Why entrepreneur choose One Person Company (OPC) Registration

One Person Company – A short description

One Person Company is a type of company registration and provides more and more benefits to the entrepreneur. This concept was newly enacted and get popular among the entrepreneurs who starts their business in stating stage. The companies Act, 1956 cannot have the one person company concept.


The Companies (Amendment) Act, 2013 introduced the new revolutionized concept of One Person Company and it contains both Sole proprietorship and partnership concept in it. And also it fulfills the drawbacks of the Sole proprietorship and partnership types of registration. One Person Company (OPC) concept is really appreciated and it is bone for the every entrepreneur who they start their business with low man power and less capital amount. An OPC can provide the both legal and financial liability to the company not a member of that company. It is most welcomed required for every entrepreneur who wants to save their personal assets. Simply said, An OPC is a hybrid system which carries the benefits of Sole proprietorship and partnership form of business. A person with a business idea with minimum capital investment can go for the One Person Company and enjoys more and more benefits.

Legal status of One Person Company

Section 62 (2) of the companies Act, 2013 mentions the wonderful scheme of One Person Company. According to this section, an OPC is defined as a legal entity which carries only one person as its member and the legal and financial liability is limited up to the company and not to its members. The member or director of the OPC must be a natural person and he must be an Indian Citizen. He also crosses the age limited of 18. He must be resident in India also. He must nominate a nominee person for his company at the time of incorporation in case of any inability to take charge of his company. The nominee also must be resident in India and it is done by the director of the company himself.

Incorporation of OPC

Incorporation process of an OPC is somewhat similar to the incorporation of Private limited company. But some of the slight differences over there in registration process.

  • An OPC can have the only one person as a member or director to form this entity.
  • The person must be a natural person, citizen of India. He must be resident in India also.
  • He can add more members as a director in his company by convert itself into a private company or a public company.
  • In the Memorandum of Association (MoA), the person must be declaring the nominee person to take care of the business after him if any death or inability to take care of the business.
  • The minimum paid up share capital of an OPC is Rs. 1 lakh.
  • The director of an OPC can have the right to change his nominee at any time. But he must be indicating it to the Registrar.
  • An OPC can be made by three types according to its limitation: these are an OPC which is limited by its Shares, An OPC which is limited by its guarantee, and an OPC which is unlimited company.
  • There is certain limitation for the directors. The director of an OPC cannot be a director of another OPC.

Certain differences which separate an OPC from the Private limited company

  • The formalities of private limited company like Annual General meeting (AGM) and Extraordinary general meeting cannot be applicable for an OPC.
  • Instead of the above, the One person company must conduct the Board meetings with their one director and its members. It must be conducted at one in the half of the calendar year and the difference between the one meeting and another meeting should be ninety (90) days.
  • The first director of the company is the sole member of the company. So no further appointment of first director is not required here.
  • An OPC can exempt from several things followed by the Private limited companies like Quorum of meeting, notices of meeting, appointment of chairman of the meeting, proxies and restriction of voting rights. By reducing these duties, you may concentrate your business and its growth.

Completely an OPC is differ from Sole Proprietorship

One Person Company completely differs from sole proprietorship. Why because it offers more and more benefits than the sole proprietorship as mentioned below:

  • An OPC is separate legal entity as you know already. The legal liability is separate from the owners of the company. In case of Sole proprietorship, it is not like that. The owner of this entity must have to put their personal liability to their company if any losses occur. In sole proprietorship, there is no security to their personal assets.
  • The personal financial strategies of the owner like financial trustworthiness and credit ratings do not affect the company’s status.
  • The taxes of the company are maintained separately. It does not opt to the personal taxation of the owner.
  • The conversion of One Person Company can be allowed and it will definitely improve the state of business into next level.
  • Comparatively, the annual compliance of an OPC is bit more higher than the Sole proprietorship. But it is a bit of disadvantage. While comparing to the benefits, it do not taken as a biggest thing.
  • A Company can successful, if a combination of human works and shares the stress over there. But we can see many shakes happen for this statement practically. So, OPC can give the right to the owner only. So, there is no possibility to failure.

From the above statements, undoubtedly, One Person Company is a big gift for every business doing persons in the start-up level. In this form of business, the owner of the company does not lose their personal assets if any losses occur. The profits also benefited to that owner only. In my point of view, an OPC is a best choice to the person who doing their business in start-up level with minimum capital amount. Introduction of the One Person Company only, create the more and more entrepreneur to our nation and it set a path way to our nation’s business growth.

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