One Person Company
One person company was introduced by Companies Act, 2013 which is a combination of Sole Proprietorship concern and a private limited company. An OPC needs only one member who is the sole owner/director of the company with a paid up share capital of 1,00,000/- and the liability of the company is limited to the company and not the members.
The MOA of OPC shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles.
Advantages of One Person Company:
a) Limit the risk to Personal Assets
- With the limited liability protection, the assets of the business are at risk and not the promoter’s personal assets such as personal bank accounts, cars and houses.
b) Improve Business Credibility
- The information relating to the company, such as name of the company, date of incorporation, registered office address, status of the company, and other information are made available in a publicly searchable database. This feature makes it easy to authenticate the existence of the business, improving business credibility.
c) Attract Funding
- Private limited company has a better scope for funds. It can borrow in its own capacity from banking and financial institutions. It can also debentures, secured as well as unsecured and accepts deposits from the public.
d) Separate Legal entity
- A Private limited company is a separate legal entity from that of its owners. It can own property in its own name and can also incur debts. The members (shareholders/directors) have no liability to the creditors of the company.
e) Complete Control on the company with a single owner
- It leads to fast decision making and easy execution of works. However an OPC can appoint as many as 15 directors without giving share to them.
f) Easy Exit Plan
- An OPC is easy to sell, very less documentation without any hassles. This is the best type of strategy for the promoters.