OPC (One Person Company) concept was introduced in 2013 companies act. Having corporate form of business has various advantages and disadvantages. In this post, I have highlighted benefits and disadvantages of one person company (OPC). If you are thinking of starting one its better to be aware be one person company advantages and disadvantages.
One Person Company Advantages :
Let’s have a look at the benefits offered by one person company form of business.
Corporation Form :
You can add LTD. to your business name. In business, having company form has indirect advantage. People like to deal with company and you can achieve their confidence in your business. Other benefit is getting employees easily. People prefer to work with company rather than firm.
As sole proprietor, you have unlimited liability for your business result. If you are doing loss, your personal assets can be claimed by your creditors. So there may be some mental worry. But in one Person Company, you can form One Person Company limited by shares, limited by guarantee or unlimited company. You can choose here limited by share form and your liability is limited to business assets. Any business loss cannot touch your personal saving.
Relaxation for some Sections of Companies Act :
To reduce burden of compliance of laws of companies act, there is relaxation available to OPC former. He is not required to follow section 96, 98, 100 to 111. He is also not required to hold annual or extra ordinary general meeting. Additionally, he is not required to preparing cash flow statement. He can also sign annual return himself as a director and no need to get signed it by company secretary.
Full management control on OPC :
He can achieve full management control over company. He is not required to give share of management to anybody. He can appoint directors but cannot give control to them. This will bring fast decision making process. This fast action process brings fast profitable results if decisions are taken wisely and proper care.
Conversion of One Person Company to Private Limited Company :
One Person Company shall be converted to private limited company when OPC reached paid up capital at 50 lakhs rupees or when average turnover of company (3 years) reaches 2 crores or more. So it is easy to form OPC once and after that coverts it to private limited company. Until your turnover increases significantly, you can enjoy benefits of OPC.
Minimum one director :
While forming one person company, you may act as director and shareholder. Only one director is valid for OPC. However, you can appoint others as director and maximum number of directors can be 15.
Procedure of One Person Company Registration