One Person Company (OPC)
Category » Start- Up
Price on Request
ONE PERSON COMPANY
One Person Company was introduced through the Companies Act, 2013 to support entrepreneurs who want to start a venture solely on their own. This was an improvisation of the risky Sole Proprietorship that introduced the owner to unlimited liability. In a One Person Company, the liability on the owner would be limited to his or her contributions to the business only.
The entrepreneur will be the only shareholder of the company and he will be the director as well. There will be a nominee director who’ll come into the picture only after the original director is incapable of running the company further. A One Person Company is a separate legal entity from its owner, which provides the luxury of limited liability in the business. Since this type of business structure requires only one person, there is no scope for raising venture capital through equity funding or for employee stock options.
There are a few more limitations to a one person company. For example, if the average year turnover is over Rs. 2 Crore or the paid-up capital is over Rs. 50 Lakh, it must be progressed into a private limited company or a public limited company within six months.
Advantages of a One Person Company
The luxury of limited liability is endowed on all partners and all their personal assets are safe, no matter the debts in the business.
While a sole proprietorship ends after the owner’s passing, that is not the case with a one person company. In an OPC, the nominee director takes the lead and after him, his nominee will. Hence, the business continues under different leaderships.