One Person Company

Know what is a one person company and what's it like to form one.

What’s a One Person Company?

When i advice this form of incorporation to my clients, their next question is if it exists in India? Well, yes it does exist in India now. The concept of a One Person Company was introduced in India through the Companies Act, 2013 mainly to promote and support single entrepreneurs who are capable of starting and running a business venture by themselves. If you are the sole owner of your business, this is it.
It is a great registration choice when it comes to a single business owner, it may have a higher price tag, however it would save up a lot of your money (especially personal) if you end up in a lawsuit. Unlike a Sole Proprietorship, you can nominate a Director in the Memorandum of Association or the Articles of Association who would become the owner of such company in case the Director is disabled/deceased/or otherwise incapable of running the company.
What you may not know about a One Person Company is that it needs to be converted into a Private Limited Company if the annual turnover crosses Rs. 2 crores.
Even though a One Person Company is easy to form, it is required to fulfil a lot of compliances in the long run. Just like other incorporated companies, it is a separate legal entity or what lawyers might tell you a separate juristic person just like a Private Limited Company established under the Companies Act. As one of its advantages, it has a perpetual succession and may be transferred to the nominated member upon the death or other departure of the sole member and continues to be in existence irrespective of the change. The company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. The most important benefit of not having a proprietorship and a One Person Company instead is that it has a Limited Liability. The liability of the members in respect of the company’s debts is limited.

Read more about different types of incorporation methods in our free ebook. 

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