One Person Company: A Success Story
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In this blog post, Aniket Chaudhry, a recent law graduate from Department of Law, University of Calcutta and a student pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the benefits of a One Person Company and enumerates the same with some successful stories of one person companies.
Meaning of an OPC
Meaning of an OPC
One Person Company (OPC) can be understood as a structure where only one member will act in the capacity of a director as well as a shareholder. It combines most of the benefits of a sole proprietorship and a company form of business. It, therefore, takes away the hassle of finding a co-partner to start a registered business entity. The legal and financial liability lie with the Company and not the member. Hence nothing needs to be shared in the name of the partnership. If one has an idea, he/she can go ahead with it and start their own OPC. This has been defined in Section 2 (62) of the Companies Act, 2013.
The concept of OPC as itís very evident is a very new one in the context of India; it has been running successfully in countries like USA, Singapore and also Europe for quite some time now. As an OPC has limited liability and the company being distinct from its owner, the personal assets of the shareholders and directors remain protected. In the case of a credit default or if the firm is embroiled in a legal controversy, the owner will not be sued; only the company will. All these factors give an edge to an aspiring entrepreneur with an idea to set up a Start-up company and register it as an OPC.
Some of the largest companies worldwide such as eBay and Amazon began being a one person start-up with one tech-savvy founder. Jeff Bezos, founder and CEO of Amazon.com was a computer engineer who decided to leave Wall Street to start an online bookstore out of his garage. Amazon was now the largest online retailer in the world with revenue of $107 billion in 2015.
Successful OPCís in India
-One such successful OPC in India is that of a tours and travels services firm registered as an OPC under the name of Delhi-based businessman Ankur Sharma. Mr Sharma had stated here in 2014 that he looked forward to turning his company into a Private Limited Company in six-eight months. Since his initial priorities were to get the business started at first, a registered legal entity under the OPC category separate from its owner, Sharma would have easier access to bank loans and less compliance under the different provisions of the Companies Act, with liability limited to the entityís net worth. As on 2016, Shree Aasht Vinayak Travels Private Limited has already turned into a Private Limited Company. This shows as to how successful an OPC can turn out to be as it helps the start-up entrepreneurs to test their business model, their products and services and eventually attract more investors to make it big and based upon the intentions of the founder may or may not turn into a Private Limited or Public Limited Company. It is thus not necessary that every OPC must turn into a Private or Public Limited Company, itís exclusively based upon the intentions as some founders prefer staying an OPC and not expanding further and changing their business structure.
- Another such OPC is that of Broombikes Opc Private Limited which is registered under the name of their Founder and Director, Aashish Sharma. It was incorporated on 24th October 2015 and is classified as Non-government Company and is registered at Registrar of Companies, Jaipur. It has an authorised share capital of Rs.100, 000 and itís paid up capital of Rs.100, 000 respectively. This company deals in the sale of motor vehicle parts and accessories (includes the wholesale and retail sale of all kinds of parts, components and accessories for motor vehicles, when not combined with the sale of such vehicles themselves). The Corporate Identification Number is (CIN) U50300RJ2015OPC048498 and its registration number is 48498. It has been in operation for over ten months now.
- Snehsanskriti Opc Private Limited is one more OPC that has been running for almost two years now and registered under the Founder and Director, Parveen Choudhary on 2nd September 2014. It is a Non-government Company and is registered with Registrar of Companies, Delhi. It also has a share and paid up capital of Rs.100, 000 each. It deals with the manufacture of other textiles. The Corporate Identification Number is (CIN) U17210HR2014OPC053244 and its registration number is 53244.
- Wowwash (OPC) Private Limited is an OPC incorporated on 16th February 2016. It is registered under the Founder and Director, Madhavi Narulla. Its authorised share capital is Rs.5, 000,000 and its paid up capital is Rs.5, 000,000 respectively. It is a Non-government Company and is registered at Registrar of Companies, Hyderabad. Itís a fairly new company with only six months in operation. It is involved in Research and experimental development on natural sciences and engineering (NSE). (This includes systematic creative work in the fields of research and development in natural sciences, medical sciences, agriculture, engineering and technology). The Corporate Identification Number is (CIN) U73100TG2016OPC103330 and its registration number is 103330.
- Wimoku Private Limited (opc) was registered in the name of the Founder and Director, Jothish Kumar Narayanan on 4th August 2014. Its authorised share capital is Rs.100, 000 and its paid up capital is Rs.100, 000 respectively. It is a Non-government Company and is registered with Registrar of Companies, Ernakulum. It has been running for over two years now and deals with Software publishing, consultancy and supply [Software publishing includes production, supply and documentation of ready-made (non-customized) software, operating systems software, business & other applications software, computer games software for all platforms. Consultancy includes providing the best solution in the form of custom software after analysing the userís needs and problems. Custom software also includes made-to-order software based on orders from specific users. Also, included are writing software of any kind following directives of the users; software maintenance, web-page design]. Its Corporate Identification Number is (CIN) U72200KL2014OPC037015 and its registration number is 37015.
- Fashtoons Apparel Opc Private Limited is a Non-government Company and is registered with Registrar of Companies, Jaipur in the name of the Founder and Director, Pritam Maratha on 30th May 2015. Its authorised share capital is Rs.100,000, and its paid up capital is Rs.100, 000. It deals with the manufacture of wearing apparel, except fur apparel (this class includes the manufacture of wearing apparel made of material not made in the same unit. Both regular and contract activities are included). It has been running for over a year now. Its Corporate Identification Number is (CIN) U18101RJ2015OPC047637 and its registration number is 47637.
Impact in India
We just came across only a few of the many OPCís in India, and the number is growing each day. The youth of the country seems to be extremely motivated to start something of their own which can also be said of the new emerging Start-up generation. In order to do so starting up with an OPC seems to be the most likely and easier option as ideas are in plenty and yet implementation of them werenít able to be done on an individual level, before the emergence of OPC in India. Some of the relaxations that the OPCís have to offer have also made the task much easier, viz.
- Annual General Meeting (AGM) and Extra-Ordinary General Meetings do not apply to an OPC.
- No requirement of appointing a first director for the company. The sole member is deemed to be the first director.
- OPC should have a minimum of one (1) director and a maximum of fifteen (15) directors. In case the Board consists of only one director, then the OPC is exempted from the requirement of conducting a Board Meeting as well.
- It will be deemed to have complied with the provisions relating to Board meetings if at least one meeting is conducted in each half of the calendar year. However, the gap between the two meetings should not be less than ninety (90) days.
- OPC is also exempt from provisions relating to notices of the meetings (Section 101), statement to be annexed to notice (Section 102), Quorum for Meetings (Section 103), Appointment of Chairman of Meeting (Section 104), Proxies (Section 105), Restriction on Voting Rights (Section 106), Voting by show of hands (Section 107), Voting by Electronic Means (Section 108), Demand for Poll (Section 109), Postal Ballot (Section 110) and Circulation of Memberís Resolution (Section111).
There is no doubt as to how successful an OPC has become in context to India. Even though it has its own shortcomings, the rate of its success surpasses it all and makes it quite easier for setting it up rather than critiquing about its flaws. This has been a success story in the Western countries for long, and India was waiting for its own permission to have OPCs which was handed over to her as a parting gift of the earlier Companies Act, 1956. This has definitely become amongst the best blessings for the individual entrepreneurs who for so long had to team up with a co-partner to start their business venture which may or may not have been as passionate as the founder. It has been a healthy and welcoming move.