ONE PERSON COMPANY
One Person Company is a private limited company consisting of only one shareholder who is also the director of the company. OPC or One Person Company is an improvement over the traditional structure of sole proprietorship limiting the liability of the person to the total of his/her capital contribution towards the business.
There will be a nominee director who has no power until the original shareholder/director is rendered incapable of running the business eg. Due to death, incapacity of mind etc.
To incorporate an OPC an application must be made to ascertain availability of name of business by applying through Form INC-1. If the desired name is available then such name must be reserved. Within 60 days from such reservation INC-2 form which is the application for incorporation must be submitted.
- Limited liability (up to the capital contributions towards the business)
- Increased flexibility and control as the person is the sole shareholder/director.
- The financial statements and resolution passed can be signed by the single director/member.
- It is better trusted by lenders and vendors as it performs annual compliances to the Registrar of Companies.
- The OPC is a separate legal entity where after the demise of the sole member/ the nominee director will run the business.
- No equity funding can be raised as there can be only one member/shareholder
- No ESOP facility due to single member structure.
- A person cannot be a member of more than one OPC.
- It must be converted into a Private Limited or a public limited company within six months if paid up capital is more than 50 lakhs or if average three consecutive years turnover crosses 2 crores.
Documents needed for OPC registration
- Scanned copy of PAN Card/Voters ID/driving license or passport
- Scanned copy of latest electricity bill/ telephone bill/ bank statement.
- Scanned passport size photograph.
- Specimen signature .
- Scanned copy of sale deed/property documents in case business is run in self-owned property.
- Scanned copy of notarized rental agreement and no objection certificate from property owner in case business is run in someone else’s premises.