Concept of One Person Company(OPC) under Companies Act, 2013

Concept of One Person Company(OPC) under Companies Act, 2013

One Person Company is newly added in the Companies Act 2013, earlier there was no concept of a one-person Company. 

The main aim was to promote the individual having the resources to form a company by reducing the complications and challenges faced while incorporation of a legal entity. It can be said as it is a company which is owned by a single person.
Section 2(63) of Companies Act 2013 defines about the OPC as one-person company means a company which has only one person as member.

Only a natural person who is Indian citizen and Resident of India:

  1. Is eligible to incorporate a One Person Company.
  2. Shall be the Nominee for the Sole member of a One Person Company.
    The term resident in India means a person who has stayed in India for a period of not less 182 days immediately preceding one calendar year
  3. Minor shall not become member or nominee of the One Person Company or can hold share with beneficial interest in such One Person Company.
  4. One Person Company are restricted to do business of Non-Banking Financial Investment activities including investment in securities of any other body corporate.
  5. It is Mandatory for a OPC to write OPC in bracket after the name of the Company.
  6. OPC can be incorporated as a Private Limited Company only.
  7. OPC cannot be incorporated or converted under Section 8 of the Act.

Privileges to incorporate OPC

  1. The privilege to incorporate OPC is that the owner has a limited liability, unlike in a sole Proprietorship where the owner has unlimited liability.
  2. OPC has a minimum requirement of One director only which can be extend up to maximum of 15 directors.
  3. The annual general meeting is not mandatory in OPC.
  4. The OPC is required to conduct a minimum two board meetings in a calendar year, and one meeting in each half of a calendar year.
  5. The sole proprietor business can easily be converted into OPC.
  6. Only Rs. One Lakh is required as minimum authorized share Capital to incorporate OPC

Restrictions 

  1. No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
  2. Such Company cannot be incorporate or converted into a company under section 8 of the Act.
  3. Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any-body corporate.

Conversion of OPC into Public Company or Private Company

OPC can be converted into other form of company other than company under section 8 of the Act.

Conclusion

OPC enables a person to incorporate a company on its own conditions and prevents interference. Thus, this concept creates opportunities too. 

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