Everything you need to know about One Person Company (OPC)

One person company (OPC) means a company formed with only one (single) person as a member, unlike the traditional manner of having at least two members. In India, the induction of OPC was given in the Dr J.J Irani Committee report dated May 31, 2005 which promised the escalation of entrepreneurs in the marketplace, making their contribution in the economy widely effective. Hence, recognition of a single person economic entity lightens a path for small traders, artisans and other service providers to venture into business by expanding their opportunities, limiting their liability with minimal procedural/compliances.

Important legal considerations of OPC

OPC is the simplest concept introduced under the Companies Act, 2013. The concept has definitely swayed its way from sole proprietorship. Hence, in India the perplexities of the two concepts seem to be interchangeable… Read More

Advantages and exemptions for OPC

An OPC is exempted from stringent legal compliances of general meeting, board meetings, quorums, voting inclusion of cash flow statements in financial statements, mandatory rotation of an auditor, except in certain circumstances… Read More

Prohibitions faced by an OPC

An OPC also faces prohibition of carrying out any Non-Banking Financial Investments activities, converting a wholly owned subsidiary into an OPC and also issuing any kind of Employee Stock Scheme.… Read More

Conclusion

OPC at a superficial level seems to be simple and attractive, but yet it deals with a great deal of its imperfection like impositions and restrictions. Thus, resulting in slow progress of small entrepreneurs or rather it can be perceived that it has indirectly discouraged them to even incorporate an OPC.

To spruce the incorporation of OPC, certain reliefs and exemptions must be made available to the OPC (and its member), such as

1. permit companies (whether Indian or foreign) to incorporate OPCs (which will operate as their wholly-owned subsidiary);
2. do not force conversion of OPC to a private or public company, if the turnover exceeds any limit;
3. permit an individual to have more than one OPC – since he/ she may want to operate different businesses under different company for prudent management, profitability and cash-flow;
4. provide reasonable tax slabs.

The relaxation of the provisions of Companies Act, 2013 and Income Act, 1961 shall reassure the entrepreneurs’ faith in the whole concept of OPC altogether.