Data provided by the Ministry of Corporate Affairs revealed that only few takers for One Person Company(OPC), which is introduced as a new business ownership concept by virtue of the Companies Act, 2013. The statistics on number of entities such as public companies, private companies, OPC and LLPs registered from 1st April, 2014 to 26th August 2014 revealed that the number of OPCs registered is lower than Private Companies and LLPs. It can be stated that the number of sole proprietorships concerns started within this period of time will definitely outnumber the OPCs. There were mere 430 OPCs registered during this period of 147 days. This will be less than 5% of the sole proprietorships started all over India within the period. OPC may not be the choice of traders. In India trading businesses contributes more revenue by VAT, CST, etc., Due to limiting annual turnover of OPCs by two crores, the traders prefer sole proprietorship. The OPC may attract the traders if its annual turnover limit is extended at least for the non-manufacturing entities.

opcIt’s the need of the hour to make appropriate changes in the limitations imposed on the OPCs on annual turnover. This may be achieved by two methods:

1) The government may increase the limitation on annual turnover for every financial year or for a fixed time limit (for every 3 or 4 financial year). This will check the influence of inflation.

2) Or the government may increase the limit on the basis of performance of the entity. This may be based on the assets and liabilities of the entity. It may be like a bank increasing overdraft facility for a current account holder.

A budding solo entrepreneur who wishes to operate the business with limited liability and corporate identity may prefer OPC as a form of business if the limitations were revised as per the changing global economy and business trends.

(Surya Krishna M.B.A., L.L.M., Advocate-  Email-

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October 2020