This format has been introduced in India recently as an improvement over sole proprietorship, and refers to the type of company where number of directors may be one or more, but there can be only one shareholder. Simply, a company incorporated by a single person and take all the benefits of a limited liability is referred to as a one person company. There is no requirement of a second party as in the co-founder of the company.

This concept support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in a OPC, while a minimum of two members are required for incorporating Private Company or a LLP. Similar to a Company, a OPC is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.

The OPC format has been gaining huge popularity in India and is growing in leaps and bounds, attributing mainly to its ease of incorporation and no third-party intervention. It has also been contributing massively to our economic development, as it supports aspiring entrepreneurs who have the creativity and capability to start their own venture, thereby encouraging great potentials to jump on the start-up boat and sail it to ‘the land of happy times’.

Though an OPC format allows a lone entrepreneur to operate a corporate entity with limited liability protection, every OPC must nominate a nominee Director in the MOA and AOA of the company, who will become the owner of the OPC in case the sole Director is no longer able to run the company owing to death or disability.

An OPC must be converted to a Private or Public Limited Company within six months if it crosses anannual turnover (averaged over three years) of INR 2 crores, or has a paid-up capital of INR 50 Lakhs. Like all other companies, OPCs are also required to file their audited financial statements with the Ministry of Corporate Affairs at the end of each financial year.

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