Benefits/Features of One Person Company

Introduction

One Person Company (OPC) is the special form of company, which is established with the assistance of the Companies Act, 2013, in particular, Section 2(62). It enables one person to start and run a business, which has the merits of a sole proprietorship and a private limited company.

This is a type of structure that enables the entrepreneurs and the small business owners to carry out their business in an independent manner, and at the same time, benefits them with the characteristics of limited liability, separation of legal personality and the corporate recognition.

By 2025 the Ministry of Corporate Affairs (MCA) has simplified a number of compliance norms in OPCs to promote business growth of small business and doing business in India.

Key Features of One Person Company (OPC)

• Single Owner Structure

1. Only one person can be an OPC since he or she is the shareholder and the director of the company.
2. This is the best form of structure in case a solo entrepreneur wishes to have complete control of the business and limits his liability.

• Limited Liability

1. The liability of the member is limited to the amount of contribution of his share capital.
2. The owner is not subject to the business liabilities or other legal obligations and the personal assets are not subject to large business debts so they have high financial stability.

• Separate Legal Entity

1. An OPC has a separate legal personality to the owner.
2. It has the capability of owning property, suing and being sued as well as making contracts in its own name which gives it corporate legitimacy.

• Nominee Requirement

1. The only member of the OPC is required to nominate an individual that will assume the management of the company in the event of the death or incapacity of the owner.
2. The consent of the nominee should be registered with the Registrar of Companies (ROC) during incorporation.

• Minimum Compliance Requirements

1. The compliances in OPCs are lower than in the case of the private limited companies.
2. Annual General Meetings (AGMs) and regular board meetings are unnecessary.
3. Annually financial statements shall still be submitted to the MCA.

• No Minimum Paid-Up Capital

1. According to the latest amendments, one does not have a minimum capital requirement in order to establish an OPC.
2. A small venture or any person with any amount of funds can start the business, as it is affordable.

• Conversion Flexibility

1. OPCs may transform into either Private Limited Companies (PLC) or Public Limited Companies (Ltd) by their own choice after accumulating a paid-up capital total of 50 lakhs or average annual turnover of 2 crores.
2. With changes to MCA after 2021, voluntary conversion may be made at any time without two years of incorporation.

• Taxation Benefits

1. Under the income tax act, 1961, OPCs are levied just like a private limited company.
2. Various deductions, startup incentives and tax exemptions that are offered to small business, including MSMEs can be claimed by eligible OPCs.

• Perpetual Succession

1. The owner dies or becomes incapacitated but the company still continues to exist.
2. Nominee assumed ownership easily and there would be continuity in the business.

• Enhanced Credibility

1. Being registered according to the Companies Act, 2013, OPC has a better credibility among clients, suppliers, and financial institutions.
2. It enhances loan, tender and partnering opportunities.

Advantages of One Person Company

Eligibility Criteria for Forming an OPC 

• A single individual is only allowed to be a shareholder and a director.

• The individual has to be an Indian citizen and should be living in India.

• Nominee should be appointed (as well as Indian citizen and resident).

• The company will have to adhere to the rules of incorporation of the MCA under SPICe+.

• The approval of that name should be done in the form of RUN or SPICe+ Part A.

Documents Required for OPC Registration 

• PAN Card and Aadhar Card of the owner and nominee

• Passport-size photos

• Present proof (Electricity bill/Bank statement)

• Evidence of registered office (Rent agreement or ownership deed)

• NOC by the owner of property (when rented).

Conclusion

The One Person Company (OPC) is an innovative idea that aims at promoting the emerging startup community in India. It gives small business owners the benefits of sole proprietorships and limited liability, as well as, a company structure.

By 2025, the government is in the process of simplifying the processes of formation of OPC and compliance to make it an ideal option among freelancers, consultants, startups, and small business owners aiming to have full control and with formal legal protection.

Disclaimer

The information provided in this blog is purely for general informational purposes only. While every effort has been made to ensure the accuracy, reliability and completeness of the content presented, we make no representations or warranties of any kind, express or implied, for the same. 

We expressly disclaim any and all liability for any loss, damage or injury arising from or in connection with the use of or reliance on this information. This includes, but is not limited to, any direct, indirect, incidental, consequential or punitive damage.

Further, we reserve the right to make changes to the content at any time without prior notice. For specific advice tailored to your situation, we request you to get in touch with us.