One Person Company (OPC)
Corporate identity with limited liability feature yet business continuity, ease of fund raising, all this at the comfort of single ownership. A rising form of business constitution where equity is self owned.
A one-person company is formed by a single person. Before the Companies Act,2013, an individual couldn’t form a company and a single person-owned entity was called a sole proprietorship. As per the newly induced section in the Companies Act,2013, now a company can be formed by a single director and a single member. The director and the member can be the same person. Such a company will have the features of a company and the advantages of a sole proprietorship.
Benefits of OPC
- It gets the status of a separate legal entity. The company is exclusive and the member or director is only liable for the part of the shares owned in the company. If the company is at loss, the creditors can only sue the company and not the member or the director.
- As the entity has got a tag of being a company, financial institutions grant loans and other amenities at ease. It makes the availability of funds easy.
- OPC have lesser compliances than a private or a public company.
- OPCs do not require to prepare cash flow statements. They also need not have a company secretary to sign the annual returns or books of accounts; a member or director could sign off the same.
- There is no minimum authorised capital for the incorporation of an OPC. And it will have only one director and member, which can be the same person, to incorporate the company.
- The decision-making processes are comparatively quick as affairs need not be discussed with many people. The decision-making power vests with a single authority.
- The OPC’s director needs to appoint a nominee and therefore it enjoys perpetual succession.
The documents required for the registration of a One-Person Company:
- The proposed initial capital of the OPC
- The registered office address of the OPC
- The PAN card copy of the shareholder and the nominee.
- The Aadhar copy of the shareholder and the nominee
- Latest bank statements with the address of the shareholder and the nominee.
- Photo of the shareholder and nominee
- Email id of both shareholder and nominee
- Director Identification Number of the shareholder and nominee, if one exists.
Profito Global provides you with a hassle-free experience if you are planning to incorporate your business into a one-person company. The experts at Profito Global will guide you and assist you in providing all the relevant information regarding the setup of an OPC.
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Who is eligible to be a member of a one-person company?
Only a natural person who is a citizen of India will be able to be a member of a one-person company.
What are the disadvantages of a one-person company?
- Suitable only for small businesses.
- Restriction on the types of business activities that can be taken up.
- Restriction in investing in securities of other body corporates.
- No clear distinction between ownership and management.
Can a person be a member of more than one OPC?
No, a person can at a time only be a member of one OPC.
Is it compulsory to appoint a nominee in an OPC?
Yes, it is mandatory for the member to elect a nominee at the time of registration. The consent of the person elected as nominee should be obtained under INC-3.
Who is not eligible to incorporate an OPC?
A citizen of a foreign country, a minor and any person who isn’t eligible to enter into contractual obligations.