One Person Company (OPC) is the entity in which a single person becomes the Director and Member. This structure is very much in trend. This is the complete fusion of sole-proprietorship and private limited companies. As per Section 2(62) of the Companies Act, 2013, “One Person Company” means a company that has only one person as a member. This structure gets all the benefits of private limited companies such as limited liability, market visibility, and easy finance under the Startup India program.
In the case of One Person Company (OPC), the person and his company are treated as separate because his company is an artificial person in the eyes of law. Due to this the owner of the OPC is not liable to repay the debts in a personal capacity. OPC can raise equity funding and are eligible for government schemes.
An OPC is exempted from stringent legal compliances of general meetings, board meetings, quorums, voting inclusion of cash flow statements in financial statements, mandatory rotation of an auditor, except in certain circumstances, such as if there is more than one (1) director, then the Board meeting must be conducted. OPC is also exempted from transacting business via postal ballot. Further, the appointment of a company secretary is also not essential for an OPC. The annual return of an OPC can be signed by its director only.
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