What are the features of One Person Company ?
The concept of One Person Company came into existence along with Companies Act, 2013. Earlier formation of a company required minimum 2 members. But now a single person too can form a company. One Person Company (OPC) is an innovative concept and permits entrepreneurs to start a small company of their own. An OPC can be formed without going into too much trouble. The incorporation process is simple. The best part is that instead of starting a sole proprietorship firm a person can directly opt for a company form of entity.The Best features of One Person Company are....
Appointment of nominee
To form an OPC a person mandatorily needs to appoint a nominee. A nominee is a person who in event of death or incapacity of the owner will take the reigns of the company in his own hands. Unlike sole proprietorship, a company has perpetual succession which means that even if the owner dies the company will still remain in existence. Its reigns will be passed on to the successor, in this case, the nominee.
Before finalizing a nominee his written consent must be obtained. The consent must then be filed with the Registrar of Companies (ROC) along with Memorandum of Association (MOA) and Articles of Association (AOA). The nominee has the right to withdraw his consent. He can also be changed by the member of the company by providing a notice of removal. Such a change must be intimated to the ROC as well.
A one person company is a private company. Thus it uses "Private Limited Company" as its title. However, the owner is required to mention "One Person Company" in brackets under the name of the company.
This is done to inform the users of financial statements that the private company is in fact a one person company.
One person company is the only form of company that is formed on the basis of number of members or shareholders. In an OPC there is only one member or shareholder.
Number of directors
An OPC must have at least one director. However, Companies Act, 2013 restricts the maximum number of directors to 15. The director and the member can be the same person. It is not mandatory to appoint a different person as the director.
A One Person Company can be started with a minimum capital of ₹1 lac. However, if the paid up capital of the company increases to ₹50 lacs or more the OPC is automatically converted to a private limited company. This also happens if the turnover crosses the ₹2 crore mark.
Conversion to private or public limited company
A one person company can voluntarily convert to a private or public limited company. But it can do so only after expiry of two years from the date of incorporation of the OPC. However, this clause is applicable only for OPCs having a turnover of ₹2 crore or less and paid-up capital of less than ₹50 lacs.
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