Introduction

One Person Company (OPC) is simply one of the various types of business structures and it’s exactly what its name suggests i.e. company with only one person. This revolutionary business structure is very popular worldwide but was introduced in India recently through the revamped Companies Act of 2013. OPC Registration is perfect for young businesses and entrepreneurs because it not only provides the limited liability feature but also ensures the flexibility to convert the business structure, whenever required at a later stage.

As per Companies Act of 2013, an OPC is simply a company with only one member, which means that the same person will be the director as well as shareholder of the company. Such a business structure was introduced to encourage new businesses and young entrepreneurs to set up companies and operate their businesses without the need to have several other shareholders or members. OPC Registration is preferred over other business structures by small businesses because of various reasons such as fewer compliance requirements and separate legal entity status etc. In this article, you will learn everything about OPCs, which will help you in deciding whether this is a suitable structure for your business or not.

How is OPC different from other business forms?

An OPC Compliances is similar to other forms of business structures but at the same time, it is distinct from other business structures as well. You’ll understand this statement after perusing the detailed comparison of OPC with other business forms below:

Just like Sole Proprietorship, OPC is also a one-person game. However, when it comes to limited liability and separate legal entity features, Sole Proprietorship lacks them.

OPC has all the features of a private limited company. However, OPCs have very few compliance requirements, unlike private limited companies. Moreover, minimum shareholder and director requirements are also different.

OPCs are not required to hold AGMs, including cash flow statements in their financial statements, signing of annual returns by the Company Secretary (can be signed by the director himself) and many other such privileges are bestowed by the Companies Act on OPCs.

One more difference is that OPCs are required to appoint a nominee at the time of registration. This very nominee became the member of the OPC, in case of death or incapacity of the numerator or business owner.

An OPC can have more than one director and up to 15 directors. But by passing a special resolution more than 15 directors can also be appointed by an OPC.

Limitations of OPC

With every advantage, there comes a disadvantage and OPC is no different. Indeed it has various benefits but it also has certain limitations, which are as follows:

Usage of the OPC acronym: An OPC is mandated to use the “OPC” acronym alongside its name so that the general public or any person dealing with them knows that they are OPC. This limitation results in less attractive branding and hampers the aesthetics of the name and logo of the business.

Limited Funding and Expertise: Through OPC, you become the sole boss of the business, but in return, you lose the potential funding which might be brought by other shareholders. Moreover, you won’t be able to use the expertise, experiences, qualifications, IPR or other rights which might be brought to the table by other members.

Compliance Burden: Indeed the compliance burden on OPCs is much less as compared to private limited companies. However, it’s still a lot when compared with sole proprietorship, partnership and LLP as well.

Requirement of Appointing Nominee: In other business structures you’re not required to appoint any Nominee, but in the case of OPCs you’re mandated to appoint a Nominee while registering your OPC.

Compliance Requirements for OPC

As per Companies Act of 2013, all the regulations applicable to a private company will also be applied to an OPC. This simply means in the eyes of law an OPC is simply a private limited company which enjoys certain benefits and exemptions.

Therefore compliance requirements of OPC are more or less the same as any other private limited company with certain benefits and exceptions which exist to ensure the ease of doing business and promote entrepreneurship. The compliances for OPCs are as follows:

Filing of Annual Returns
Maintenance of Books as per the Companies Act and its applicable rules
Auditing of Financial Statements
Conducting Board and Other mandated meetings
Compliances other than of Companies Act such as IT Act, GST etc

Conversation of OPC

Just like the conversion of a Private Limited Company into a Public Limited Company or the conversion of an LLP into a company. An OPC can be converted to a Private Limited Company as well. Therefore, if you incorporate your business as OPC your option to convert the structure is always open.

Whenever at a later stage you want to expand your business and feel the need to convert your OPC into a company, you can do so by following a simple conversion process. Hence incorporating your small business as an OPC Registration is always advised in order to enjoy the advantages offered by an OPC, during the early stages of your business and later change the structure whenever required. By following this strategy you will save a lot of compliance costs by using various advantages and exemptions bestowed upon an OPC Registration during the crucial times of your business. It will not only ensure cost efficiency but will also lower the compliance burden, which will enable you to focus on things which really matter for your business and its growth.

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Everything You Need To Know About One Person Company (OPC)

Priyanka

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