One Person Company

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Ampuesto

One Person Company

One Person Company in India is a new concept that has been introduced with the Company's Act 2013. A One Person Company (OPC) is a type of company that is incorporated as a separate legal entity with only one shareholder who also acts as the sole director of the company. In other words, an OPC is a company that is owned and managed by a single person. OPCs were introduced in many countries, including India, to provide a suitable business structure for entrepreneurs who want to start and run their business without the need for partners or additional shareholders. An OPC has features of a Company and the benefits of the sole proprietorship.

According to Section 2 (62) of the Company's Act 2013, a company can be formed with just 1 director and 1 member. One Person Company registration in India is a type of entity where there are lesser compliances requirements than that of a Private Limited Company

Advantages of One Person Company

  • No such minimum Capital Compulsion
  • Limited Liability unlike Proprietorship
  • It can be started by Single Owner
  • Annual General Meeting not Compulsory
  • Corporate Ownership

Disadvantages of One Person Company

  • OPC can have a maximum no. of 1 members
  • Public Disclosure of Financials
  • No income tax slab available
  • There is a requirement to appoint a nominee to incorporate a OPC.
  • Compulsory Audit

Documents Required

  • KYC Documents of Director and Nominee
  • Address Proof of Company registered Office
  • Consent Letter of Nominee
  • Contact Details/ Photo of Director and Nominee
  • Proposed Name and Objects of Company

What You Will Get

  • Incorporation Certificate
  • MOA and AOA
  • PAN and TAN of the Company
  • DSC of Director
  • DIN of Director

Why you should choose OPC

  • Limited Liability

Limited liability in One Person Companies (OPCs) refers to the legal protection that the company offers to its owner or sole shareholder in case of any financial liabilities incurred by the business. In other words, the liability of the owner or sole shareholder is limited to the amount of capital invested in the company and their personal assets are protected from any claims by creditors. This means that if an OPC faces financial difficulties and is unable to meet its financial obligations, the personal assets of the owner or shareholder, such as their house, car, or personal savings, will not be used to pay off the debts of the company. Instead, only the assets of the OPC will be used to settle any outstanding liabilities.

  • Separate Legal Entity

One of the key features of a One Person Company (OPC) is its status as a separate legal entity. This means that an OPC is treated as a separate legal entity from its owner or sole shareholder, and it has its own legal identity that is distinct from that of its owner. As a separate legal entity, an OPC can enter into contracts, sue or be sued in court, own property, and conduct business in its own name. This provides a number of advantages to entrepreneurs who want to start their own business, including limited liability protection and legal recognition.

  • Minimum Capital Requirement

In some countries, a minimum capital requirement is mandatory for One Person Companies (OPCs). The minimum capital requirement refers to the minimum amount of capital that an entrepreneur needs to invest in an OPC in order to start the business. The purpose of a minimum capital requirement is to ensure that the OPC has sufficient financial resources to cover its initial expenses and operating costs. In India an OPC can be started with a minimum authorized capital of Rs. 1 lakh But There is no mandatory requirement for a minimum paid up capital.

  • Single Ownership and Management

In a One Person Company (OPC), the company is owned and managed by a single person who is referred to as the "sole shareholder" or "sole owner". This means that there is only one person who owns the company, and that person also manages the day-to-day operations of the business. Single ownership and management can be a good option for entrepreneurs who want complete control over their business and want to minimize administrative and legal costs. However, it is important to note that single ownership and management also means that the entrepreneur is solely responsible for the success or failure of the business. It is recommended to consult with a legal professional or business advisor to understand the legal and financial implications of starting an OPC.

 

Tax Structure in One Person Company

Entrepreneurs can save money on taxes by starting an OPC by taking advantage of lower tax rates in comparison to proprietorship and Partnership. By choosing an OPC as their business structure, they can benefit from lower tax rates, deductions, and exemptions, which can help to reduce their overall tax liability. Additionally, the limited liability protection offered by an OPC can also help to reduce the entrepreneur's personal tax liability. It is recommended to consult with a tax professional or business advisor to understand the specific tax laws and regulations that apply to OPCs in the country where the business is being registered. We at, Ampuesto, can provide guidance on how to structure the business to maximize tax benefits and minimize tax liability.

 

Requirement for Annual General Meeting and other ROC Filling

A One Person Company is exempted from holding the Annual General Meeting of the company. As there is only one director for a One Person Company, compliance with the provisions of conducting the board meetings is impossible and is therefore granted an exemption. In respect of businesses, which can be transacted only through general meetings of the company using an ordinary or special resolution, for a One Person Company, such a meeting will be deemed to have done if the member of the company has communicated the resolution to the company and entered it in the minutes book with sign and date.

Other than Annual General Meeting, OPC is exempted to hold Board Meeting in every Quarter like Private Limited Company as there is only One Director so the compulsion of having Board Meeting is removed from OPC.

Compliances like AOC 4 and MGT 7/7A is still compulsory for an OPC. Being a legal entity, public disclosure of financials of OPC is required so every OPC should file the compliances form with in the prescribed limit mentioned in Companies Rules.

 

Conversion to Private Limited Company

An OPC conversion into a private/public limited company is not permitted unless two years have expired from the date of incorporation of the One Person Company (OPC). However, if the paid-up share capital of the One Person Company (OPC) exceeds rupees 50 lakhs or if its average turnover exceeds rupees 2 crores then such One Person Company (OPC) could convert itself into a private limited company within two months.

 

Challenges and Risks of Starting an OPC

Starting an OPC (One Person Company) can be a great way for entrepreneurs to establish and run their businesses. However, like any business venture, there are potential challenges and risks that come with it. Here are some of the challenges and risks associated with starting an OPC like Limited Investment Opportunities, Operational Challenges & Succession Planning etc.

Frequently Asked Question

A nominee is an individual who becomes a member of the company in case of the promoter's death.

OPC is a Company that has a separate existence and is owned by one single member. OPC is a mixture of proprietorship and company forms of business.

An OPC can raise funds through venture capital, financial institutions. An OPC can also raise funds by converting into a Private Limited Company.

GST registration for a Person Company is necessary if the supply of goods or services is in another state irrespective of annual turnover.

No, a person can be a member in only one OPC.

1. At least one Board Meeting in each half of the calendar year and the time gap between the two Board Meetings should not be less than 90 days. 2. Maintenance of proper books of accounts. 3. Statutory audit of Financial Statements. 4. Filing of business income tax returns every year before 30th September. 5. Filing of Financial Statements in Form AOC-4 and ROC Annual Return in Form MGT 7.

There is no specific tax advantage to an OPC over any other form of company. The tax rate is flat at 30%, other tax provisions like MAT & Dividend Distribution Tax (DDT) apply as they apply to any other form of company.

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