ORGANIC BAGAYATDAR (OPC) PRIVATE LTD.
What is a One Person Company in India (OPC)?
Several key
features define an OPC:
Key Features and Characteristics
A One Person Company (OPC) is a type of business
structure introduced in India under the Companies Act, 2013. It's
essentially a private limited company that can be established and managed by a
single individual. This structure allows a sole entrepreneur to enjoy the
benefits of a corporate structure, such as limited liability and perpetual
succession, while still maintaining complete control over the business.
OPCs offer
several advantages:
Advantages of an OPC
Single Member: The defining
characteristic is that it has only one member or shareholder. This person is
also often the director.
Nominee: A nominee must be
appointed during incorporation. This person will take over the company in case
of the original member's death or incapacity.
Limited Liability: The liability of the
member is limited to the extent of their investment in the company's shares,
protecting their personal assets.
Separate Legal Entity: The OPC is
recognized as a separate legal entity, distinct from its owner.
Perpetual Succession: The company
continues to exist even if the owner dies or becomes incapacitated, thanks to
the nominee.
Indian Citizen and
Resident Requirement: Only
a natural person who is an Indian citizen and a resident of India is eligible
to incorporate an OPC and be its member and nominee. "Resident in
India" means a person who has stayed in India for at least 120 days during
the immediately preceding financial year.
Name: The name of the OPC
must include the words "(OPC) Private Limited".
Simplified Structure: Easier to manage and
operate compared to companies with multiple shareholders.
Limited Liability
Protection: Protects
the owner's personal assets from business debts and liabilities.
Access to Funding: Banks and financial
institutions are more likely to provide loans to a company than a sole
proprietorship.
Perpetual Existence: The business
continues even if the owner is no longer able to manage it.
Fewer Compliance
Requirements: OPCs
have fewer compliance requirements compared to private limited companies.
The process
of incorporating an OPC involves several steps:
Incorporation Process
Limited Membership: An OPC can only have
one member at a time, which can restrict fundraising options.
Restrictions on
Activities: OPCs
cannot engage in non-banking financial investment activities.
Taxation: OPCs are subject to
the same corporate tax rates as other private companies.
One OPC per Person: An individual can only be a member of one OPC.
No ESOPs or External Investors: OPCs cannot issue ESOPs or attract external investors.
Compliance Requirements
OPCs have certain mandatory compliance requirements:
Board Meetings: At least one board meeting in each half of the calendar year, with a gap of not less than 90 days between the two meetings.
Maintenance of Books of Accounts: Proper accounting records must be maintained.
Statutory Audit: Financial statements must be audited.
Income Tax Returns: Filing of business income tax returns every year before September 30th.
Annual Filings: Filing of financial statements (Form AOC-4) and annual return (Form MGT-7).
As a OPC, We encourage farmers and producers of Agricultural produce and products to register as a Private Limited Company entity as "Farmer Producers Company".
Formation and Structure
A Farmer Producer Company (FPC) is a legally recognized entity formed by farmers or primary producers with the primary goal of improving their income and overall quality of life. It operates as a hybrid model, combining elements of both private limited companies and cooperative societies, and is registered under the Indian Companies Act, 2013.
FPCs are designed to empower farmers by enabling them to collectively engage in various activities, including production, harvesting, procurement, grading, pooling, marketing, and selling of their produce.
Objectives and Activities
An FPC can be established by a minimum of 10 primary producers or by two or more producer institutions, or a combination of both. The structure of an FPC is democratic, with each member having equal voting rights, regardless of the number of shares held.
The governance is managed by a Board of Directors elected by the members. The Board is responsible for the overall management, policy-making, and financial decisions of the company.
The main objective of an FPC is to facilitate the formation of cooperative businesses and to enable existing cooperative businesses to transition into companies. The objectives of a producer company relate to various activities, including:
FPCs offer several advantages to farmers:
Benefits of Farmer Producer Companies
Production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of primary production.
Processing of produce, including preserving, drying, distilling, brewing, and packaging.
Manufacturing, sale, or supply of machinery, equipment, or consumables to its members.
Providing education and technical services to its members.
Generation, transmission, and distribution of power, and management of land and water resources.
Insurance of producers or their primary produce.
Promoting techniques of mutuality and mutual assistance.
Providing welfare measures for the benefit of members.
Financing procurement, processing, marketing, or other related activities.
Despite the benefits, FPCs face several challenges:
Challenges Faced by FPCs
Economies of Scale: FPCs enable farmers to reduce costs through bulk purchasing of inputs and selling of produce.
Improved Bargaining Power: By aggregating their produce, farmers gain better negotiating power with buyers and suppliers.
Access to Markets and Technology: FPCs facilitate access to wider markets and advanced technologies, which can improve productivity and profitability.
Financial Assistance: FPCs can provide financial assistance to their members through credit facilities and loans.
Legal Autonomy: FPCs operate under the Companies Act, providing a structured business framework.
Enhanced Creditworthiness: The collective size and legal status of FPCs improve their ability to secure funding and loans.
Capital Raising: It can be difficult to raise the capital required to buy members' produce or for value addition activities.
Member Loyalty: Maintaining member loyalty can be challenging if expectations are not met.
Management Skills: Attracting and retaining skilled professionals for CEO and managerial roles can be difficult.
Policy Consistency: Inconsistent policies and disparities in credit availability and minimum support prices can pose challenges.
Government Support
Current Status
The Government of India has recognized the importance of FPOs and has implemented various schemes to support their formation and growth. The government provides funding, training, and other support to make FPCs viable. The government also provides technological interventions for better output and access to shared affordable resources. The government launched a scheme called the Formation and Promotion of 10,000 New Farmer Producer Organization's in February 2020.
The registration process for an FPC is similar to that of a Private Limited Company. The key steps include:
Registration Process
As of the latest available information, there are over 9,600 FPOs registered in India, with more than 8,600 actively engaged in agriculture and allied activities. State-level Producer Companies in Gujarat, Maharashtra, and Madhya Pradesh have shown encouraging results.
Obtaining a Digital Signature Certificate (DSC) for the directors.
Obtaining a Director Identification Number (DIN).
Applying for name reservation with the Registrar of Companies (ROC).
Preparing the Memorandum of Association (MoA) and Articles of Association (AoA).
Filing the application for incorporation with the ROC.