The Companies Act 2013 introduced the concept of a One Person Company (OPC), allowing the formation of a company with only one person as a member and director, as per Section 2(62) of the Act. This article highlights the benefits of OPC, including reduced compliances, ease of formation, lower costs, ease of management, and access to funding. It also discusses the legal status of OPC, its separate legal entity, and limited liability protection for the member. Furthermore, exemptions provided to OPCs are outlined, along with the requirements for registration and the process of incorporation. The article concludes by mentioning the annual compliance checklist for OPCs.
According to Section 2(62) of the Companies Act 2013, a “One Person Company” refers to a company that has a single individual as its sole member.
As per above, it is clearly stated that after addition of this section, company can be formed with One person and one Director. Before applicable of this section, for company incorporation, min 2 directors and 2 Members are required.
Benefits of OPC:
1. Less Compliances: In One Person Company, Compliance Checklist is very short.
2. Easy Formation: Formation of One Person Company is very easy to incorporate, less documentation and less risk of certification.
3. Less costing: Costing of Incorporation of One Person Company is very less. In point of view of compliances, less burden of compliances on OPC during the year.
It is not required to conduct Annual General Meeting or Board Meeting by One Person Company.
4. Easy to Manage: Due to less burden of compliances and costing of One Person Company, it is easy to manage One Person company by single hand.
5. Easy to get fund: Due to less burden of compliances, chances of non-compliances in OPC are very low and it is attracted investors for funding. Complexity of non- compliances in One Person Company is very less.
6. Perpetual Succession: One notable feature of an OPC is its ability to have perpetual succession, even with just one member. During the incorporation process, the single member appoints a nominee. In the event of the member’s demise, the nominee assumes responsibility for running the company.
7. Legal Status of One Person Company: An OPC is granted a distinct legal entity status separate from its member. This legal entity status offers protection to the individual who incorporated the OPC. The member’s liability is limited to their shares, safeguarding them from personal liability for the company’s losses. Consequently, creditors have the right to take legal action against the OPC itself, rather than the member or director.
Exemptions provided to OPC
There are some exemptions provided in the Company to promote OPC culture in India.
Few of these exemptions are below:
Requirement for registration of OPC
Process to incorporation of One Person Company:
1. Apply for DSC and DIN
2. Submit Name approval application to ROC
3. After approval of name application then submit further below documents for incorporation:
(iii) KYC documents of Director.
(iv) Address proof of registered office of the Company along with NOC of owner of premises.
(v) Other required documents as mentioned in the form, if any.
After approval of Company incorporation documents, Obtain Certificate of Incorporation and run the company without any hassle.
Annual Compliance Checklist for OPC:
Conclusion: The introduction of the One Person Company (OPC) under the Companies Act 2013 has provided individuals with the opportunity to establish a company with minimal requirements and enjoy several benefits. OPCs have reduced compliances, simplified formation procedures, and lower costs compared to traditional companies. The separate legal entity status of OPCs ensures limited liability protection for the member. Additionally, exemptions from certain requirements further facilitate the growth and promotion of OPCs in India. By adhering to the annual compliance checklist, OPCs can maintain regulatory compliance and operate smoothly. Overall, OPCs offer a viable option for individuals seeking to establish and manage a company with ease and convenience.
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.
For any query, kindly contact to email@example.com