One Person Company (OPC) is a new concept introduced by the Companies Act, 2013 in India, which allows a sole proprietor to incorporate a private limited company with the liability protection of a limited company. Despite being a relatively new concept, there are a number of myths surrounding OPCs that need to be addressed. Learn about the opc company in India.
Myth #1: OPCs are only for small businesses One of the most common misconceptions about OPCs is that they are only for small businesses. In reality, OPCs can be suitable for businesses of all sizes, as long as the business is owned by a single person. An OPC can have a paid-up capital of any amount and can operate in any sector. In fact, OPCs are becoming increasingly popular among solo entrepreneurs and freelancers who want to take their business to the next level.
Myth #2: OPCs have more compliance requirements Another myth surrounding OPCs is that they have more compliance requirements than other types of companies. This is not true. OPCs are subject to the same compliance requirements as other private limited companies, including filing annual returns and financial statements with the Registrar of Companies. However, OPCs are not required to hold statutory meetings and maintain minutes of the meetings, which can save time and resources.
Myth #3: OPCs can’t raise capital Many people believe that OPCs cannot raise capital from investors. This is not the case. While OPCs may have more difficulty in raising capital compared to public limited companies, they can still raise capital from investors through private placement or by issuing shares to the public.
Myth #4: OPCs are not suitable for e-commerce business E-commerce businesses may also consider setting up OPCs as it provide liability protection and recognition as an incorporated entity which is essential for some business models and also can attract more customers as well as suppliers as they are more likely to do business with incorporated entities.
Myth #5: OPCs can’t grow One of the biggest misconceptions about OPCs is that they cannot grow and expand their business. In reality, an OPC can grow and expand just like any other private limited company. An OPC can increase its paid-up capital, issue new shares, and even convert to a private limited company or a public limited company in the future.
In conclusion, the concept of OPC is a new way for a sole proprietor to incorporate a private limited company with the liability protection of a limited company. While there are a number of myths surrounding OPCs, it is important to note that they can be suitable for businesses of all sizes and sectors, have similar compliance requirements as other private limited companies and have the ability to grow and raise capital. Business owners should consult with professionals before making any decision to form an OPC or any other entity.