One Person Company, or we should say OPC registration is nothing but the formulation of a company with only a single person as a member, which is unlikely as the traditional company requires at least two members. In OPC, its owner acts as the most powerful authority. So, what was the need behind its introduction?
The government of India made significant changes with the introduction of the Companies Act 2013, and the motive was to ease the process of doing business in the country and improve corporate governance. With these changes came the concept of One Person Company, conceptualized by the Ministry of Corporate Affairs to fill the gaps for entrepreneurs between a proprietorship and a private company set-up.
Earlier, there were no provisions for an individual to start his own company, except the option of Sole Proprietorship, which is not a distinct legal business entity; hence the person (sole proprietor) handling it is responsible for any credit facility available. Not just that, the absence of legal status as an incorporated entity also made financing and business credit harder to procure. But with OPC, the Indian government has presented a hybrid form of a sole proprietorship and a private limited company, offering the benefits of both.