Legal Definition of a One Person Company
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Essential Components of a One Person Company
- Name of the Company: A company cannot exist without a name. In fact, it is the most prominent and communicative aspect of its identity. It is through its name that the company builds its brand value. Hence, it is necessary that the name of a company must be unique yet revealing of its purpose of establishment.
- Address of the Company: A One Person Company must have a primary place for conducting its business operations. The place could either be rented or owned by the owner in the name of the company. It is this address where all the communications addressed to the company shall be received.
- Capital of the Company: The capital of a company is the amount of money that the shareholder invests in the company after buying the same worth of shares. It is this investment for which the shareholder shall receive returns as a percentage in the share of profits earned by the company. Since all the capital is invested by a single shareholder in a one person company, the amount should be sufficient for the business to run smoothly and conduct its operations without any hindrance.
- Shareholder: A One Person company can have one member or shareholder who will be entitled to 100% ownership of the company, and will be entitled to pocket 100% of the profits earned by the company. His relevance to the company is that he invests all the capital that the company needs in the due course of business operations.
- Director: Unlike a Sole Proprietorship where the single owner is completely responsible for controlling the management of the company, the sole owner or shareholder of a one person company does not involve himself in the management of the company. For this purpose, he can appoint directors. A one person company must have at least one director and can have a maximum number of 15 directors.