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ONE PERSON COMPANY(OPC)

ONE PERSON COMPANY(OPC)

A One Person Company (OPC) is a business structure in India that allows a single person to form a company while enjoying the benefits of both a sole proprietorship and a traditional company. The Companies Act of 2013 introduced the concept of OPCs to promote entrepreneurship and the formalization of small and medium enterprises (MSMEs).

Here are some benefits of an OPC:

  • Limited liability: The legal and financial liability of the company is limited to the company, and the promoter's liability is limited to their contributions.
  • Separate legal entity: The OPC is a separate legal entity from its owner.
  • Tax benefits: OPCs can access certain tax benefits.
  • Streamlined operations: The single director and shareholder can make decisions and run the company efficiently.
  • Option to appoint more directors: If needed, the OPC can appoint up to 15 directors.

Eligibility Criteria

Before you go ahead and engage in OPC registration process, it's crucial to understand the specific eligibility criteria and limitations that govern its formation. The Companies Act sets out clear requirements that must be met to ensure that the individual promoting the OPC is eligible to do so.

  • Natural Person and Indian Citizen: Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs cannot create an OPC.
  • Resident in India:  The promoter must be a resident in India, meaning they should have lived in India for at least 182 days during the previous calendar year.
  • Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company's capital clause during the OPC Company registration.
  • Nominee Appointment: The promoter must appoint a nominee during the OPC's incorporation. This nominee would become a member of the OPC in the event of the promoter's death or incapacity.
  • Restrictions on Certain Businesses: Businesses involved in financial activities such as banking, insurance, or investments are not eligible for OPC company registration.
  • Conversion to Private Limited Company: If the OPC's paid-up share capital exceeds 50 lakhs or its average annual turnover surpasses 2 Crores, it must be converted into a private limited company to comply with the regulatory requirements for larger companies.

It's worth noting that an individual can establish only one OPC, and an OPC cannot have a minor as its member. In the following section, you'll find advantages and disadvantages one will get as a result of OPC registration online.

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