One Person Company (OPC) was introduced by The Companies Act 2013. As the name implies, an OPC is established by a single person. A person establishes and manages the company. An OPC has all the features of a company like limited liability, perpetual succession, and a separate legal entity. A single person could not establish a company before the enforcement of the Companies Act, 2013. Now we will discuss the advantages of one-person company registration.
Easy to Obtain Funds
Since the one-person company is a private company it is easy to raise funds through angel investors, venture capitalists, incubators, etc. The banks and the Financial Institutions usually prefer to grant loans to a company rather than a proprietorship firm. So, it becomes easier to obtain funds.
Legal Status
The one-person company gets a separate legal entity status from the member. The separate legal entity offers protection to the single individual who has incorporated it. The member’s liability is limited to their shares and they are not personally liable for the company’s loss. The creditors can sue the OPC but not the director or member.
Less Compliance
Another advantage of one-person company registration is that it does not need to prepare the cash flow statement. The secretary of the company doesn’t need to sign the book of accounts and annual returns.
Easy to Manage
It becomes easier to manage the affairs as a single person can establish and run the OPC. It is more convenient to make decisions and implement the decision-making process. The special and ordinary resolutions can be passed by the member easily and signed by the sole member. So, managing and running the company is easy because there won’t be any conflict or delay within the company.
Easy Incorporation
One of the main benefits of one-person company registration is that it is convenient to incorporate. This is because only one member and one nominee are needed for the incorporation. The director can also be a member. So, it is comparatively easy to incorporate a one-person company.
What are the Features of One Person Company?
A One Person Company (OPC) is a company that enables a single entrepreneur to run a firm with minimal liability protection. The features of one-person company registration are mentioned below.
Less Regulatory Burden
One-person company has comparatively fewer regulatory requirements and formalities. For example, no board meetings or general meetings are required. This streamlined regulatory environment enables the owner to concentrate more on core business activities and strategic growth without being overwhelmed by compliance tasks.
Easy Conversion
An OPC can be converted into a Private Limited Company if it meets certain criteria, like crossing a specified turnover or paid-up capital threshold. This flexibility allows the company to grow and scale without needing to change its foundational structure. Conversion to a Private Limited Company can provide additional benefits, including the ability to boost capital through equity and greater access to funding and investment opportunities.
No Minimum Requirement of Capital
There is no minimum capital requirement for forming an OPC as this makes it accessible for small entrepreneurs who may not have significant initial capital to invest. The flexibility in capital structure allows the owner to start the business with a modest investment and scale up as needed, decreasing financial barriers to entry and enabling more individuals to pursue entrepreneurial ventures.
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.