The apt form of business structure for solo entrepreneurs with limited liability protection
A One Person Company, or OPC, is a new type of business entity that was recently introduced which allows a single entrepreneur to operate a corporate entity with limited liability protection. The idea of OPC was introduced to give a boost to entrepreneurs who have great potential to start their own venture. Since no intervention from any third party is involved in an OPC, it makes it more beneficial for entrepreneurs in setting up their businesses.
This new concept of OPC in India was introduced through the Companies Act, 2013, and is expected to have a huge impact on the economy and development of the nation. It gives opportunities to many and therefore is expected to bring young and creative minds in front of everyone.
A person will be the only director and shareholder. There will also be a nominee director, but with no power until the original director is disabled. There is also no chance of raising equity funding or offering employee stock option in an OPC. In case the OPC crosses an average three year turnover of INR 2 crores, or has a paid-up capital of over INR 50 lakhs, it must be converted into a Private Limited Company or Public Limited Company within six months.
The personal property of the director is always safe in a one-person company.
In the event of death of the owner, the property doesn’t cease to exist but would pass on to the nominee director, continuing its existence.
Since one-person companies have to audit annually, it has greater credibility among vendors.