Question

Mr. Arjun is a sole proprietor . He has been doing the wholesale business of tea for the last three years .
The brand name of his tea is "Tadka Chay." This is a popular brand of its region . Now Mr. Arjun has been worried about two issues . First , his business unit is situated in an unorganised sector and therefore , he is unable to buy goods on credit from any trader easily . Similarly , banks and other lending institutions hesitate to extend a long-term loan to him . Such a treatment by the people produces the inferiority complex in him . The second issue worrying him is that he has unlimited liability . If unfortunately he suffers a heavy loss in business , his business property and personal property both will be finished . He wants to get rid of these worries . So he contacts a business specialist , who suggests a new form of business organisation which will remove all his problems .
In your opinion what advice must have been given to Mr. Arjun by the business specialist ? Explain .

Answer 1

The business specialist must have advised Mr. Arjun to establish One Person Company (OPC) .
The Indian Companies Act , 2013 , introduces a new type of entity to the existing list , i.e., apart from forming a public or private limited company , the 2013 Act enables the formation of a new entity a one-person company (OPC). An OPC means a company with only one person as its member .
Rule 3(1) provides that only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate OPC. No person shall be eligible to incorporate more than one OPC or become nominee in more than one such company .