One Person Company registration was introduced recently as a major improvement over the sole proprietorship. In this type of company registration a single owner gets full control over the company while limiting one’s own liability. This person will be the sole director and stakeholder. There’s no option of raising equity financing or giving employee stock options.
ADVANTAGES OF ONE PERSON COMPANY REGISTRATION
- Limited Liability : The personal property of a director is always safe in this type of company registration, no matter the liability of the business.
- Perpetual Existence : TOPC having a separate legal identity, it would pass on to the nominee director and, therefore, continue to exist unlike sole proprietorship which will be dissolved at promoter’s death.
- Improved Credibility : As an OPC needs to have its books audited annually, it has greater credibility among vendors and lending institutions.
DISADVANTAGES OF ONE PERSON COMPANY REGISTRATION
The Ministry of Corporate Affairs is concerned about a single person taking control of large corporate firms. Henceforth it requires all One Person Company registrations to be converted to private limited or public listed company registration.