WHAT ARE THE FEATURES OF OPC?
Introduction
One Person Company (OPC) is a new form of company introduced by the Companies Act, 2013. It is a private company that can have only one person as its member. The member of an OPC can be an individual, HUF, or a company.
Features of OPC
- Single member: An OPC can have only one member. The member of the company is also the director of the company. This means that the member has complete control over the company.
- Separate legal entity: An OPC is a separate legal entity distinct from its member. This means that the company can own assets, enter into contracts, and sue and be sued in its own name. The member’s personal assets are not liable to be used to pay off the debts of the company.
- Limited liability: The liability of the member of an OPC is limited to the extent of the share capital invested in the company. This means that the member’s personal assets are not liable to be used to pay off the debts of the company.
- Nominee: An OPC must have a nominee. The nominee is a person who will become the member of the company in the event of the death of the member. The nominee must be a natural person and a resident of India.
- Minimum authorized and paid-up capital: The minimum authorized capital required to incorporate an OPC is Rs. 1 lakh. The minimum paid-up capital is Rs. 10,000.
- No requirement of annual general meetings (AGMs): An OPC is exempted from holding AGMs. However, the company must hold a meeting of its members at least once in every three years.
- Other benefits: OPCs are also eligible for various other benefits, such as lower tax rates and deductions on business expenses.
Exemptions and privileges
In addition to these features, OPCs also enjoy the following exemptions and privileges under the Companies Act 2013:
- They are not required to have a company secretary.
- They are not required to include cash flow statements in their financial statements.
- They are not required to have independent directors.
- They can pay higher remuneration to their directors.
Limitations of OPC
OPCs have some limitations, such as:
- OPCs cannot raise money from the public.
- OPCs cannot be listed on a stock exchange.
- OPCs cannot carry out certain activities, such as banking and insurance.
Advantages of OPC
OPCs have many advantages, such as:
- Limited liability
- Separate legal entity
- Single member
- No requirement of AGMs
- Other benefits
Disadvantages of OPC
OPCs have some disadvantages, such as:
- Limitations on raising money
- Limitations on listing
- Limitations on activities
Conclusion
OPCs are a good option for small businesses and entrepreneurs who want to start a business with limited liability and fewer compliance requirements. However, they should be aware of the limitations of OPCs before deciding whether or not to form one.
Additional information
Here are some additional information about OPCs:
- The name of an OPC must end with the words “One Person Company” or the abbreviation “OPC“.
- The member of an OPC must be a natural person.
- The nominee of an OPC must be a natural person and a resident of India.
- The articles of association of an OPC must be approved by the Registrar of Companies.
- An OPC must file its annual return with the Registrar of Companies.
- An OPC must get its financial statements audited by a chartered accountant.
