. Alternatively the lone entrepreneur may be required to find yet another like minded person(s) with whom the business could be carried out jointly. 2013 which replaced the Companies Act.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. In order to bring significant fillip to new or existing entrepreneurs with micro or small-scale business and to enable them carry their respective business organizations on par with global standards.658 Sections and 15 schedules ]. because the Companies Act mandates a minimum of two shareholders in case of Private Company or three shareholders to form a Public Limited Company. It is a right solution for such enterprising entrepreneurs to form. key aspect. it is to be taken to mean as the Companies Act.proprietary concern. 2015 Entrepreneurs always look for new bundle of opportunities and glance forward to start or convert their own ventures with a structure of organized business. 1956 [ that was in operation for over five decades. Now onwards wherever the word ‘Act’ is used in this paper. 2013. One Person Company form of business organization characteristics. This forces a person who would like to take-up a venture as a sole. an onerous task since it is NOT legally recognised as a separate entity. advantages. OPC can work like proprietorship but it holds the status of Company and of course enjoys the bundle of benefits as a registered Company. multiple persons are needed as shareholders. If anyone wants to set up and register a Company. register and run a Company with only one Member [ Shareholder ]. cs@suryanarayana. as one of the largest pieces of legislation ever passed by the Indian Parliament . OPC concept in the Companies Act 2013 has opened the doors for those entrepreneurs who are looking to set up a Company all by themselves in the name of a separate legal entity. 2015 Page 1 of 8 . formation features are briefly outlined here for budding business minds as well as existing enterprises. Government of India has introduced a novel concept of One Person Company ( herein after abbreviated and used as OPC) through the Companies Act.com 1 March. As part of re-codification exercise of the erstwhile Companies Act. The said committee suggested multiple classification of companies such as (i) on the basis of size. Regarding OPC. To facilitate this. Irani Committee particularly with a view that OPC structure must be similar to that of a proprietorship concern without the ills generally faced by the sole proprietors. b. the Committee recommends that the law should recognize the formation of single person economic entity in the form of 'One Person Company'.) On the basis of number of members: a.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. Small companies and Other Companies and ( ii. This is really a star among the innovations brought in to reality in the new Act enabling One Person Company as a company registered under the provisions of the Act with just one member and shall have "(OPC)" added in brackets to its name. Such economic activity may take place through the creation of an economic person in the form of a company. cs@suryanarayana. the suggestions of the Committee were thus: "With increasing use of information technology and computers. it is time that the entrepreneurial capabilities of the people are given an outlet for participation in economic activity. Such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not compelled to fritter away his time. 2015 ORIGIN OF THE OPC The Companies Act. in 2005 referred to OPC in its report in a Chapter briefly titled "Classification and Registration of Companies". c. which was appointed by the Government of India. Private companies. Dr. We feel that it is possible for individuals to operate in the economic domain and contribute effectively. 1956.J. Irani Expert Committee. 2015 Page 2 of 8 . energy and resources on procedural matters. 2013 (Act) introduced several new concepts and one among them is the registration of One Person Company. emergence of the service sector. One person company. J. Yet it would not be reasonable to expect that every entrepreneur who is capable of developing his ideas and participating in the market place should do it through an association of persons. Public companies. The Companies Bill at various stages has accepted the recommendations of the Dr.com 1 March. The concept of OPC is to restrict the liability of the promoter to the extent of investment made in OPC whereas in case sole proprietor firm. Bahrain. Sole Proprietorship Firm: One Person Company has an edge over sole proprietorship firm in respect of limited liability with perpetual succession. the United States of America. particularly successful in China. United Kingdom. Pakistan and several European countries since a very long time now. Act defines ‘One Person Company’ or OPC as a company formed for any lawful purpose with only one person as its member. 2. The Act provides that the letters (OPC) in brackets to be suffixed with the name of ‘One Person Company’ . 50 lacs and average annual turnover not exceeding Rs. Capital: OPC shall be started with a minimum capital of Rupees One Lakh and can have a maximum paid up share capital of Rs. affixed or engraved. 200 lacs. Indian OPC Characteristics: The Companies Act. Singapore. [email protected] 1 March. 