One person company

One person company. Rajesh Rathour FY B.B.A.

Introduction. Section 2(62) of Companies Act defines a one-person company as a company that has only one person as to its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member..

What is OPC (One Person Company) ?. According to the Companies Act of 2013, a person can form a company with only one member and one director. It’s possible that the director and the member are the same person. As a result, a One Person Company means that a single person, whether a resident or an NRI, can start a business that combines the benefits of a corporation with those of a Sole Proprietorship..

Advantages of OPC. It is simple to obsimple Funds – Because OPC is a private company, it is simple to raise funds from angel investors, incubators, venture capitalists, and other sources. Banks and financial institutions prefer to lend to corporations rather than sole proprietorships. As a result, obtaining funds becomes easier. Implementation is simple – The incorporation of OPC is simple because only one member and one nominee are necessary. A member can also be a director. The minimum authorized capital for forming an OPC is Rs.1 lakh, although there is no requirement for a minimum paid-up capital. As a result, compared to other types of businesses, it is simple to start. Legal standing – The OPC is granted its own legal entity status by the member. The OPC is a separate legal entity that serves to protect the individual who has formed it. The member’s liability is limited to his or her shares, and he or she is not personally accountable for the company’s loss. As a result, creditors have the right to sue the OPC rather than the member or director. Succession indefinite – Even when there is only one member, the OPC has the feature of eternal succession. The single member must appoint a nominee while incorporating the OPC. When a member dies, the candidate takes over as president of the company..

Disadvantages of OPC. High Tax Rate – As a corporate form, you cannot avail of the tax slab advantage. In proprietary, you are required to pay according to your salary at 10%, 20% or 30% tax rate. But in the case of one person company, you are directly charged 30% income tax. The high tax rate is a big disadvantage of a one-person company. Only suitable for small businesses – OPC (One Person Company) is well suited to the structure of a small firm. At any given time, the OPC can have not more than one member. To obtain more funds, OPC cannot recruit more members or shareholders. As a result, more members cannot be joined as the company expands and grows. Business operations are restricted – The OPC is prohibited from engaging in non-banking financial investment operations, such as investing in corporate securities. It cannot be changed to a charity purpose company under Section 8 of the Companies Act, 2013..

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