SOLE PROPRIETORSHIP VS OPC

SOLE PROPRIETORSHIP VS OPC

  • OPC structure would be similar to that of a proprietorship concern without the ills generally faced by the proprietors. One of the most important features of OPC is that the risks mitigated are limited to the extent of value of shares held by such person in the company.
  • This would enable the entrepreneurial minded persons to take the risks of doing business without botheration of litigations and liabilities getting attached to the personal assets.
  • One Person Company has separate legal identity from its shareholders i.e., the company and the shareholders are two different entities for all purposes. On the other hand proprietorship does not have a separate legal identity from its members.
  • The existence of OPC does not depends upon its members and hence it has perpetual succession i.e., death of a member does not affect the existence of the company and the Sole proprietorship is an entity whose existence depends upon the life of its members and death or any other contingency may lead to dissolution of such an entity.

Features Of One Person Company:

  • One Person Company is incorporated as a Private Limited Company. It must have only one member at any point of time and may have only one director.
  • The member and nominee should be natural persons, Indian Citizens and resident in India.
  • One person cannot incorporate more than one OPC or become nominee in more than one OPC.
  • No minor shall become a member or nominee of the One Person Company or hold share with beneficial interest.
  • OPC cannot carryout Non Banking Financial Investment activities including investment in securities of any body corporate.
  • OPC cannot convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in the case where the paid up capital of the company reaches Rs. 50 lakh or turnover reaches Rs. 2 crore for a financial year.

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