One-Person Companies are single-owner businesses, incorporated as Private Limited Companies. This indicates that, akin to a Private Limited Company, the shares of an OPC also cannot be sold on public platforms like stock exchanges, or to the general public at large. Moreover, since the One Person Company has only one owner, he is the sole shareholder of the business or holds all the shares that the OPC issues in its entire lifetime.
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An One Person Company offers a number of advantages to all its stakeholders, including the owner, the creditors, and the customers. The purpose of this blog is to elaborately explain each of these benefits for a detailed and comprehensive understanding of the readers.
Benefits of OPC Registration
Registering your company as a One Person Company has a number of advantages, the primary one being Sole Ownership. Being the only owner of a business allows you to pocket all the profits earned, without sharing an ounce of it with any other entity. Limited or restricted liability for the sole owner, offered by an OPC, under these circumstances, is an added cherry on the cake! Other benefits of an OPC include easily available credit, a 100% online process of incorporation, qualification as small-scale enterprise, and Perpetual Existence. We have explained each of these benefits in the following section.
Regulated and registered under the Companies Act, 2013, an OPC is defined as a Private Limited Company owned by a single individual only. As the only owner, this individual brings in the entire investment needed by the OPC. In other words, he is the owner of all the shares issued by the One Person Company in its lifetime and is accordingly entitled to a 100% share in the profits of the company. Moreover, since only a single shareholder’s approval is required, taking key decisions for the company is extremely quick and easy.
Unlike a Proprietorship, an OPC operates as a distinct legal entity, separate from its sole shareholder. Although, as the only owner, the sole shareholder is entitled to receive all the income and profits earned in the due course of business, his liability towards paying off the losses and debts of the OPC is not 100%. The maximum amount that he is liable to pay cannot exceed the unpaid amount of capital that he has subscribed to.
Easy Credit Facilities
Since, an OPC is a legally incorporated entity, its details and documents are available for public viewing and inspection on the official website of the Ministry of Corporate Affairs. So, all credentials with which an OPC operates, or applies for credit, can be verified thoroughly. This enhances the credibility and reliability of an OPC and enables it to avail institutional credit facilities with utmost ease and effortlessness.
Easy to Incorporate
With the introduction of the SPICe+ application for company registration, the process of incorporating an OPC has become completely online. This has drastically reduced the time and effort that goes into the application process. The SPICe+ application is quite wholesome and provides end-to-end services for company formation. The application is divided into two parts, where the first part can be used to apply for name reservation of the OPC, and the second part can obviously be used for OPC registration. Apart from registration, the form also contains various linked applications for EPF registration, ESI registration, company PAN and TAN, and opening a current bank account in the name of the OPC.
Benefits of Small-Scale Industries
One Person Companies are generally suitable for small-scale business operations, as they have limited capital. So, they can easily become eligible to avail of the benefits initiated by the Government for small-scale industries. These may include, low-interest loans, collateral-free loans, favorable policies for foreign trade, and credit facilities enabled without any limit on the securities deposited.
Perpetual Existence
An OPC can be continued beyond the life of its sole shareholder. This is possible through the nominee of every subsequent shareholder of the OPC. An individual, immediately after becoming the owner of an OPC, is required to choose a nominee who would be succeeding him as the new owner, in the event of his death or his permanent departure. A nominee can be any individual chosen by the owner, and need not necessarily be his legal heir. However, no person can be appointed as a nominee by the owner, unless he gives his consent for the purpose. The consent of the nominee is required to be intimated to the ROC, with the application for updating/replacing the name of the old nominee with the new nominee.
Conclusion
With this we conclude our blog and hope that we have succeeded in explaining to you all the advantages of a One Person Company. If you still have any further questions you can contact us for a free consultation or send us your query and we will respond back in no time.
