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What is a One Person Company?

Introduced with the aim of limiting the liability of proprietors while keeping the compliance to a minimum, One Person Companies were introduced by the Companies Act 2013. Any proprietor looking for a way to limit his personal liability in the business can opt to form a one person company instead of a private limited. An OPC just like a Pvt ltd, enjoys separate legal existence and the owner is not personally liable for the company’s debt. The two most important features of an OPC are – first that it has the characteristics of a Pvt ltd company and second that it does not have compliance obligations as much as a Pvt ltd company does, it has minimum compliance requirements just like a proprietorship. So, an OPC is a legal entity which gives you the benefits of a private limited company without the legal obligations that come with it. If you’re looking to run and control your business all by yourself without having to rely on someone else, do opt for registering your business as a One Person Company. However, there are 2 limitations in the form of thresholds, which are –

  • An OPC cannot have a Capital exceeding INR 50 Lakhs.
  • Its turnover must not exceed INR 2 Crores for 3 consecutive years, if it happens, then the OPC must be converted into a private limited company. 

Features of an OPC

  • Incorporated as a private limited company. 
  • Only one member or shareholder. 
  • Can have a maximum of 15 directors. 
  • Don’t have to hold any Annual General Meeting each year. 

Documents Required for incorporating an OPC

  • Copy of PAN card/Passport. 
  • Copy of Aadhaar/Voter Id card. 
  • Copy of Electricity, Gas and Telephone bill. 
  • Copy of rent agreement. 
  • Passport size photograph. 

Advantages of an OPC

  • OPC needs less compliance and is less complicated. 
  • Enjoys many exemptions. 
  • Lesser tax liability.
  • Easy funding by banks. They prefer incorporated bodies. 
  • No Company Secretary required.
  • Given legal recognition as a separate entity. 
  • Avails all benefits under Enterprise Development Act (2006). 
  • Benefits of Startup India Initiative.
  • A single owner can make quick decisions, can manage and control company better. 

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