Continuing on the series, today we will focus on another form of business, namely – OPC which is One Person Company wherein one person can start a private limited company, which helps one to build a collaboration at the international level as it gives the status of a private limited company.

Unique Features

1. It is established on the principle of no perpetual succession.
2. Since there is only one member, the death of the member will result in the nominee choosing or rejecting to become sole member whereas other private companies follow the concept of perpetual succession.
3. It is a distinct legal entity.
4. The earlier minimum paid up capital of Rs. 1 lakh has been removed in Budget 2021 and as of now, there is no minimum paid-up capital.
5. There are no shareholders in this business entity.  Sweat equity, ESOP or any other forms of shares cannot be issued as it is one person.  The promoter will be the only shareholder of the company.
6. The liability of the company is limited liability, which distinguishes it from proprietorship.  That means private property of the one person is not liable for attachment of company liabilities.
7. The minimum director required is one person.  However, they can have a maximum of 15 directors.

Documents Required for registration:

• DSC of the Promoter.
• PAN & Aadhar Copy of the Promoter.
• Memorandum should contain objects of the Company, Terms & Condition & nominee consenting to nomination.

Privileges & Important points in an OPC:

• No AGM (Annual General Meeting) required.
• Financial statements need not include cashflow statement.
• Company secretary is not required to sign annual returns, Directors can do it.
• Provision of independent directors does not apply to OPC.
• The article of association can provide additional grounds for vacation of Director’s office.
• Most of the provisions related to meetings and quorum do not apply to them.
• The directors can be paid more remuneration as compared to other companies.
• In Budget of 2021, the resident limit for an Indian citizen is 120 days as against 182 days earlier.  It allowed NRIs also top open OPC in India.
• The earlier paidup share capital cap of Rs. 50 lakhs maximum and turnover of Rs. 2 crores to convert as a private company has been removed.
• OPC can be converted to any kind of company with effect from April 1, 2021.
• The OPC can be started only by Indian Citizens and Residents.
• Law prohibits minors from starting OPC.
• OPC cannot be converted into Section 8 company.

Conclusion: This form of business is a good model instead of proprietorship for people who do not want to risk their personal capital for the business losses and also this form of business gives the status and image of a private limited company.

Folks, I think things now are much clearer on the various forms of business entities.  We will be talking about the private limited company in our next video, so watch out.

Share & Review us at :

Facebook : https://www.facebook.com/totalsols
Linkedin:https://www.linkedin.com/in/a-subramani/
Instagram: https://instagram.com/totalsols123?igshid=vhhhy4ozhh2q
Youtube Channels : https://rb.gy/q43drq  /   https://bit.ly/3ol827x