One Person Company : A Boon To Individual Businessman

INTRODUCTION

The retail industry in India is experiencing a revolution as a result of the changing lifestyles of the country’s population. The prevailing type of enterprises functioning within this sector are small-scale merchants that adhere to traditional business techniques. Recent years, nevertheless, have witnessed a shift towards contemporary retailing. This shift has taken place due to the increased awareness and knowledge of contemporary trends among Indian consumers, which has led to a heightened demand for enhanced professionalism during the purchasing process. The proliferation of modern retail formats, including supermarkets, department stores, shopping centres, and analogous establishments, has prompted a considerable number of domestic and international companies to venture into this industry. Small business owners who engage in organised commerce may be exposed to a potential risk as a result of this trend. This article examines the concept of a “One Person Company” as a strategy for establishing the corporate status of modest retail enterprises.

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A novel form of organisation called a One Person Company (OPC) was established in India to enable solitary proprietors and other entrepreneurs to formally organise their activities within a corporate framework. OPCs are a hybrid form of business organisation composed of both sole proprietorships and corporations. The requisite number of individuals to establish a private corporation is two, whereas the minimum number of citizens for a public company is seven.An OPC is established as a private corporation, wherein a solitary individual assumes the role of a member.It is the duty of the proprietor of an OPC to designate a successor who will assume control of the business upon the proprietor’s demise.

A minimum paid-up capital of one million rupees is required to establish an OPC, which may be categorised as an unlimited company, a company limited by guarantee, or a company limited by shares. It was in the United Kingdom that the public was initially introduced to this concept. It subsequently underwent expansion into numerous other regions across the world.

A number of nations permit the formation of one-person corporations, such as the United States, Singapore, China, and the United Arab Emirates.

LITERATURE REVIEW

The origin of the One Person Company (OPC) concept in India is discussed in the report One Person Company (OPC) (Institute of Company Secretaries of India, 2014). This report discusses the influence of OPCs on Indian entrepreneurship, notable characteristics of OPCs, the various categories of OPCs, and the privileges extended to OPCs. The report provides an analysis of the concept’s suitability for implementation in India.

WHAT IS OPC AND HOW IT IS FORMED?

The One Person Company formation in India was introduced by the Companies Act of 2013. This concept provided a favourable opportunity for individuals desiring to establish a new venture with an organised business structure. The JJ Irani Committeehas advocated for the formation of One Person Companies in India since 2005; it is regarded as a groundbreaking idea.

There are one-person businesses that function in certain countries. The country of England was the trailblazer in creating the foundation for the development of this concept by its decision in Salomon v. Salomon &Co. Ltd. England became a pioneer in the industry when it eventually gave the One Person Company idea formal status in 1925. In order to connect India with the United Kingdom, China, the United States, Australia, Singapore, Qatar, Pakistan, the European Union, and Serbia, the Ministry of Corporate Affairs in India has recommended the creation of One Person Companies. The Ministry of Corporate Affairs has made progress and shown good judgement. One Person Businesses have been doing business in the UK for a while now. In China, OPC establishment was only allowed as recently as 2005. Only a few other countries have likewise given OPCs legal status.

A One Person company is the definition of a One Person Company under Section 2 (62) of the Companies Act, 2013. The Companies Act, 2013 allows a sole proprietor to form a company for any permissible purpose, as stipulated in Section 3 of Chapter II. Furthermore, it specifies that the memorandum ought to include the name of the individual who, with the subscriber’s prior assent, shall be admitted as a member of the organisation in the subscriber’s absence or demise or inability to sign contracts. Along with the articles and memorandum, this written consent must be submitted to the registrar of companies at the time the company is incorporated. In India it is advisable to establish a One Person Company with a minimum investment of Rs. 1,00,000.

A natural person residing in India who is a citizen of India is eligible to establish a one-person company. This specifically means that an individual who has resided in India for a minimum of 182 days in the calendar year preceding the current one is eligible to establish the company and appoint a nominee as the sole member. It is important to acknowledge that no individual is authorised to be an OPC or candidate for more than one of the aforementioned corporations.In contrast to private limited and public limited firms, the process of establishing a one-person company is considerably more straightforward. A number of legal complications arising from the Companies Act, 2013 are mitigated through the process of incorporating other firms.

A One Person Company (OPC) must follow the required closure process and submit the necessary application for strike off or closing in order to be legally and formally closed under the Section 248 of the Companies Act, 2013. Even if it’s not operating, an OPC still has to file all regulatory compliances and regular returns on schedule, unless it has already sent the closure documentation to the appropriate ROC.

It is necessary to update the ROC or MCA database on the closure OPC in order to release yourself from the legal and regulatory duties related to it and to declare it closed. A One Person Company (OPC) may dissolve voluntarily or in response to an order from a tribunal. This article offers thorough and useful information on the necessary paperwork in India as well as the “Procedure for One Person Company Closure: How to Close an OPC.”Emphasising that winding up an OPC is not the same as turning it into a private or public limited company at any point in time—as long as its paid-up capital exceeds INR 50 Lac or its average annual turnover for the three fiscal years that precede it exceeds INR 2 Crore.

IMPACT OF OPC IN INDIAN ENTREPRENEURSHIP OR INDIVIDUAL

Despite being a relatively new concept in India, OPC has already demonstrated considerable innovation, given the time required to thoroughly implement such a notion. OPC is quite popular because incorporating requires less documentation, it is possible to launch a business without additional shareholders, and a member can add more shareholders by amending the MOA and submitting a ROC. OPC assists entrepreneurs of small businesses, including weavers, merchants, and artisans, in expanding their operations and establishing a global presence. Foreign investors engage in business interactions with a solitary member as opposed to a multiplicity of shareholders or directors, thereby fostering divergent ideas, conceptions, and other related factors. OPC affords international corporations the chance to establish investments, mergers, or joint ventures in India.

Since 2014, 26,897 one-person enterprises have been registered. The major industries that participated included real estate, rental and business activities (16,016 OPC registered), manufacturing (2355 OPC registered), wholesale and retail trade (2197), other community and social activities (2001), education (860), transportation, storage and communication (795), and numerous others.At present, a total of 25,728 One Person Companies are operational, each possessing a paid-up capital ranging from 1 lac to 5 cr.

CONCLUSION

The One Person Concept is yet to materialize in India, but once it does, it is expected to provide an impetus to corporatization in the country. In the retail segment, where modern retailing is intensifying, the OPC model would certainly provide the much-needed thrust to small retailers.

The OPC idea has made it possible for small company owners to set up an organisational structure for their enterprises that provides advantages such bank loan availability, restricted liability, and unique entity status, among other things. More One-Person Company creation can be encouraged by the rebate and tax relief offered to them. This will encourage more business ventures and entrepreneurs. If the idea is carried out correctly, it might promote the country’s economic growth.

Author: Sakshi Sinha, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing

BIBLIOGRAPHY/ REFERNCES:

• One Person Company, Institute of Company Secretaries of India, 2014
• Rule 3 of the companies (incorporation) rules 2014.
• Salomon v. Salomon & Co. Ltd (1896)
• Section 2 (62) of the Companies Act, 2013
• Section 3 of the Companies Act,2013.
• Section 248 of the Companies Act, 2013.
• The JJ Irani Committee report, 2005.