1.

INTRODUCTION

Working as a Sole Proprietor grants you the autonomy and faster business decisions because you
are not answerable to any third person. You are your own boss and can even hire assistants for
delegation of work. But Despite the fact there are certain inherent limitations of working as a
Sole Owner for instance:

1. Unlimited Liability
2. Lower Brand Value
3. Problem of funding from Banks and financial institutions and many more.

Therefore, to overcome these shortcomings of a traditional form of sole entity form of business
structure the Government of India has introduced a New Form of Business structure titled “ONE
PERSON COMPANY “more popularly known as OPC with bringing of Companies Act, 2013.

In India the Companies are mainly regulated by Ministry of Corporate Affairs by enforcing the
provisions of Companies Act, 2013 which repealed the years old erstwhile Companies Act, 1956.
This innovative Concept of “OPC” was not present in the erstwhile Companies Act, 1956 it was
first introduced with the coming of new corporate legislation in the country.

The intent of the government is to bring the traditional small proprietors who are currently
working in un-organized sectors in an organized form of business to enhance Corporate
governance and inculcate a habit of formal business structure.

“OPC” provides the benefits of limited liability, brand image, access to banks funding and at the
same time retaining the basic feature of “ONE MAN SHOW” because in OPC there is only one
person who controls the company and can hire directors and employees for efficient
management.

AIMS AND OBJECTIVES:

1. To study the concept of OPC in India.
2. To study the pros and cons of OPC
3. To study the OPC in comparison with sole proprietorship
RESEARCH QUESTIONS
1. What are the different types of OPC under companies act, 2013?
2. What are the salient features of OPC?
3. What are the privileges given to One Person Company?
4. What are the pros and cons of Sole Proprietorship?

HYPOTHESIS:
OPC provide access to market players to various credit and loan facilities to encourage
entrepreneurship.
RESEARCH METHODOLOGY:
The researcher will be relying on Doctrinal method of research to complete the project.

MODE OF CITATION
 SILC

SOURCES OF DATA:
The researcher will be relying both on primary and secondary sources to complete the project.

Primary Sources: Companies Act. 2013

Secondary Sources: Books, Articles, Journals

LIMITATIONS OF THE STUDY:

The researcher has territorial, monetary and time limitations in completing the project.
 2. CONCEPT OF OPC IN INDIA

The Companies Act, 2013 has, for the first time, allowed formation of a limited liability
company by just one person. Such a company is described under section 3(1)(c) as a private
company. ‘One Person Company’ is a one shareholder corporate entity, where legal and financial
liability is limited to the company only. In India, the J.J. Irani Expert Committee recommended
the formation of one-person company (OPC). The provisions relating to OPC are strewn all
across the Companies Act, 2013.

Section 2(62) of the Companies Act, 2013 defines ‘One Person Company’ to mean a company
with only one person as its member. Section 3(1)(c) provides that a company may be formed for
any lawful purpose by one person, where the company to be formed is to be One Person
Company, that is to say, a private company by subscribing his name to a memorandum and
complying with the requirements of the Act in respect of registration.

An OPC may be registered as ‘limited by shares’ or ‘limited by guarantee’. However, the

memorandum of One Person Company shall indicate the name of the other person, with his prior
written consent in the prescribed form (Form No. INC.3), who shall, in the event of the
subscriber’s death or his incapacity to contract become the member of the company and the
written consent of such person shall also be filed with the Registrar at the time of incorporation
of the One Person Company along with its memorandum and articles.

Such other person may withdraw his consent in such manner as may be prescribed. On the death
of the promoter member of an OPC, the person nominated by such promoter member shall be the
person recognized by the company as having title to all the shares of the member and shall be
entitled to the same dividends and other rights and liabilities to which such sole promoter
member of the company was entitled or liable.1

Again, the member of One Person Company may at any time change the name of such other
person by giving notice in such manner as may be prescribed. He must, however, intimate the
company the change, if any, in the name of the other person nominated by him by indicating in

1
DR. G.K. KAPOOR AND DR. SANJAY DHAMIJA, COMPANY LAW (TAXMANN, 22nd EDITION, 2019) at
pg. 41
the memorandum or otherwise within such time and in such manner as may be prescribed, and
the company shall intimate the Registrar any such change within such time and in such manner
as may be prescribed.

The words “One Person Company” shall be mentioned in brackets below the name of such
company, wherever its name is printed, affixed or engraved.

 Relaxations available to OPCs

can be signed by the Director and not necessarily a Company Secretary (Section 92). The Central
Government may prescribe an abridged annual return for OPC.

3. There is no necessity for an Annual General Meeting (AGM) to be held.2

4. Specific provisions related to general meetings and extraordinary general meetings would not
apply (Sections 100 to 111).

5. Compliance can be said to have been done if the resolutions are entered in the minutes’ book
of the company.3

6. It would suffice if one director signs the audited financial statements.4

7. Financial statements can be filed within six months from the close of the financial year as
against 30 days.5

8. An OPC need to hold only one meeting of the Board of Directors in each half of a calendar
year and the gap between the two meetings should not be less than ninety days6

 Can a body corporate form an OPC?

As per Singapore law, a Company can be

2
Section 96 of Companies Act 2013
3
Section 122 of Companies Act 2013
4
Section 134 of Companies Act 2013
5
Section 137 of Companies Act 2013
6
Section 173 of Companies Act 2013