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The Companies Act 2013, introduced the concept of One Person Company (OPC) in India. It encourages self-employment within the ambit of India's legal system. There can be only one member in an OPC. Its main characteristic is that only one shareholder who owns 100% stake of the company. To maintain the character of perpetuity, the appointment of the nominee is compulsory, who will take place of the owner in case of death or his inability. One person company is a type of Private Limited Company.
OPC gives the individual entrepreneurs all the benefits of a company, which means they will get credit, bank loans, access to market, limited liability, and legal protection available to companies.
OPC would provide tremendous opportunities for small businessmen and traders, including those working in areas like handloom, handicrafts and pottery.
A company is a Separate legal entity from its Owners and Management in the eyes of law.It can have a PAN number, bank accounts, licenses, approvals, contracts, assets and liabilities in its unique name.
Management & shareholders can be separated. A shareholder can invest the fund in fruitful business without managing & Management can operate their business without frequent interruption of investors.
The compliance requirements are lesser in comparison to the private company.Compliances like holding General and Board Meeting, etc. are not applicable to OPC. However, Board Meeting must be held if more than one director is on Board.
Shareholder enjoys limited liability to the extent of capital invested. In case of any unforeseen liabilities, it would be limited to the company and not impact the shareholders. Shareholder's personal assets protected in the event of the company's insolvency.
OPC can take legal action against another and also other person can take legal action against company separate from directors, shareholders & promoters.
Only a natural person who is a resident of India in the preceding calendar year (who has stayed in India for a minimum of 182 days) can form an OPC. Therefore, a minor, foreign citizen, non-resident, or any person incapacitated by contract are ineligible to form an OPC.
The member of the OPC cannot incorporate more than one OPC.
It is pertinent to note that the rules do not permit non-banking financial institutions (NBFC) to Register as OPC.
In case the Annual turnover of OPC crossesRs. 2 Crore, it must be converted into a Private Limited Company. Further, audited financial statements must be filed with the Ministry of Corporate Affairs at the end of each financial year.
In case the Paid-Up Share Capital of OPC exceedsRs. 50Lakhs, it must be converted into a Private Limited Company.
| Characteristics | OPC | Pvt. Ltd. Company | Proprietary Concern | Partnership Firm | LLP |
|---|---|---|---|---|---|
| Separate Legal Entity | YES |
YES |
NO |
NO |
YES |
| Governing Act | Companies Act, 2013 | Companies Act, 2013 | No specific Act | Indian Partnership Act, 1932 | Limited Liability Partnership Act, 2008 |
| Registration | Mandatory | Mandatory | Not Reuqired | Optional | Mandatory |
| Liability | Limited | Limited | Unlimited | Unlimited | Limited |
No. of Members |
1 Member and 1 Nominee | 2 - 200 | Only 1 | 2 or more partners, 10 for banking , 20 for non-banking | 2 or more partners |
Dissolution |
Legal procedures for winding up orliquidation as the case may be | Legal procedures for winding up orliquidation as the case may be | The proprietor has the sole authority | The proprietor has the sole authority | With Consent of partners |
Succession |
Nominee | A company has perpetual succession | Legal Heir | Remaining Partners and Legal Heir of deceased partner with consent of other partners | Remaining Partners |
| Filing of financials with regulatory authorities | Financial statements are to be filed annually with Registrar of Companies | Financial statements are to be filed annually with Registrar of Companies | Not Applicable | Not Applicable | Financial statements are to be filed annually with Registrar of Companies |
| Filing of forms for creation of charge (in case of loans taken). | Required to file adequate forms with Registrar of Companies | Required to file adequate forms with Registrar of Companies | No legal formalities | No legal formalities | Required to file adequate forms with Registrar of Companies |
| Statutory Compliance | Apart from Annual filing, compliances are less compared to Private Company | Apart from Annual filings, it has to comply with various provision laid down, but less compared to public company | No compliances and no requirement to file a separate ITR | Separate ITR of partnership is filed, else there is no filing requirement | Annual filing and few event based filings are necessary |
Audit Compliance |
Compulsory | Compulsory | Subject to turnover of the firm | Subject to turnover of the firm | Only if contribution more than Rs. 25 lakhs or turnover exceeds Rs. 40 Lakhs |
~ Conveyance/ Lease deed/ Rent Agreement
~ NOC from Owner
~ Latest Utility Bill of registered Office
~ PAN Card
~ Identity Proof ( Voter’s ID / Passport / Driving License )
~ Address Proof ( Latest Telephone Bill / Electricity Bill/ Bank Account Statement )
~ Photograph
Taxes Applicable
Taxes Applicable