Arjuna (Fictional Character): Krishna, Recently one person has shown that nothing is Impossible and created history, that person is Current Prime Minister of India Mr. Narendra Modi. If we discuss keeping politics apart, we can see that with hard work, dedication and willingness, of a single person can also achieve huge success. Taking example of this style of “One Person” work, let us discuss the new concept of “One Person Company” recently introduced in New Companies Act.
Krishna (Fictional Character): Good Arjuna, A human being can do anything, if one has strong willingness and dedication towards his work. All knows that for achieving the goal the Prime Minister Mr.Modi has worked day and night on his own and after winning has taken everyone together to form government for benefit of all. Likewise every entrepreneur can think in that way and can create “One Person Company” and after growth, by taking all stakeholders can transform into a Private Limited or a Pubic Ltd. Company in future. The concept of “One Person Company” is successful in UK and several European countries since very long time. If an individual has to carry on business then this concept is useful and is different from the Proprietorship.
Arjuna: Krishna, What is this “One Person Company?”
Krishna: Arjuna, “One Person Company” means company owned by a single person. This revolutionary concept is a step forward to facilitate more business friendly corporate regulations. It is a separate legal entity. In this company promoter, director and member of the company is only one person. Therefore joyfully it can be said that “One Person Company” as “One Man Army” like Modiji. It is useful for small entrepreneurs.
Arjuna: Krishna, How “One Person Company” (OPC) can be formed?
Krishna: Arjuna, “One Person Company” can be opened in the form of limited by shares. The conditions for opening OPC are:
1. It shall have minimum paid up capital of Rs. 1 Lakh
2. The shares of the company cannot be transferred
3. The word “One Person Company” should be mentioned below the name of the company
4. Only Indian citizen and resident in India can become member or nominee of the company
5. Only one person can become member of the company
6. For forming “OPC” rules and regulations of New Companies Act will have to be followed and it will have to get registered under it.
7. The most important if average annual turnover during the relevant period of the “OPC” exceeded Rs. 2 crore and share capital exceeded Rs. 50 Lakh then it will have to compulsorily get converted into private or public company.
Arjuna: Krishna, What are the benefits of “OPC?”
Krishna: Arjuna, “OPC” is useful for one who are starting new business, the persons work solely like proprietors, artists, professionals, etc. the benefits of this company are:
1. The foremost important benefit in limited liability. It means if at any time business is at risk then the business assets may be taken away but personal assets are safeguarded i.e. residential house of Member which may not be possible in Proprietorship.
2. There is separation of ownership and business for e.g. by appointing director and manager corporate culture can be brought and brand building is possible.
3. Relaxation from various provision of The Companies Act, otherwise applicable to private limited company.
Arjuna: Krishna, Are there any disadvantages of OPC?
Krishna: Arjuna, every coin has two sides. There are some disadvantages of the “OPC.” They are:
1. For starting and running “OPC” rules and regulation of new Companies Act will have to be followed. Various types of returns will have to be filed. Further the compliance cost is also very high. Starting “OPC” may be time consuming process as registration process for forming it is same as that of private limited company. Further there is also a condition of Limit of turnover and capital which is of most important.
2. “OPC” will be taxed like other companies under Income Tax Act. If an individual is carrying on business then he will be taxed as per income tax slabs. However “OPC” will be taxed at 30%. Further it will have to pay minimum alternate tax if the situations arise.
Arjuna: What one should learn from this new concept of “OPC?”
Krishna: Arjuna, Government introduces with various options for business, just like it came with the concept of “OPC.” All should take the decision by considering the advantages and disadvantages of it. Further in life, without feeling lonely, a person should himself try to achieve his goals with courage. Likewise many have succeeded in their lives on own, as they are independent, confident and have a dream of achieving. For good deeds one should not wait for anyone, rather work should be started on its own and eventually good people will meet in journey and goals can be achieved. Nowadays many people feel loneliness and gets disturbed mentally and physically. All should keep in mind these negative thoughts should be kept aside and then only goals can be achieved. Keeping long term goals “One person Company” can be formed and then whole world will be with you if, your goals is welfare of the people. To change the world, one should change himself first. Don’t wait for help of others, start something new on your own, be an inspirational “One Person Company”, so others will be eager to join your Company.
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Tags Corporate Law