Background of this concept  :-

First of all In 2004 Govt. constituted Expert Committee under the chairmanship of Dr. JJ Irani for the recommendation on company Law matters .One of recommendation was recognition of OPC in our New Company Law Bill . That Committee had considered various Global Changes in U.K & U.S regarding recognition of OPC as Company or LLC . This became the base for the recommendation of OPC .

After considering their recommendation and various debates on this topic the Govt. of India has decided to give recognition of OPC in our new Company Law Bill.

Objective Of OPC:-  

1. Increasing the entrepreneurial capabilities for better participation in economic activity.
2. The person has to give a separate name and legal identity to the company under  which all the all the activities of the business are to be carried on. This ensures that a separate legal entity is formed.
3. OPC will bring the unorganised sector of proprietorship into the organized version of a limited company.
4. OPC will give the greater flexibility to the individual or a professional to manage the business efficiently.

Formation Of OPC :-

An OPC may be formed for any lawful purpose by one person only.

It shall have only one member however, It shall have a minimum of one director and a maximum of fifteen director in its board.

One person has to subscribe to a memorandum and complying with the requirements of this act in respect of registration.

Provided that the memorandum of one person company shall indicate the name of other person with his prior written consent in the prescribed form .which will be a safeguard for all the stakeholders of OPC and all the concerned persons of OPC.  Mean to say In the event of subscriber death or his incapacity to a contract become the member of the company.

Compliance requirement: The written consent of nominee shall has to be filed with the registrar at the time of registration along with its memorandum and articles.

About the Nomination: - Nominee may withdraw his consent in such manner as may be prescribed. And a member of the company may also can also any time change the nominee by giving notice. It is the duty of the company to intimate the company about change. The company shall intimate the registrar any such change with in such time as may be prescribed in the Act.

Relaxation of Compliace Requirement : if we compare with the other companies like other private companies and public companies.

1. Minimum number of director for an OPC is one and the maximum is 15.
2. There is no requirement of appointment of first directors as the sole member shall be deemed to be the first director.
3. There is no need to conduct the meeting like AGM and EGM.
4. OPC can ignore the provisions relating to meetings:-

1. Power of tribunal to call meetings of members.
2. Calling of extraordinary general meeting.
3. Notice of Meeting
4. Statement to be annexed to notice
5. Quorum for meetings
6. Chairman of meetings
7. Proxies
8. Restriction on voting Rights
9. Voting by show of hands
10. Voting through electronic means
11. Demand for Poll
12. Postal Ballot
13. Circulation of member resolution

1. Only one director is sufficient to sign the Annual Returns to be submitted to ROC.
2. If there is more than than one director then at least a Board Meeting twice a year required to be conducted.
3.  Only one director is sufficient to sign the financial statement and Director’s report.
4. Within 6 month from the closure of the financial year, OPC should file the copy the financial statement with the registrar.
5. The Sole Member may transact the any business which may require a resolution –ordinary or special , by means of communication through a member of the company and entering it in the minute book.

Statutory requirements:- The report of the of the Board of Directors to be attached to the financial statement under this section shall, in case of a One Person company ,mean a report containing a containing a explanation or comments by the Board on every qualification , reservation or adverse remark or disclaimer made by the auditor in his report.

Analysis of sole proprietorship organization with the One person Company

OPC gives the advantage of limited liability to entrepreneurs whereby the liability of member will be limited to unpaid subscription money. This benefit is not available in case of sole proprietorship.

Small entrepreneurs can now set up ‘One Person company’ to directly access target markets rather than being forced to share their profits with middlemen. This provide tremendous opportunities for millions of people, including those working in areas like handlooms, handicrafts and pottery. They are working as artisans and weavers on their own, so they don’t have the legal entity as a company. But the OPC would help them do business as an enterprises and give them an opportunity to start with their own ventures with a formal business structure.

An OPC being an incorporated entity will also have the feature of perpetual succession and will make it easier for entrepreneurs to raise capital for business. Also,since it will have lesser compliances burden compared with private companies. It can be preferred mode for business for small industries.

Since it is a company form of organisation . It can easily get finance from Bank and various Financial Institution.

NOW DRAWBACKS:-

1. Democratic Decision Making:- Any Joint stock company is known for its democratic decision making through different genres of meeting by virtue of its stipulation of more than one member. This is one of the basic characteristics of a company. Voting Power also involved a democratic atmosphere where proper decision could be taken and investor’s money was secured. Therefore, in the absence of such restriction, One person company could be seen as an autocratic form of organisation without any iota of accountability.
2. Prepetual Succession:-  The very concept of a separate legal entity being created for a perpetual succession that is continuation of the company even after the death or retirement of a member is also challenged. Because the nominee whose name has been mentioned in the memorandum of association will become the member of the company in the event of death of the existing member. However it is doubtful that it would do any good for the company because the person is not being a member of the company and also not involved in the day to day operation of the company, would not be able to succeed the business after the death of the member.

Main disadvantages is that , The mandate of mentioning in the stationary and sign board of a company the words One Person Company would mar the whole idea of forming a company and take away its credibility . Advantage of a limited liability is the main danger of poor corporate governance might pose some threats to the investors.

1. Separation of Owner and Control:-  This is one of the characteristics of the company ,which is seriously challenged by the new Companies Act ,2013, where the line between the ownership and control is blurred. Which might result in unethical business practices.
2. Limited Liability :- If the limited liability concept is taken seriously , it might be dangerous for stakeholders and for investors as it would open ways for fraudlent activities .
3. Compliance Cost:-One of the main disadvantages would be the High Incorporation Cost and Cost of Statutory Compliance, which is of recurring nature.     
4. Tax Benefits:- As the Income tax Act is silent on the taxability of a One Person Company, It would be rightfully decide that, in the explicit pronouncement, A one person company would be taxed at the same rate as that of all other companies. This would again be disadvantageous as proprietorship firm enjoy the tax rate applicable to an individual.

Conclusion :- To conclude the discussion , it would be rightfully said that the Concept of OPC suffer from more disadvantages than advantages.  We need to understand that a One Person Company has only one member because it lacks funds, capital and professionalism attached to a limited company. It is just one notch above a sole proprietorship firm which has registered itself in striving for better market , economic and management opportunities.   It remains to be seen If the OPC model is widely adopted.