One Person Company (F)

One Person Company

As per provision of section 2(62) of the Companies Act, 2013 defined (62) “one person company” means a company which has only one person as a member.

For the formation of OPC – Only a natural person who is an Indian citizen and resident in India­­-

shall be eligible to incorporate a One Person Company;

shall be a nominee for the sole member of a One Person Company.

The term “resident in India” means a person who has stayed in India for a period of not less than 182 days immediately preceding one calendar year.

Once we have decided to register an OPC we should be aware of the cons of an OPC also. Pros we have already seen.

We can only incorporate only one OPC. The law does not permit the incorporation of more than one OPC by the same owner. This is the same case with regards to the nominee of an OPC also. A nominee of an OPC cannot be a nominee of another OPC.

A minor cannot become a nominee or can hold shares of a beneficial interest in an OPC.

An OPC cannot enjoy the status of an OPC after achieving the ceiling limit as prescribed by the Companies Act, 2013. The rules state that where the paid-up capital of a PC exceeds Rs. 50 lakhs and its average annual turnover exceed Rs.2 crores. Upon crossing the above-mentioned threshold it should be converted to a private or public company. The conversion should take place within 6 months.

It cannot voluntarily convert into a private or public company unless it has completed two years from the date of incorporation except in point (3).

Many of us feel that the cost of registration is cheaper than that of the private company. But in practice, that is not the case. The cost of registration depends upon the authorized capital.

Disadvantages of the One Person Company 

1. High Tax Rate

As a corporate form, you cannot avail of the tax slab advantage. In proprietary, you are required to pay according to your salary at 10%, 20% or 30% tax rate. But in the case of one person company, you are directly charged 30% income tax. The high tax rate is a big disadvantage of a one-person company.

2. Consistency Cost

Compliance cost of partnership firm or proprietary is very low compared to One Person Company.

3. OPC is included in Name

You are required to specify a one-person company in your company name in the bracket. There is a slightly lower impression that the organization is kept running by one and only person. Another side, if you start your company with a couple of shareholders, the administration can’t be dedicated, and you can offer impressions to customers moreover.

One Person Management

A shareholder is one, and that person makes all the decisions. On the off chance that he is insightful, it is excellent; however, in some cases, cross-check is required for business development. The company’s success and growth are all dependent on one person’s decision-making ability.

5. OPC Incorporation is allowed

You can incorporate one and only OPC (One Person Company). If you need to start another company as OPC, it is not permitted. In today’s quick economy, more than one business can differentiate income and spare you from enormous misfortunes. One and an only stream of business is unsafe these days. Having this condition is a snag for serial business people.