OPC is a One Person Company, which is run by a single person. There cannot be members more than one in such type of companies and that only member of the company is the only shareholder of the firm. These types of companies are preferred when there is only one founder or promoter. Also, the entrepreneurs, who are having their business at the early stages, choose to create OPC one person company instead of a sole proprietorship business.
How OPC is formed?
An OPC can be formed by subscribing one’s name to the memorandum of association and completingthe other necessary requirements mentioned under the Companies Act, 2013. These types of memorandums should have the details of the nominee who will become the owner of an OPC after the death of the original owner.
The memorandum and the consent of the nominee must have to be filed to the Registrar of Companies. An application of the registration has to be submitted as well. The nominee has the option to withdraw his/her name at any point of time by submittinga necessary application to the Registrar.Even the original owner has the right to cancel the nomination in the future.
One more thing that is to be kept in mind while you go to register one person company is that the owner and the nominee have to be the residents of India for the formation of the company.
Mentioned below are a few privileges enjoyed by a one person company:
- An OPC is not required to hold general meetings every year.
- Such companies don’t have to include cash flow statements in their financial statements.
- Unlike other firms, the company secretary is not needed to sign the annual returns, only the director of the company can do so.
- All the provisions that are related to the independent directors are not applied to them.
- The articles of the OPCs help them with additional grounds for the vacation of the office of the director.
- Numerous provisions linked to meetings and quorum does not apply to the OPCs.
- Unlike other companies, the directors of such companies can get more pay.
Difference between OPC and Sole Proprietorships:
There is not a big difference between an OPC and a sole proprietorship, but a small one. There is a difference between the natures of liabilities both the companies carry.As a one person company is a distinct legal entity distinguished from its promoter, it has its own assets and liabilities. The promoter does not have to repay the debts of the firm. While the sole proprietorships and their owners are the same persons due to which the law permits the attachment and sale of the assets of the promoters in case they fail to fulfill the business’s liabilities.
This much information is enough for you, for now, to decide if you should plan to register your company as a one person company to avail the benefits mentioned above.