The introduction of OPC in the legal system is a move for encouraging a citizen can constitute a Company, under the One Person Company (OPC) concept. With the implementation of the Companies Act, 2013,
One person companies are in existence in number of Countries including UK,USA, Australia, Singapore, Qatar, Pakistan and China allowed formation of OPCs as recent as in 2005. A few other countries have also given the legal status for OPCs. In India this concept has been mooted by the Ministry of Corporate Affairs by allowing One Person Companies in India in line with other countries
The concept of OPC was mooted, in the report of Dr. J.J. Irani Committee. The Irani Committee briefly referred to OPC in its report. In
Chapter III titled “Classification and Registration of Companies” the committee suggested multiple classifications of companies as given hereunder. On the basis of size, On the basis of number of members, Control Liability and Capital:
The Committee expressed the view that the law should recognize the potential for diversity in the forms of companies and rather than seeking to regulate specific aspects of each form, seek to provide for principles that enable economic inter-action for wealth creation on the basis of clear and widely accepted principles.
OPC may be registered as a private Company with one member and may also have at least one director with the nomination of any relatives, word ‘OPC’ to be suffixed with the name of One Person Companies
The concept of OPC is still in its nascent stages in India and would require some more time to mature and to be fully accepted by the business world. With passage of time, the OPC mode of business organisation is all set to become the most preferred form of business organization specially for small entrepreneurs. The benefits emanating from this concept are many, to name a few –
The OPC would act as a launch pad for such entrepreneurs to showcase their capabilities in the global arena.
The counterparts of Indian OPCs in Europe, United States and Australia have resulted in further strengthening of the economies in the respective countries. OPCs in India are aimed at structured, organised business units, having a separate legal entity ultimately playing a crucial role in further strengthening of the Indian economy.
OPC or Proprietorship Concern! Your choice
OPC VS. SOLE PROPRIETORSHIP | |
Separate Legal entity | Not a Separate Legal Entity |
Limited Liability | unlimited liability |
Perpetual succession | No perpetual succession |
Loan not the sole responsibility | Loan-sole responsibility of the of the owner |
Registration required | Registration not required |
OPC structure would be similar to that of a proprietorship concern without the ills generally faced by the proprietors. One most important feature of OPC is that the risks mitigated are limited to the extent of the value of shares held by such person in the company. This 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. One Person Company has a separate legal identity from its shareholders i.e., the company and the shareholders are two different entities for all purposes. On the other hand proprietorship does not have a separate legal identity from its members. The existence of a One Person Company is not dependent upon its members and hence, it has a perpetual succession i.e., death of a member does not affect the existence of the company and the Sole proprietorship is an entity whose existence depends on the life of its members and death or any other contingency may lead to the dissolution of such an entity.
In OPC the business head is the decision maker, he is not dependent on others for suggestions or implementation of suggestions etc., resulting in quicker and easier decision making. He is the sole person who runs the business and hence, the question of consensus or majority opinion etc., does not arise.
As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member
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Incorporate OPC:
It can be done through form mentioned on the website of MCA.