2015 Page 3 of 8 . One person company is a private company with one person subscribing to the Memorandum of Association [ constitution of the company ] and signing the Articles of Association [ Regulations for internal management ] in order to comply with the requirements of the Act in respect of registration. OPC vs. though such a form of business organization has been very popular in several countries with different names like Single Person Company / One man Company.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. For example ABC Private Limited (OPC). Privileges and Benefits identified with OPCs : 1. Ireland. wherever its name is printed. 2015 Global Practice: The concept of One Person Company is new as far as India is concerned. 2013 contains provisions enabling registration of One Person Company so that entrepreneurs are in a position to avail the benefits of registered companies. the liability extends to the personal assets of such sole proprietor. This is to distinguish OPC from other companies. Mauritius. 7. 4. 2015 3. could well raise capital from others like venture capital financial institutions etc. Compliances: OPCs need not bother too much about compliances. 2015 Page 4 of 8 . The nominee shall become the Member of OPC in the event of the incapacity to contract or death of the original promoter. Any change in Nominee particulars shall also be intimated to Registrar of Companies. Being a recognized corporate. OPC can have maximum fifteen Directors. Funds: Structured as an OPC instead of a proprietorship. Business currently run under the proprietorship model could get converted into OPCs without any difficulty.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. Nomination Facility: The objective of OPC is to establish perpetuity and continuity to the life of the company and does not end with the life of the promoter. 5. the entrepreneur can have better access to banking finance. The name of the Nominee shall be declare in Memorandum of Association and the Nominee’s written consent shall be filed with the Registrar of Companies [ An office of Ministry of Corporate Affairs ] at the time of incorporation along with the other documents. along with the written consent of such other person so nominated.. It may again become an active OPC on an application made to the ROC along with such documents and fees as may be prescribed.com 1 March. cs@suryanarayana. The promoter shall nominate another person as a new Nominee within 15 days on the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company. Nominee may withdraw consent by giving a notice in writing to such promoter. That is why OPC shall nominate any other natural person with his consent as his nominee in the event of original promoter incapacity to contract or death. Directors: Minimum number of Directors required in OPC is one. Dormant Company Status: OPC formed and registered for a future project or to hold an asset or an intellectual property but has been inactive and not carrying on any business or operation and has not made any significant accounting transactions may make an application to the Registrar of Companies [ROC] to obtain the status as a Dormant Company. 6. However. thus graduating to a private limited or public limited company. OPCs would provide the start-up entrepreneurs and professionals the much needed flexibility in setting up a business in India without losing the professional control over the business idea for the professional. 10. Financial Statements: OPC shall file a copy of the financial statements duly adopted by its member. General Meetings: Provisions relating to General Meeting of company are not applicable to OPC. within one hundred eighty days from the closure of the financial year. Incorporation of OPC will help increase international trade as many businesses all over the world know about the one person company concept.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. they give a dual entity to the company as well as the individual. cs@suryanarayana. 9.com 1 March. 11. hence. OPC model of corporatization OPCs are not proprietorship concerns. Cost: Incorporation expenses. financial hub and such an individual promoter would be able to run the show in a better and improved manner. 12. the setup and administrative costs are less. Global reach: OPC on registration gets the status of a separate legal entity obtains automatic recognition in the business circle. Subsidiary: OPC can have a subsidiary but it cannot be a subsidiary to any other holding company. guarding the individual against any pitfalls of liabilities. 2015 8. 2015 Page 5 of 8 . along with all the documents which are required to be attached to such financial statements. This is the fundamental difference between OPC and sole proprietorship. The resolutions required to be passed at the Annual General Meeting or Extra Ordinary General Meetings of the company shall be deemed to have been passed if the resolution is agreed upon by the sole member and communicated to the company and entered in the minutes book maintained. fee payable to Government and due to less number of records to be maintained. 2015 “One person company” (OPC). sole entrepreneurs. OPC model of corporatization would be a much better alternative to the Limited Liability Partnership (LLP). is a dynamic form of business organization. if their professional bodies permit such form. etc. OPC suits the Professional skilled persons who would desire to adopt any type of business plan in addition to take extra risk. There is no bar on raising funds through loan or instruments other than securities. 