When businesses operate independently, they grow faster. Companies Act helps in this, and it provides separate legal entity, common seal, ability to sue, etc. to the companies and limited liability, etc. to its owner. But the problem was that to register the business under the Companies Act, at least 2 persons were required in private companies, and at least 7 persons were required in public companies. To overcome this problem, The Companies Act, 2013 introduced the concept of One Person Company.
The Companies Act, 2013 introduced the concept of One Person Company, only one person is required to register the business under the Companies Act, 2013.
Table of Contents
What is a One Person Company?
Meaning of One Person Company
One Person Company means a company in which only one person is required to register the business under the Companies Act, 2013.
In simple language, One Person Company means a company which has only one member.
Definition of One Person Company
As per Section 2(62) of the Companies Act, 2013 – “One Person Company means a company which has only one person as a member.”
Features of One Person Company
Following are the features of a One Person Company:
1. One Person:
A one person company has only one member and that person acts as a member and director.
2. Separate Legal Entity:
Separate legal entity is the biggest feature of a one person company as it is separated from its owner and becomes a separate legal entity. According to this, the company and its owner are two different persons.
3. Limited Liability:
Members of a one person company enjoy limited liability facilities. Limited liability means the member is liable up to his share.
4. Perpetual Succession:
Perpetual succession means continuity, according to which members may come and go but the company will continue. A one-person company gets this facility even if it has only one member.
5. Ability to Sue:
When the business is registered under the Companies Act, the business gets a separate legal entity under the law, under which the company can sue anyone in its name.
6. Nominee:
A nominee is required under this company because if the member becomes unable to work, dies, or is equal to die, the nominee takes over the position of the member. Minor, mentally unsound, disqualified by law is not eligible for nominee.
7. Capacity of Ownership:
When the business is registered under the Companies Act, the business gets a separate legal entity under the law, under which the company can buy and sell property in its own name.
8. Name:
Businesses registered under the concept of One Person Company in the Companies Act will need to add One Person Company (OPC) after their name.
QNA/FAQ
Q1. What is a One Person Company?
Ans: One Person Company means a company in which only one person is required to register the business under the Companies Act, 2013.
Q2. Write the definition of one person company.
Ans: As per Section 2(62) of the Companies Act, 2013 – “One Person Company means a company which has only one person as a member.”
Q3. Write the features of one person company.
Ans: Following are the features of a One Person Company:
1. One Person
2. Separate legal identity
3. Limited Liability
4. Perpetual Succession
5. Ability to Sue
6. Nominee
7. Capacity of Ownership
8. Name
Q4. Why was the One Person Company introduced?
Ans: When businesses operate independently, they grow faster. Companies Act helps in this, and it provides separate legal entity, common seal, ability to sue, etc. to the companies and limited liability, etc. to its owner. But the problem was that to register the business under the Companies Act, at least 2 persons were required in private companies, and at least 7 persons were required in public companies. To overcome this problem, The Companies Act, 2013 introduced the concept of One Person Company, only one person is required to register the business under the Companies Act, 2013.
