A business entity where individual is allowed to operate a corporate firm with limited liability protection is a One Person Company.
To enable entrepreneurs in the process of starting a venture by providing a means to create a single person economic entity, the concept of a One Person Company (OPC) was introduced via Companies Act in 2013.
Permitting a single individual to create a company is a major advantage of OPC. On the contrast, Limited Liability Partnership (LLP) or a Private Limited Company (PLC) must have at least 2 members to establish a company. The single shareholder of a One Person Company will have limited liability protection alike PLC or LLP which ensures ease of incorporation and continuity of the business.
There are certain limitations in an OPC, although it enables the Entrepreneur to have the protection of an incorporation with limited liability.
In an OPC, ownership can be transferred easily and it allows single existence. It is the only type of entity which permits single promoter with an additional benefit of limited liability protection in India.
OPC remains in existence until it gets legally dissolved because it has perpetual succession. Demise or departure of any partner will not affect the OPC as it is a separate legal person. Regardless of any modifications in ownership, OPC remains in continuation or uninterrupted existence.
The ownership of the company can be transferred with a simple transfer of shares and the process of singing and filing the share certificates and share transfer form. Also, by altering the directorship, shareholding and nominee director information, the ownership of an OPC can be transferred.
The individual in the OPC must solely own the security equity against loans. This is advantageous to Financial Institutions and Banks as it will not involve disputes in ownership which secures capital for an OPC easily.
The company can obtain, buy and sell, enjoy properties on its name as an artificial person. Property can be tangible and intangible assets which are owned by a company like land, machinery, building property- commercial or residential, etc. Further, while serving as the nominee director, the individual cannot claim for the ownership of these assets.
Identity and Address proof of the main Director and Nominee Director must be supplied. In order to incorporate an OPC, electricity bill or bank Statement which include Address proof documents must be no older than 2 months. Only valid documents are meant to be submitted.
In order to prove access to the registered office, tax receipt or electricity bill along with rental agreement or sale deed, a letter from the landlord with his/her permission to utilize the office as a registered office of a company and a recent copy of water bill must be submitted. Every company must have a registered office in India.