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| Legal Risk Management Strategies for the Digital Era! |
One Man
Company or One Person Company, a dream come true for Digital Age Solopreneurs!
“A
man is known by the company he keeps”, goes the old saying. But now a man can
start a company all by himself without having to search for a partner to
fulfill the legal requirement that required two persons to form a
company. The Companies Bill 2012 passed by the Indian Parliament allows
for the creation of a Company by just one individual.
So what is a One Person Company (OPC)?
As the very name indicates, it means a company which has only
one person as a member of a company. An OPC can be floated by just one single
individual. In the past, two persons were required to form a company
under the Indian Law. Thus previously an Entrepreneur had to tout for a
suitable partner or a co-founder in order to start a company which could
eventually create far reaching legal and financial implications in the event of
a disagreement between the two.
Why OPC in India at this stage?
The
One Person Company as a business concept has been popular in many developed
countries including USA, UK, Australia, Singapore and even China. The OPC
concept was long overdue in India especially taking into account today’s global
economy which thrives on new ideas, innovation, be it product or services which
can even come from a single individual anywhere. The recent past has seen many
successful “Juvenile Entrepreneurs” and young millionaires in the high tech
industry especially in the development of “Apps” segment in the mobile space.
Thus an aspiring Entrepreneur can easily set up a One Man Company solo thereby
protecting his Intellectual Property rights namely patent, design, etc.
What
are the advantages of an OPC?
The main advantage of an OPC is Limited Liability of its
Founder. In an OPC, the legal and financial liability is limited to the
company alone and does not make its Founder personally liable for the actions
of the Company.
What are the rules regarding the concept of Perpetual Succession
in an OPC?
The person forming the OPC has to nominate a name with that
person’s written consent as a nominee to the OPC who will step into the shoes
of the founder in the event of founder’s death, incapacity or disability. This
provision ensures perpetuity and continuity to the life of the Company. The
golden rule of “members may come and go, but the Company must live on” still
holds good. Every One Person Company should bear the letters “OPC” in brackets
after it’s registered name, wherever it may be printed, affixed or
engraved.
Will the OPC gain popularity in India?
Well, only time will tell. The Limited Liability Partnership
(LLP) which was allowed in India just over a year ago failed to gain popularity
due to traditional “brick and mortar legal practitioners” still pushing the old
fashioned and risky concept of Sole Proprietorship and Partnership in the Legal
Market.
Until and unless the traditional legal practitioners shed their
“Status Quo Mentality” and embrace change, adopt new methods, technologies in
their traditional mode of practice and allow healthy competition in the Legal
Industry by allowing foreign law firms to enter India, the traditional concepts
will still rule the roost thereby stifling innovation and value added services
in the Legal Market in India.
Conclusion: An
OPC is a dream come true for the high tech solopreneurs with new ideas who can
start off a venture solo without the need of a co-founder. This would also
benefit the increasingly growing number of Technology Evangelists, Digital
Nomads who follow an Internet Lifestyle and work from anywhere being digitally
connected 24/7 to include freelancers, developers, or juveniles who have no
time to connect with fellow beings in a traditional manner.
Tech Legal World is
quite optimistic that this business concept is going to be a game changer
especially in today's dynamic and ever changing digital environment where the
stage is set for the return of the "One Man Show".
Note:
This blog can be read as a sequel to our previous one titled “ Legal Risk Management Strategies for Start ups.”
Please email us for a free copy of the Companies Bill, 2012 or
leave a comment below.
www.techlegalworld.com
www.techlegalworld.com
