Background of One Person Company (OPC)?
On 2nd December 2004, the Government constituted and Expert Committee on Company Law under the Chairmanship of Dr. J.J.Irani to make recommendations on various Company Law issues.
One Person Company (OPC) Concept has been first recommended by the Expert Committee (Dr. J.J.Irani) in 2005.
Expert Committee examined that how the global changes given a chance to an individual to participate into economic activity. And how can such economic activity may take place through the creation of an economic person by the Company Law.
Expert committee also suggested the characteristics of the One Person Company (OPC).
The below is the summary of the presentation of the report of the Expert Committee on Company Law.
With increasing use of information technology and computers, emergence of the service sector, it is time that the entrepreneurial capabilities of the people are given an outlet for participation in economic activity. Such economic activity may take place through the creation of an economic person in the form of a company. Yet it would not be reasonable to expect that every entrepreneur who is capable of developing his ideas and participating in the market place should do it through an association of persons.
We feel that it is possible for individuals to operate in the economic domain and contribute effectively. To facilitate this, the Committee recommends that the law should recognize the formation of a single person economic entity in the form of ‘One Person Company’ (OPC). Such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not compelled to fritter away his time, energy and resources on procedural matters.
The concept of ‘One Person Company’ (OPC) may be introduced in the Act with following characteristics :-
a) One Person Company (OPC) may be registered as a private Company with one member and may also have at least one director;
b) Adequate safeguards in case of death/disability of the sole person should be provided through appointment of another individual as Nominee Director. On the demise of the original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member.
c) Letters ‘OPC’ to be suffixed with the name of One Person Companies to distinguish it from other companies;