The recently enacted Companies Act 2013 has introduced us to a new form of business organization called “One Person Companies” (OPC). Though the concept is new to India, it is prevalent in other parts of the world.
Here is an overview of One Person Companies
For any person who intends to promote a business venture, there is always a concern about the potential risk attached to such a venture. Entrepreneurs seek out a model which gives them enough freedom to undertake a business venture without having to bother about the risks, which in the case of a sole proprietorship involves exposing the entrepreneur’s personal properties. Consequently one settles for a corporate setup or a partnership firm even at the cost of losing some control and freedom.
As the OPC is deemed to be a corporate entity, the financial liability of that one person owner is deemed to be limited to the extent of the share capital. This is unlike a proprietorship firm where the liability is unlimited. In a way, it is a natural follow-up after the advent of Limited Liability Partnerships.
1) The liability of the owner is limited
2) The status of one person company shall be of a private company. Wherever the name of the company shall be mentioned, it will be followed by the word “One Person Company”
3) OPC will have a separate identity for tax purposes which is separate from the owner
4) At the time of incorporation the owner shall nominate another person to act on his behalf in the event of a need.
5) It is not mandatory to call Annual General Meeting
6) The OPC still has to ensure statutory compliances like filing returns, Audit of Accounts, etc