Background:

The unique concept of One Person Company came into being by the way of The Companies Act,
2013. The very first recommendation of the One Company Person was put forth by the expert
committee which was headed by Dr JJ Irani in the year 2005. One person Company is being
praised on a larger scale, as it provides a new range of opportunities to the ones looking forward
to starting their own ventures with the structure of an organised business. One Person Company
(OPC) has proved to be of great advantage to the young businessmen as it provides them all the
benefits including that of access to bank loans, access to market, legal protection of business,
access to credits and all this, in turn, comes in the name of a separate entity. Considering all the
above-mentioned points, it can be said that, when thought in a broader perspective, one person
company proves to be of great advantage to a number of budding new businessmen in the
corporate world.

Taking into consideration the concept of India, it can be said that One Person Company is a
comparatively new concept in the Indian scenario, while on the other hand, it has been proved as
a successful business strategy in the UK and in addition to this even a number of European
countries have succeeded in terms of formation and working of the One Company Person for
quite a long period of time.

Historical background
According to The Companies Act, 1956, there is a requirement of at least 7 members for the
formation of a Public Limited Company, and in terms of shareholders it requires 2 of the
shareholders to be present in order to validate the company, and hence because of this very
provision, there was no formation of One Person Company in the country of India. It was only
under the Companies Act of 2013, Section 2(62), that there was a provision laid down for the
formation and bringing into effect the One Person Company. The very meaning of One Person
Company means a company which consists of only 1 member. Another important point to be
taken under consideration is that Section 3 of the Companies Act classifies One person Company
as a private limited company for the sake of all the legal purposes but with only one person in the
company. In addition to this, all the provisions related to a private limited company is applicable
to an OPC, unless they are expressly excluded by an independent clause.

Difference between OPC and Sole Proprietorships:

A sole proprietorship form of business might seem very similar to one-person companies because they
both involve a single person owning the business, but they’re actually exist some differences between
them.

The main difference between the two is the nature of the liabilities they carry. Since an OPC is a
separate legal entity distinguished from its promoter, it has its own assets and liabilities. The promoter is
not personally liable to repay the debts of the company.
On the other hand, sole proprietorships and their proprietors are the same persons. So, the law allows
attachment and sale of promoter’s own assets in case of non-fulfilment of the business’ liabilities.