Business

Benefits of One Person Company in India

One person company is a company which is registered under the companies act, 2013 through Registrar of Companies (ROC), in whose jurisdiction the registered office of the company is situated. One person company registration is totally online process and once it is registered it is valid for a lifetime. One person company cannot share its membership with any other person. It is a type of private limited company and that is the reason the word “(OPC) Private Limited” is mentioned at the end of the name of the company. In this company minimum of 1 director is required but a maximum of 15 persons can be appointed as directors in the company during the tenure of the business.

The government intend to promote the sole ownership business that is why they introduced the concept of one person company (OPC) in the companies act, 2013. This is the best option for the person who wants to run their business under the name of private limited as it has all the benefits of the private limited company except the right to issue shares to other than the existing member. 

Following are the One Person Company Benefits in India:

  1. Separate Legal Entity: Just like other companies the OPC is also a separate legal entity and enjoy all the rights like a person. It can hold, sell, lease, rent properties on its own name including trademark, patent, copyright, etc. 
  2. Limited liability: The director and member are limited and they are not personally liable for any debt or loss incurred by the company. The liability of the shareholder is limited to the unpaid capital amount.
  3. Perpetual Succession: The death of the director and the member doesn’t affect the life of the company; the company remains in existence. The person comes and goes but the company remains alive until a closure application has been made to the registrar.
  4. No Profit Sharing: As there is a single owner in the company there is no option to share profit among the members of the company.
  5. Less Compliance: In comparison to private limited and public limited company the OPC company annual compliances are very less because there is no need to hold an annual general meeting, or 4 board meetings in a year, to maintain minutes, maintain a quorum in a board meeting if there is one director, etc.
  6. Less Chance of Management Dispute: There is very little chance for a dispute in the board of directors. In OPC the management has a better ability to make better decisions because of a small group of directors.
  7. Less Tax Rate: In comparison to other business entities the tax rate is less. In OPC the income tax rate is 25% whereas other business entities have to pay 30% tax on the profit earned during the year. 
  8. Easy to get finance help: The company is regulated by the ROC (a proper authority) therefore it gains the trust of the investors because they can look into each and every document of the company, that is why it becomes easy to get support from the banks or financial institutes or capital ventures etc. 

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Adrianna Tori

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