Description

A new concept has been introduced in the Company’s Act 2013, about the One Person Company (OPC). In a Private Company, a minimum of 2 Directors and Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 members. A single person could not incorporate a Company previously. But now as per Section 62 of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. It is a form of a private company but the compliance requirements are lesser than that of a private company. OPC Registration allows single founders to enjoy the status of a company. OPC Registration helps to have full control over affairs of the business while keeping the liability limited. Though an OPC Registration allows a lone Entrepreneur to operate a corporate entity with limited liability protection, a OPC does have a few limitations. For instance, every OPC Registration must nominate a nominee Director in the MOA and AOA of the company – who will become the owner of the OPC in case the sole Director is disabled. Also, a One Person Company must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. Therefore, it is important for the Entrepreneur to carefully consider the features of a One Person Company prior to registration. Furthermore, if an OPC hits an average three-year turnover of over Rs. 2 crore or has a paid-up capital of over Rs. 50 lakh, it must be turned into a private limited company or public limited company within six months. Mandatory conversion to Private Limited or Public Limited To maintain this One Person Company, the share capital limitation of fifty lakh rupees and not exceed more than two core rupees in the business undertaking. Suppose, is it occurred, it shall be required to modify it to a private or Public Limited Company within the time period of six months. An OPC has certain opportunities and advantages which are not available to private companies. The provisions related meetings like, General Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are not relevant for One Person Company. But the OPC will offer all benefits to its businessman as similar to the private limited company. It can access credits, bank loans, limited liabilities, legal protection for business, get into market etc. But all must be done with a single registration. An individual can start only one company under the name of the OPC.