One Person Company (OPC)
One Person Company is a new concept. Earlier if you wanted to set up a private company, you needed at least two persons because the law mandated a minimum of two shareholders. So, for the person wanting to venture alone, the only option was proprietorship, which is not legally recognized as a separate entity.
While doing business as a proprietorship firm, the personal assets of the proprietor can be at risk in the event of failure, but this is not the case for a One Person Company, as the shareholder liability is limited to his shareholding.
There are numerous benefits:
- OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.
- OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.
- An OPC can avail the various benefits provided to small scale industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.
- The OPC with bad credit rating may even get the loan. The credit rating of OPC will not be material if the rating of OPC is as per norms.
- Any business entity that runs in the form of the company always enjoys an increased trust and prestige.