One Person Company Case Study

From the time Company act came into act, 478 One Person Company have been incorporated.
One-man company, also known as 'wholly-owned', 'single-share companies'. OPC refers that there is only one shareholder (the person or legal person), and he has limited liability depending upon the capital he invested in the company. There has to be a clear distinction between the corporate property and the individual property of sole shareholder.
OPC is incorporated as a private limited company as per Section 2(62) and Section 3 of The Companies Act, 2013 and therefore all features of a private company are applicable to it. OPC like private company can’t subscribe to public for subscription of securities of the company.

Historical perspective
OPC concept

Pratt (Bom.) Ltd. v E.D. Sasson & Co.Ltd. , the Court observed that under the law, an incorporated company has distinct entity, and although all shares may be practically controlled by one person. Thus in Law a company is a distinct entity and it is not relevant to enquire whether the directors belonged to the same family or whether it is considered as a one man company.

Concept of One Person Company was first introduced in JJ Irani Committee report in 2005 which encouraged entrepreneurial capabilities of people, thus giving whole new bracket of opportunity for those who look forward to start their own ventures with a structure of organized business to participate in the economic growth of the country.

SCOPE
Small and medium-sized enterprises (SMEs) are a heterogeneous group of businesses usually operating in various sectors like manufacturing, service, agri-business and trade. They include a wide variety of firms such as village handicraft makers, small machine shops, and computer software firms that possess a wide range of sophistication and skills. These SMEs not only help to create employment opportunities, but also generate income, investment and savings in the economy. They also help in developing regional economy, promotion of export potential, development of infrastructural facilities etc. They have been helping to provide employment opportunities to rural, urban masses, generating income, and raising the standard of living thereby eradicating poverty

With the implementation of Companies Bill 2009, now a single person can form a company i.e. One person Company (OPC). This OPC helps entrepreneurs who are currently working under sole proprietorship model to transform to a company which has value added advantages and minimum compliance.
The three basic goal of OPC are
First goal is to limit the only one owner's liability i.e. to define that owner he always bears losses only to the extent of his contribution.
The second goal is setting up a single-member company to provide and guarantee the right of freedom of company so established.
Finally, the third goal is to separate the assets of founder and company so as to maintain the protection of creditors and the other single-member company's partners. Power, says “The Directive allows the genuine individual entrepreneur to limit his liability but it must not be used as a weapon of fraud: it must be a shield and not a