One Person Company – The ‘One’ way to form a Company
The word company literally implies the idea of an association of more than one. In the corporate sector a company is run by a group of people or an amalgamation who jointly strive for profits. The One Person Company (OPC) concept rules out this convention and proposes a whole new and exceptional design, a company that can be started and run by a single person. This conception has been previously alive abroad, and as the Company’s Bill 2012 will be enacted into a law, it would be permissible in India too. Clause 2(62) of the Bill defines One Person Company and allows a single person to start a company. Including an acquaintance for the namesake partnership to legally obtain the recognition of a company is no longer an obligation. An individual can now register as a company under this clause with the legal and monetary liability is restricted to that company and not to the individual.
The person must comply with the requirements of the clause at time of incorporation and register a nominee with his prior assent. The nominee shall be accountable to handle the company and take full charge in case of death or inability of the registering member. However, the nominee has the full liberty to withdraw from the same at any point of time; as well the registered member has all the rights to change the nominee as per his wish. The business chronicled as an OPC must always mention ‘One Person Company ‘ in brackets next to the company’s name, whenever and wherever the name happens to appear.
It mitigates the member from the burden of unlimited liabilities as a proprietor and eases the entry of such aspiring entrepreneurs as an organized company into the corporate world. As a One Person Company, the individual can avail the benefits of proprietorship and enjoy a place in the corporate by registering under the clause.
Some of the advantages that follow along with this focal plus side are:
- Better opportunities for loan and banking facilities as a company
- Unorganized proprietorship into organized structure of accompany
- No cash flow statements required
- Annual return need not be necessarily signed by a company secretary
- Annual general meeting is not essential and general meetings/extraordinary general meetings are not applicable in this case.
With these perks beside, it appears as a means to rise and flourish in an organized and structured form of a company. It certainly is a good alternative to proprietorship and India will open doors to all folks who wish to come up as a company as soon as the One Person Company plan is brought into action by law.