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What are the Benefits of One Person Company ?

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What are the Benefits of One Person Company?

One person company (OPC) is a unique concept introduced by Companies Act, 2013. A one person Company is a company that has only one member. One person company registration is simple and doesn't take much time. It is like a sole proprietorship but in form of a company. Infact, the concept of One Person Company was introduced to give a more formal structure in place of Sole Proprietorship.

An OPC requires only one member who is also the director of the company. The member starting OPC needs to appoint another person as a nominee, so that he can take over the affairs of the company in case of death or incapacity of the former. A company registered as OPC also writes private limited company after its name. The benefits of One Person Company forming are:

1. Less Compliances

As compared to a Private Limited Company and Public Limited Company, One Person Company has to comply with less provisions and statutory compliances. For instance it doesn't have to compulsorily hold Annual General Meetings and may not hold even a single Annual General Meeting. It exercises relaxation for Sections 100 to 110 of Companies Act, 2013 which private or public companies don't.

2. Can accept foreign funding

Unlike sole proprietorships and partnerships, one person companies can accept foreign direct investment. They can receive foreign investment and can also do overseas direct investment. This is an important relaxation given to the One Person Company wherein investment to and from India directly to a small business is allowed.

Register a Private Limited Company in India image

3. Can accept debt

One person company can accept debt and apply for loans with financial institutions which partnership firms and sole proprietorships cannot. As compared to them OPC gets better and prompt banking facilities. Since it enjoys separate legal entity it can even role out debentures and accept funding in form of debt.

4. Limited liability

In case of one person company member or director has limited liability as the liability lies upon on the company. The business is done in the name of company and members are liable only up to the amount of shares they hold. Unlike OPC, in sole proprietorship and partnership liability is unlimited.

5. Separate entity

One person company is an artificial person that is different from its owner's. It is a separate legal person and has its own identity, like PAN CardCompany Identification Number, etc.

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