There are three types of ownership for companies: 1. One Person Company 2. Private Company 3. Public Company. A number of ideas were introduced in Indian corporate law by the Companies Act, of 2013. A major shift occurred with the emergence of the one-person company concept. Prior to the new Companies Act in 2013, several other nations recognized that people could form corporations. The USA, China, Singapore, the United Kingdom, and Australia were some of these countries. Read more to know about one person company India.
Meaning of One Person Company:
Founded as a private company, it consists of only one member. Corporations can be registered even if they only have one shareholder or member. In order to encourage microbusinesses and entrepreneurship, One Person Company was established. It was recommended in 2005 by the JJ Irani Expert Committee that OPC be formed in India. The company has all the benefits of a private limited company, such as being a separate legal entity, protecting personal assets from business liabilities, and continuing to exist.
The One Person Business (OPC) has only one shareholder, since its members are its shareholders. OPCs are often formed by single founders or promoters. Businessmen and entrepreneurs who are just starting a business choose OPCs over sole proprietorships because of their multiple benefits.
Characteristics of a One Person Company
The characteristics of One Person Company are as follows:
- Those who are Indian citizens and residents in India: a) are eligible to incorporate a One Person Company; b) are eligible to serve as a nominee for the sole member of such a company. In India, a resident is a person who has stayed there for at least one hundred and eighty two days during the calendar year preceding it.
- It is not permitted to incorporate or become a nominee of more than one OPC or to become a nominee of more than one such company.There is a difference between OPCs and other kinds of businesses, in that an OPC’s sole member must appoint a nominee when the company registers. A person may not be a nominee in more than one OPC.
- The OPC does not permit minors to become members or nominates, or to hold shares with beneficial interests.
- A company cannot be incorporated or converted into an OPC under Section 8 of the Act.
- The OPC cannot engage in non-banking financial investment activities, including securities investments.
- One Person Company cannot convert into any kind of company unless two years have passed since its incorporation, except when its paid-up capital exceeds 50 lakh rupees or its average annual turnover exceeds 2 crore rupees during the relevant period.
- When a natural person is a member of one OPC but gets membership in another OPC as a nominee in that OPC within a period of one hundred and eighty days, he must withdraw his membership from both OPCs.
- When the name of such a company is printed, engraved or affixed, it must be accompanied by the words “One Person Company.”.