One Person Company is a new form of business entity in India, wherein a single person can form the company. However, it provides the freedoms of an individual trader and some structure of a private limited company. OPC is beneficial to the owners of the businesses as it helps in running and expanding their businesses with limited liability. This structure offers flexibility, legal recognition, and protection of assets ideal for sole traders willing to grow their company beyond the one proprietor system without the complexity arising from the partnership and many shareholders. Now we will discuss the unique features of One Person Company formation.
Features of One Person Company Formation
One Director
In a One Person Company (OPC), the incorporation can be done with only one director. This makes it unique from the other business structures that require more than one director. It facilitates the work of managing and making decisions. This can be highly beneficial, especially when the company is managed and run under the leadership of a single businessman. However, similar to any private limited company, an OPC gets entitlement to limited liability and legal entity. This structure is best used by anyone who wants to run their business and does not need help from other directors or partners in the company.
Limited Liability
In One Person Company (OPC), the liability of the sole member is limited to their share capital investment. This brings will personal asset protection from business risks. The feature of limited liabilities is designed in a way that even if there are debts or losses, the member does not lose their assets but risks only the capital that they invested.
Separate Legal Entity
OPCs are recognized as separate legal entities, different from their owners. This distinction guarantees that the company has perpetual existence, which means it continues to operate regardless of changes in ownership or the demise of the sole member. It also has the advantage of entering into contracts, owning property, and suing or being sued in its name, providing stability and continuity. This feature makes OPC a stable structure for entrepreneurs seeking long-term business sustainability.
Minimal Compliance
OPCs have fewer regulatory requirements than other forms of business structures and this makes them a perfect choice for single entrepreneurs. OPCs are subject to fewer compliance requirements than companies such as exemption from the holding of annual general meetings and limited filing requirements. This helps business owners to direct most of their efforts toward the growth and management of the business. This clearly shows why OPCs are the ideal model for a one-man business that wants the legal entity status of the company while avoiding all the numerous headaches and expenses associated with compliance.
Benefits of One Person Company Formation?
One Person Company is an ideal business structure for a single individual who wants to form a company. The benefits of One Person Company formation are mentioned below.
Limited Liability Protection
One of the main benefits of OPC is that it offers limited liability protection to the sole member. The personal assets of the member are protected and their liability is limited to the amount of capital invested in the firm. The assets remain protected during debts or legal disputes in the business.
Easy Funding and Investment Opportunities
OPCs attract external funding and investments as they are registered as private limited companies. This makes it possible for businesses to access funds for growth and expansion, purchase and upgrade machinery or tools, or for research purposes. The sources of funding assist OPCs in advancing the expansion and profitability of the business.
Sole Decision Making
OPC is an extension of full control over decision-making for the company without necessarily involving the consent of many stakeholders. This makes it easier and faster to implement business strategies and enables organizations to capitalize on market opportunities.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.