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Explanation
A One Person Company (OPC) is a legal structure for business in which a single individual can incorporate a company, enjoying limited liability protection, and full control over the company’s operations. This concept was introduced to support entrepreneurs who wish to operate as a company without the need for a minimum number of directors and shareholders, which is typically required for traditional companies.
Some key features about a One Person Company (OPC):
1. Single Member: An OPC can have only one member or shareholder. This individual is the sole owner of the company.
2. Limited Liability: The member’s liability is limited to the extent of their capital contribution, which means their personal assets are not at risk in case of the company’s financial troubles.
3. Nominee Director: An OPC is required to have a nominee director who can take over the company’s management in case the sole member becomes incapacitated or passes away. This is a legal safeguard.
4. Minimum Capital Requirement: There’s no specific minimum capital requirement for OPCs, making it easier for entrepreneurs to start with minimal capital.
5. Taxation: OPCs are taxed at the regular corporate tax rates applicable to other companies. They are subject to the same tax laws and regulations.
6. Conversion: An OPC can be converted into a private limited company after meeting certain criteria, such as having a certain amount of paid-up capital or turnover.