While starting up a business, there are multiple things that cross your mind. Whether you should start a company as a Proprietorship firm or establish it aa a Partnership firm with someone? Whether to get it registered as a Private Limited Company or OPC – One Person Company? Clearly, company incorporation in India demands a careful thought process.
OPC is a rather new concept in India which has been introduced under Section 2(62) of the Companies Act 2013. One Person Company, as the name suggests, which has only one person as a member.
OPC can be formed for any lawful purpose by one person, and it offers fantastic possibilities for sole proprietors and entrepreneurs who can benefit from Limited Liability and corporatization but further steps are blocked by the requirements of finding a second director or second shareholder.
Limited Liability in OPC
In case of OPC, the liability in the event of business failure is limited only to the business assets. However, in case of a proprietorship, the liability is unlimited and in worst scenario the creditors can even take hold of your personal assets and home – including your personal bank accounts, jewellery, and house – to settle the liabilities. This is what differentiates a sole proprietorship from a One Person Company. This is also why incorporation of OPC is gaining popularity in India.
Requirements for OPC:
Any Indian citizen or resident of India –
Important things about OPC:
One share holder
This is the fundamental concept and most important thing about OPC. As defined in the Companies Act, OPC has only one member, and single shareholder enjoys 100% shareholding. Only a person who is a citizen of India can form OPC, not any foreign citizen or non-resident Indian can form OPC.
One Director
OPC may have only one Director, but it can have maximum 15 directors.
Nominee
A person forming OPC has to provide a written consent to nominate a nominee who shall come forward and take the reign of the company, in the event of death of the person.
Freedom from compliance
OPC also gets freedom from many compliances or requirements unlike other Private Limited companies.
OPC is a rather new concept in India which has been introduced under Section 2(62) of the Companies Act 2013. One Person Company, as the name suggests, which has only one person as a member.
OPC can be formed for any lawful purpose by one person, and it offers fantastic possibilities for sole proprietors and entrepreneurs who can benefit from Limited Liability and corporatization but further steps are blocked by the requirements of finding a second director or second shareholder.
Limited Liability in OPC
In case of OPC, the liability in the event of business failure is limited only to the business assets. However, in case of a proprietorship, the liability is unlimited and in worst scenario the creditors can even take hold of your personal assets and home – including your personal bank accounts, jewellery, and house – to settle the liabilities. This is what differentiates a sole proprietorship from a One Person Company. This is also why incorporation of OPC is gaining popularity in India.
Requirements for OPC:
Any Indian citizen or resident of India –
- Shall be eligible to form a One Person Company
- Shall be a nominee for the sole member of OPC
Important things about OPC:
One share holder
This is the fundamental concept and most important thing about OPC. As defined in the Companies Act, OPC has only one member, and single shareholder enjoys 100% shareholding. Only a person who is a citizen of India can form OPC, not any foreign citizen or non-resident Indian can form OPC.
One Director
OPC may have only one Director, but it can have maximum 15 directors.
Nominee
A person forming OPC has to provide a written consent to nominate a nominee who shall come forward and take the reign of the company, in the event of death of the person.
Freedom from compliance
OPC also gets freedom from many compliances or requirements unlike other Private Limited companies.
