One Person Company Structure in India

One Person Company in India

In India, one person company was recommended in 2005 by the J.J Irani Committee, which aimed at the growth of new entrepreneurs in the country. But it was introduced in the year 2013 under the provisions of Companies Act 2013. A one-person company (OPC) consists of a single person as the owner of an enterprise.

The owner enjoys all the benefits and privileges of the enterprise. Through OPC many small business owners got a chance to expand their path and contribute to the economy of the country. One person company can be formed in different ways. It also comes with a few restrictions and duties.

Meaning Of OPC (One Person Company)

A one-person company is mentioned under section 2(62) of the Companies Act that it is a company with only one person as the sole member of the company. These types of companies are created to promote the interest of an individual and help them in expanding their business. 

This further helps them in the market to add to the economy of the country. It has provided the new business owners with a platform where they can easily get bank loans for their company and expand their market at the national and international levels.

Features of OPC (One-Person Company)

There are several distinct features of a one-person company. Knowing these would help us initiate a deeper understanding of this kind of company. Some features of a One Person Company are:

• Private Company: Under section 3(1)c of the companies act, it is said that only a single person is allowed to form a company as an entrepreneur for any legal purpose. Thus, this brings into consideration that an OPC is a kind of private company.

• Single-Owner: There must be single-person ownership under OPC’s, unlike other companies. The main characteristic of OPC stands for its sole ownership of an enterprise, venture or company.

• Nominee: A single owner of the OPC’s can have a nominee during the registration process. This is a unique feature that distinguishes it from other companies.

• Only-One Director: Only one person is allowed as a director in a one-person company. This one director stands as the head for taking all the crucial decisions. 

• Distinct Liberty: In OPC’s a owner enjoys all the special perks and benefits of the company along with other benefits that other companies do not provide.

Advantages of One-Person Company in India

The start of a one-person company in India, holds a lot of importance. Let us know what these are:

• The concept of co-partners and the responsibilities is totally eliminated in the one-person company.

• It provides an organised sector to the owner and entrepreneurs can enter into the different domains and expand their business.

• The requirement is very less in OPC’s as compared to other companies. Other companies require different entities as shareholders, one director. However, both direction and shareholder can be one person in a one- person company. 

• It is very easy to get loans from the bank under OPC’s and most of the time banks also give a chance to the entrepreneur to convert into a public limited company.

• Dis-advantages of One-Person Company in India

Besides the positive light of a one-person company, there are also a few drawbacks. These are mentioned as below. 

• Only the citizens of India are able to incorporate under OPC’s and same with the nominee.

• OPC’s are best suited for small-scale businesses, which have a turnover of up to 2 crores, if it exceeds then there is a need to convert into a private limited company.

• There is a limitation in business-like activities like a single person cannot do non-banking financial activities.

• NRI’s are not allowed to form one-person companies.

Impact of One Person Company in India

After 2014, it is seen that one-person companies or OPCs have impacted India positively . It has promoted business owners and gained huge incentives out of it. It is predicted by some economists that in the near future, it will give a boost to the Indian economy.

The one-person company or the OPCs will have access to the international market also. From 2015 to 2018, a huge number of entities have registered for the OPCs. Those who were already registered contributed in good numbers to the financial sector of India. The small business owners have now adopted new ways to see the growth of their business under OPCs. 

The Indian government has also played a crucial role in helping the new OPCs. It has also aided in funding the new entrepreneurs. It is observed that in the future, foreign investors will also contribute to the Indian entrepreneurs. There will be a plethora of new and innovative ideas to emerge. The advent of one-person companies has revolutionised the concept of trade and economy. 

Conclusion

In the Indian market, one- person company or OPC is a new concept for business holders. However, the growth is very good as compared to previous statistics of business in India. People are accepting opportunities and ideas as OPCs have opened up new doors for entrepreneurs. This has also enabled them to enjoy the advantages of OPC.

Due to distinctive features, it has resulted in such a rapid growth of OPC in India. It has helped a lot to the small-scale business owners with the bank loans and other benefits. People who are self-employed also get a unique platform to build their business further. In 2014 and till now, OPC’s has shown excellent growth in the Indian business market.

With this, there are also a few disadvantages of OPC that must be looked out for. The concept of OPC may be new, but it has already swirled around the business world.