One Person Company is a new and useful concept in India which is usually introduced by The Companies Act 2013. It is one of the best ways to start up a new company. It is a legal entity separate from its member, offering limited liability protection to its sole member. OPC is adequately a company that has only one shareholder as its member.
Here are some common features of a one-person company like;
- Private Company: One of the company’s acts says that an individual can form a company for any legal purpose. It further defines OPC as private companies.
- Single Member: One-person company have only member and shareholder like others.
- Nominee: A differ but useful feature of the One Person Company that defines it separately from other kinds of companies is that the single person of the company must mention a nominee while registering a company.
- No Continual Succession: Since there is the only person in open person company. If that person is died because of any reason, then his death will result to choose a nominee on behalf of that person. This does not happen in other companies as they don’t follow the concept of continual succession.
- Minimal One Director: One Person Company requires to have a minimum of one member as a director of that company. It can have a maximum of 15 directors.
- No Minimum Paid-Up Share Capital: There is no amount defined in a Company Act 2013, as minimum paid-up capital for OPC’s.
- Special Privileges: One Person Company enjoys many privileges and exemptions under the Companies Act 2013, that other types of companies do not retain.
How to form OPC’s (One Person Companies)
A single individual can make an OPC by subscribing his name to the memorandum of association and fulfilling other requirements lay down in The Companies Act, 2013. Such a kind of memorandum just states the details of the nominee who shall become the company’s single-member. If in case of an original person dies or incapable to involve in all these contractual relations.
Along with an application of registration, the memorandum and the nominee consent to his nomination should be filled to the registrar of the companies. They can get back their names at any point in time by submission of requisite applications to the registrar. The nomination of that person can also later be removed by the member.
Exemptions of One Person Company
One-person company enjoy the following privileges and exemptions under The Companies Act 2013:
- They do not have to hold Annual General Meetings (AGM’s).
- Their Financial Statements need not include Cash Flow Statements.
- There is no need to sign the annual returns by the Secretary of the company; The Director can also do the same.
- Provisions relating to independent Directors do not apply to them.
- Their articles can provide for additional grounds for vacation of a Director’s office.
- Several provisions relating to meetings and quorum do not apply to them.
- They can pay more remuneration to Directors than compared to other companies.