Advantages of One Person Company
One Person Company (OPC) is another form of Private Limited Company having one member. This form of the company gave wings to the sole entrepreneur who wanted to have their own company. Being a private limited company, they provide the sole owner to have total control on the Company. Since it is run by a single person, various clauses such as conducting of Board Meeting, General meeting (AGM & EGM) have been waived off. OPC is like a boon for entrepreneurs who wanted to start but did not have partners to collide with.The basic difference between a sole proprietor and one person company are:
|S. No.||Basis of difference||Proprietorship||One Person Company (OPC)|
|1.||Nature of Business||It’s a sole proprietor business wherein the owner and the business are deemed to be a single person.||It’s a form of private limited company wherein the company and the owner are two different legal person.|
|2.||Identity||The identity of the business and Owner is one. They cannot be identified as separate person.||Being a legal person, the OPC is different from its owner.|
|3.||Liability of the Owner||The liability of the owner is unlimited. Personal property of the owner can be attached easily to pay off the liability of business.||The liability of the owner is limited to the extent of their shareholding. Being separate entity, personal property of the shareholder cannot be attached|
|4.||Perpetual Succession||The business may end up with the death of its owner.||Company being a separate entity, have perpetual succession.|
|5.||Wind up||It is easy to wind up a proprietorship business.||Winding up of an OPC is a lengthy process.|
- Legal Person: One person company is an artificial legal person. It has its own identity separate from its owner.
- Nature: It’s a new version of private limited company, where there can only be a single shareholder.
- Perpetual Succession:Company being an artificial person does not have any impact of change of shareholder. Members may come and members may go but a company goes on forever.
- Liability: The liability of member is restricted to the extent of share capital of the company. Hence, the property of the owner cannot be attached to pay off the liability at the initial stage.
- Nomination: In case of the death of the sole shareholder of OPC, then all the assets and liabilities are automatically transferred to the nominee of the OPC.
- Minimum Number of Member and Director: Only one shareholder and/or minimum one director is required to incorporate an OPC.
- Wind up: An OPC can be wound up only through legal procedure as given under the law.