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One person company (OPC)

A One Person company is a Company which has only one person as member. This is a new concept introduced by the Companies Act, 2013. Since such companies have only one member, these companies enjoy certain privileges or exemptions as compared to other companies.

Since the company is owned by a single person, he must nominate someone to take charge of it in case of his death or disability. The nominee must give his consent in writing, which has to be filed with the Registrar of Companies. Of course, the owner can change the nominee any time he wants to, but he will have to inform the Registrar. The nominee can too back off at a later stage, in which case the owner will have to make a fresh nomination. Once the paperwork is complete, the Registrar will issue a certificate of incorporation within seven days of receiving the documents, after which you can start the business

Silent Features of OPC:

  • A One Person Company can be incorporated as a private limited company only.
  • It can have only one member at any point of time.
  • The words “One Person Company” must be mentioned in brackets below the name of the Company.
  • The provisions relating to holding of Annual General Meeting and Extraordinary General Meeting is not applicable to such companies.
  • No provisions have been prescribed on holding board meetings if there is only one director, but two meetings need to be organised every year if there is more than one director. Any resolution passed by the sole member must be communicated to the company and entered in the minute book.
  • There is no relief from the provisions on audits, financial statements and accounts, which are applicable to private limited companies.

Advantages of OPC:

  • The biggest advantage of a One Person Company is that its identity is distinct from that of its owner. Therefore, if the firm is embroiled in a legal controversy, the owner will not be sued, only the Company will.
  • Another obvious advantage is limited liability.
  • Since the company is distinct from that of its owner, the personal assets of the shareholders and directors remain protected in case of a credit default. However, a proprietorship offers no such advantage.