In her Budget speech, Union Finance Minister Nirmala Sitharaman announced measures to ease norms on setting up one-person companies (OPCs). 

It will allow OPCs to grow without any restrictions on paid-up capital and turnover and would directly benefit start-ups and innovators.

What are one-person companies?

As the name suggests, a one-person company is a company that can be formed by just one person as a shareholder. 

• These companies can be contrasted with private companies, which require a minimum of two members to get going. 
• However, for all practical purposes, these are like private companies.

Implication:

A single-person company and sole proprietorship differ significantly in how they are perceived in the eyes of law.

• For the former, the person and the company are considered separate legal entities. 
• In sole proprietorship, the owner and the business are considered the same.

Liability:

This has an important implication when it comes to the liability of the individual member or owner.

• In a one-person company, the sole owner’s liability is limited to that person’s investment. 
• In a sole proprietorship set-up, however, the owner has unlimited liability as they are not considered different legal entities. 

How many OPCs does India have?

According to data compiled by the Monthly Information Bulletin on Corporate Sector:

• There were 34,235 one-person companies out of a total number of about 1.3 million active companies in India, as on December 31, 2020. 
• The number of OPCs was 2,238 (out of a total of about 1 million companies) as on March 31, 2015. Data also show that more than half of the OPCs are in business services.

Source: The Hindu