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1. One Person Company By: Dr V.R. Narasimhan
The Companies Act 2012, which is likely to become law very soon, has introduced “One Person
Company” (OPC), a dynamic form of business. It will be interesting to note how the market will
use this form. On an immediate note, one can see that OPC form will be used by ‘employee
turning into entrepreneur’, practicing professionals, if their professional bodies permit such
form, sole entrepreneurs, etc. Value of IPR or business viability exploration work which
consumes time, effort and money of a prospective entrepreneur/promoter (pre launch
pioneering work) can be stored in a OPC and such OPC can be a stake holder in a larger
company along with entrepreneur/promoter. Solo entrepreneurs can present OPC as a legal
entity to foreign customers who take comfort in dealing with legal forms rather than dealing
with individuals. Even government can use this form for strategic purposes which require both
100% control of the government from a strategic perspective and flexibility of a private
enterprise. OPC is not a “Small Company” and therefore can be big both in terms of capital,
business scale and managerial capabilities. OPC cannot raise equity capital from any other
person other than the One Person who is a member of the company and cannot issue
debentures to “public”; debentures may be issued on “private placement” basis. There is no bar
on raising funds through loan or instruments other than securities. The legal structure around
the OPC is very interesting.
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