OPC is appropriate for sole entrepreneurs, seeking business privileges that are missed in a sole-proprietorship model. Essentially, it enables single owners to operate a corporate entity with limited liability protection.
The OPC mode of business was recently brought in force, especially for Indian entrepreneurs through the Companies Act of 2013. The new model is considered to a promising substitute for the conventional sole-proprietorship form. The unique feature of OPC model is that it enables a solo-promoter to form a single person economic entity and let fully control all its functions, while limiting the liability to contributions to the business. The solo-person will be the only director and share-owner (there is, however, a nominee director with no power until the original director is incapable of entering into contract). There is, therefore, no scope of increasing equity funding or offering employee stock options.
Additionally, if an OPC touches an average three-year turnover of more than INR 2 crore or has a paid-up capital of over INR 50 lac, it’s bound to be transitioned into a private limited company or public limited company within six months of period. It is, therefore, critical for an entrepreneur to closely consider all the features of an OPC prior to incorporation.
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