2015 Page 6 of 8 . practicing professionals. OPC cannot raise equity capital from any other person other than the One Person who is a Member of the company and cannot issue debentures to “public”. business scale and managerial capabilities.com 1 March. OPC is for those who would like to come out of the shackles of big corporate and be independent. Even Government can use this form for strategic purposes which require both 100% control of the Government from a strategic perspective and flexibility of a private enterprise. They can corporatize their profession by converting the individual practices into OPC without bargaining with other co-professionals. such person could well be a shareholder in another private limited company or be a partner in another LLP. OPC is not limited to be a “Small Company” and therefore can be big both in terms of capital. Several cs@suryanarayana. The concept of OPC is equally suitable for Professionals and Management Consultants specifically from the Service Sector. Solo entrepreneurs can present OPC as a legal entity to foreign customers who take comfort in dealing with legal forms rather than dealing with individuals and unregistered entities. effort and money of a prospective entrepreneur / promoter (pre launch pioneering work) can be stored in a OPC and such OPC can be a stake holder in a larger company along with entrepreneur/promoter. While each individual professional could incorporate an OPC. OPC form will be used by ‘employees turning into entrepreneurs’. Value of IPR or business viability exploration work which consumes time. willingness to take additional responsibility above all. who opts personal commitment to the business.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. The legal structure around the OPC is very interesting. . such individual is not dependent on others for suggestions or implementation of suggestions etc. In other words. the business head is the decision maker. does not arise.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. as a nominee of the MNC for the simple purpose of fulfilling the legal requirement of having two or more shareholders.com 1 March. The sole promoter who runs the business and hence. All these finer features of OPC would enable entrepreneurial minded persons to take the risks of doing business without the botheration of litigations and liabilities getting attached to the personal assets.. the question of consensus or majority opinion etc. the newly registered Indian company is owned 100% by the MNC only which is in no way different than the OPC itself. resulting in quicker and easier decision making. When do OPC loses its status? OPC mandatorily and automatically converted itself into a public company or a private company if : (1) paid up share capital of OPC exceeds fifty lakh rupees. one of its Indian officials or representative is given one share. 2015 OPCs could come together to form Public Limited or Private Limited Companies or LLP thus reach out to a larger section of clients without sacrificing their individual clients. that too. cs@suryanarayana. or (2) on the last day of the relevant period during which its average annual turnover exceeds two crore rupees In the above cases. as every one knows. OPC shall within 6 months convert itself into a public company or a private company with minimum number of directors and members. In OPC. When any Multi-National Company incorporates a Company in India. 2015 Page 7 of 8 . OPC would legalize it. the following measures would help the enterprises entrepreneurs and professionals in the long run: (i) further simplified procedure of forming and running the OPC with minimum compliance requirements. 2015 Page 8 of 8 .. (iv) through the Rules. Chartered Accountants. Fashion Designers are opting OPC as a startup. IT professionals. (ii) special incentives like income tax concessions and indirect tax holiday schemes with reduced annual fee. Cost Accountants. Architects. Management Consultants. fruit mart and many other undertakings are taking advantage of the OPC and they have formed OPC and are operating. . Since India is moving forward by adopting the global best practices. cs@suryanarayana. Company Secretaries. provision stores. laundry. (v) include separate Chapter in Companies Act 2013 to keep all provisions at a place relating to One Person Companies.One Person Company – An entrepreneur friendly business organization CS Suryanarayana SV Paper for UGC Sponsored National Seminar @ Mahatma Gandhi University on 20th March. Interior Decorators. (iii) look into the possible grey areas in order to protect gullible investors.com 1 March. the author has perceived that many professionals viz. filing fees & stamp duty payable to Government for OPCs. OPCs should be restricted to see that personal transactions are not to be mixed up with that of the OPC. Doctors. It goes without saying that small and medium businesses such as hotel. traders and such others who are required to do business with an OPC. In Conclusion: The formation of OPC is very simple and also running a company does not require much compliance and it is very easy. 2015 OPC has impact in Indian Entrepreneurship: After introduction of OPC in India from 2014 year onwards. The name board is normally seen the name of the undertaking followed by the word OPC denoting that it is a One Person Company. Engineers.
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