private companies such as conducting an AGM General Meeting or Extraordinary General Meeting (EGM) etc. Which makes its operation very convenient and hassle-free.
9. A Freelancer Can Register His Company As OPC In India
As a Freelancer it is difficult it must be understood that being a freelancer is quite challenging & the hassle while providing freelancing services. If one is a freelancer and wants to register an OPC it adds more credibility trust after registering an OPC- one-person company. All the function of the company will be smooth operating and clients and investors will trust more because you will have documents to prove that you have registered the company.
10. Limited Liability And Hence More Opportunity.
As discussed earlier one of the other major advantage of one person company is Limited liability according to which the owner will have the accountability or legal responsibility only for the maximum value of what shares owner do hold. It is beneficial in case of a freelancer registering as a one-person company also if any legal controversy or case or debts over the company it will the company which will be always sued and the allegation will not come to its owner and the owner will be held responsible only for a fixed sum.
11. Complete control of the company and easy decision process
Only in case of one person company it is possible of getting an easy decision process complete control over the company along with a legal status and recognition. On the other hand we can see that in case of private limited or proprietorship one do not have those benefits anymore And the major advantage is beside unlike proprietorship in case of one person company, the personal asset of the owner does not have any chances of being on a stake solely in case of company failure or debt which is considered to be the biggest relaxation. And these were the just a little of what you can achieve and be benefitted if one is preferring OPC over freelancing and get the benefit in the registration of one person company in india.
One person company from regulators perspective will make the regulation of these entities convenient and Effective by organizing the unorganized sector of proprietorship. Going forward the conferment of the status of private limited company on a one person company also provide access to market players to various credit and loan facilities and hence would encourage entrepreneurs rather than one limit the liability of sole entrepreneurs.