If you want to know about the business model of a One Person Company, then you must learn all about its features and the benefits it offers to its executives during its operation. Here in this article, we have discussed some of the features of a One Person Company Registration and why an application must opt for such a model.
Features of One-Person Company Registration
1. Sole owner is the only requirement for One Person Company Registration
A One Person Company registration allows its sole member the desire for personal freedom to adopt the business of his choice. It is a personality-driven passion and implementation of a business plan. Also, an OPC allows the entrepreneurial person to take extra risk and responsibility for his proposed startup.
The sole idea behind One Person Company registration is a personal commitment to the business. The One Person Company is incorporated as a private limited company by the MCA (Ministry of Consumer Affairs). Individuals run it, yet an OPC is a separate legal entity similar to any registered corporate.
2. Single Membership and Directorship in an OPC
An OPC can have only one member and one director at any time. The member and nominees should be natural persons, Indian Citizens, and residents of India. Here, the term “resident in India” means a person who has stayed in India for not less than 182 days during the preceding calendar year.
An OPC cannot incorporate more than one OPC or become a nominee in more than one OPC. Suppose a member of One Person Company becomes a member of another Person Company by being a nominee in that OPC, then within 180 days. In that case, he will have to meet the eligibility criteria of being a Member of one OPC.
No minor can become a member or a nominee of the One Person Company registration or hold its share with beneficial interest.
Also Read: Conversion of Partnership Firm into LLP
3. A One Person Company registration requires the negligible Capital requirement
A registered OPC can lose its status if the required paid-up capital of the OPC exceeds 50 lakh rupees. Also, the OPC can lose its status if the average annual turnover is more than two crores in three consecutive years.
The One Person Company registration can raise capital from others like venture capital financial institutions etc., thus graduating to a private limited company. The director of a One Person Company alone can sign the company’s financial statement. Also, Cash Flow Statement is not a mandatory part of financial statements for an OPC.
Also Read: How to register for Importer License per the LMPC Standards?
4. An OPC can easily convert to bigger Company models
A One Person Company registration cannot be incorporated or converted into any other type of company. Also, One Person Companies cannot carry out Non-Banking Financial Investment activities.
One Person Company cannot convert voluntarily into any company unless two years have expired from the date of incorporation. But, in cases where capital or turnover threshold limits are reached, one can apply for Conversion.
An existing private company other than a company registered under section 8 has a paid-up share capital of Rs. 50 Lakhs or less or an average annual turnover during the relevant period is Rs. 2 Crores or less can convert itself into One Person Company by passing a special resolution in the general meeting.
