One Person Private Limited Company (OPC)
The one person company[as defined under section 2(62) of Companies Act, 2013] means a company which has only one person as a member.
The Company Incorporation Rules provide that only a natural person who is a resident of India and also a citizen of India can form an one person company (OPC). It means that other legal entities like companies or societies, corporate entities, Non-resident Indians or Foreign citizens cannot form an one person company. Further, the rules also specify that a natural person shall not be a member of more than one“One Person Company” at any point of time and the said person will not be a nominee of more than a One Person Company.
Advantages of OPC:
- OPC provides the start-up entrepreneurs to operate business independently.
- OPC provides an outlet for the entrepreneurial impulses among the professionals.
- It has advantages of limited liability. The most significant reason for a shareholder to incorporate the OPC is certainly the desire for limited liability.
- OPC is not a proprietorship concern; hence, it gives a dual entity to the company as well as the individual, guarding the individual against any pitfalls of liabilities. This is the fundamental difference between OPC and sole proprietorship.
- Unlike a private limited or public limited company (listed or unlisted), OPC has comparatively fewer compliances.
- Businesses currently run under the proprietorship model could get converted into OPC hassle free.
- OPC require minimal capital to begin with. Being a recognized corporate, OPC can raise capital from others like venture capital financial institutions etc., thus graduating to a private limited company.
- Mandatory rotation of auditor after the expiry of a maximum term is not applicable.
- The annual return of a One Person Company shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
- The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general meetings, shall not apply to One Person Company.
- One Person Company needs to have a minimum of one director. It can have directors up to a maximum of 15 which can also be increased by passing a special resolution as in case of any other company.
- For the purposes of holding board meetings, in case of one person company having only one director, it shall be sufficient if all resolutions passed by such company are entered in the minutes-book, signed and dated by the member and such date shall be deemed to be the date of the board meeting for all the purposes under this Act. For other One Person Companies, at least one board meeting must be held in each half of the calendar year and the gap between the two meetings should not be less than 120 days.
- The financial statements of OPC can be signed by the single director alone. Cash Flow Statement is not a mandatory part of financial statements for OPC. Financial statements of OPC need to be filed with the Registrar, after they are duly adopted by the member, within 180 days of closure of financial year along with all necessary documents.
- Board’s report to be annexed to financial statements may only contain explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
Preliminary requirements to form OPC:
- One promoter (shareholder/ member)
- One director(must be shareholder/ member himself)
- An authorized capital of Rs.1,00,000/- (Minimum)
- Director Identification Number(DIN) of director
- Digital Signature Certificate (DSC) of the director
- One Nominee (to be appointed by the promoter/ shareholder)
- Proposed names of OPC (at least three)
- Name search and application for name availability
- Drafting of Bye Laws (MOA & AOA)