The concept of One Person Company in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. A One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder while having continuity of business and being easy to incorporate.
One Person Company feature is such that it has only one shareholder who owns 100% stake of the company. To maintain the character of perpetuity, the appointment of the nominee is compulsory, who will take place of the owner in case of death or his inability. One person company is a type of Private Limited Company.
It is the only type of corporate entity that can be started and operated by a single promoter with limited liability protection in India. A corporate form of legal entity in OPC ensures that the business has perpetual existence and easy ownership transferability.
Lower Compliance Requirements
A single person company is benefited with an exemption to many compliances like holding general and board meeting etc. However, board meeting must be held if there are more than one directors are on board.
Unless legally dissolved, a company has ‘perpetual succession’. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.
Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.
- Every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the company – who will become the owner of the OPC in case the sole Director is disabled.
- If any OPC crosses an annual turnover of Rs. 2 crores, then that company must be converted into a Private Limited Company and it must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial year like all types of companies.
- A one person company cannot issue different types of equity security, as it can only be owned by one person at all times.
The status of a separate legal entity will be provided to an OPC. Such registration ensures that the company is separate from the owner. It can own assets in its own name and can enter into a contract with the parties. The actions of the company are independent of its owner.
Limited Liability of Owners
One of the key benefits of registering OPC lies in the separate legal entity of the company where the liability and obligations are not charged over the personal assets of the sole member. The liability of a member is limited to the unpaid amount of the capital subscribed by the member. Even in the case of liquidation, the personal assets of the member are protected, except in certain specified cases.
Ownership can be easily transferred by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In an OPC, the ownership can be transferred by altering the shareholding, directorship and nominee director information.
A company being an artificial person, can acquire, own, enjoy and alienate, property in its name. Machinery, building, intangible assets, land, residential property, factory, etc., can be owned by a company as property. Further, the nominee director cannot claim any ownership of the company while serving as a nominee director.
A self - attested copy of PAN Card of Shareholder, Nominee and Directors.
Aadhar card and Voter ID/ Passport/ Driving License of Shareholder, Nominee, and Directors.
Director’s Address Proof
Latest Telephone Bill /Electricity Bill/ Bank Account Statement of Shareholder, Nominee, and Directors.
Latest Passport size photograph of Shareholder, Nominee and Directors.
Business Address Proof
Latest Electricity Bill/ Telephone Bill of the registered office address.
NOC from owner
No Objection Certificate to be obtained from the owner(s) of registered office
Rent Agreement of the registered office should be provided, if any.