The Companies Act, of 2013 changed corporate laws in India by presenting a few new ideas that didn’t exist before. One such huge advantage was the presentation of the One Person Company idea. This prompted the acknowledgement of a better approach for new businesses that give flexibility which company can offer, while additionally giving the assurance of limited liability that sole proprietorship or partnership needed.
Definition of One Person Company
The Companies Act, 2013 gives that an individual can frame a company with one single member and one director. The director and member can be the same. In this manner, One Person Company implies a single individual who might be a resident of India or NRI can establish his/her business that has the elements of a company and the advantages of a sole proprietorship.
Section 2(62) of the Companies Act characterizes a One Person Company as a company that has a single person as a member. Besides, a member of an organization is the only contributor to its memorandum of association or its shareholder. Along these lines, an OPC is an organization that has just a single shareholder as its member.
Such organizations are made when there is just a single founder for the business. Entrepreneurs whose organizations lie in the beginning phases like to make OPCs rather than sole proprietorship businesses because of the benefits that OPCs offer.
Difference between OPCs and Sole Proprietorships:
- A sole proprietorship type of business seems similar to a one-person company because the two of them have a single individual owning the business, yet they exist a few distinctions between them.
- The important difference between the two is the liabilities they carry. Since an OPC is a different legal entity from its promoter, it has its own assets and liability. The promoter is not liable to pay the debts of the company.
- Sole proprietorships and their proprietors are similar people. Thus, the law permits the sale of a promoter’s assets if the promoter is not able to pay the business liability.
Features of One Person Company:
- Private Company:
Section 3(1)(c) of the Companies Act says that a single individual can frame an organization for any legal reason. It further depicts OPCs as Private Companies.
- Single-Member:
OPCs can have just a single member or shareholder.
- Nominee:
A unique element of OPCs that differentiate them from different sorts of companies is that the sole individual from the organization needs to specify a nominee while registering the organization.
- No perpetual succession:
Since there is just a single member in an OPC, his death will bring about the candidate picking or dismissing to turn into its sole member. This doesn’t occur in different organizations as they follow the idea of perpetual succession.
- Minimum one director:
OPCs need to have at least one individual (the member) as director. They can have a limit of 15 directors.
- No minimum paid-up share capital:
Companies Act, 2013 has not recommended any sum as minimum paid-up capital for OPCs.
- Exceptional privileges:
OPCs get few privileges and exemptions under the Companies Act that different sorts of companies don’t have.
Documents Required for the Registration of One Person Company:
- Copy of PAN Card of the owner.
- Passport size photo of the owner.
- Copy of Aadhaar Card/Voter Identification Card.
- Copy of Rent Agreement (If the property is rented)
- Power/Water Bill (Business Place)
- Copy of Property papers (If the property is owned)
- Landowner NOC