New Delhi: Small entrepreneurs can now set up 'one person companies' to directly access target markets rather than being forced to share their profits with middlemen, Corporate Affairs Minister Sachin Pilot has said.
With the new Companies Act, 2013 coming into force, the 'one person company (OPC)' has been introduced for the first time in India, which would allow a firm to be registered with just one shareholder and limited regulatory costs and other requirements.
This would provide tremendous opportunities for millions of people, including those working in areas like handloom, handicrafts and pottery, Pilot said.
"They are working as artisans and weavers on their own, so they don't have the legal entity as a company.
"But the OPC would help them do business as an enterprise and give them an opportunity to start their own ventures with a formal business structure," Pilot told PTI.
Prior to the new Companies Act coming into effect, at least two shareholders were required to start a company.
The minister said: "One person company (concept) is quite revolutionary... This will give the individual entrepreneurs all the benefits of a company, which means they will get credit, bank loans, access to market, limited liability, and legal protection available to the companies.
"...The amount of compliance by one person company will also be much less in terms of filing returns, balance sheets, audit etc. "Also, rather than the middlemen conjuring profits,the one person company will have direct access to the market and the wholesale retailers."
The minister said that the new concept would also boost the confidence of small entrepreneurs.
"It is a new concept and has happened for the first time in India. It is the small towns and small business areas, where this concept needs to be spread," he added.
For 'one person company', the minimum initial capital requirement is expected to be less than Rs 1 lakh but the finer operational details would be clear once the rules for the new Companies Act are framed.
This new concept is expected to benefit people who are into self employment and many small scale sectors.
Pilot also asserted that the Ministry would try to keep certain checks and balances to ensure that such companies are not misused.
In the case of a 'one person company', the financial statements - duly adopted by the member - along with all the related and required documents should be filed with the government within 180 days the end of a financial year.
As per the Act, such companies "may not include the cash flow statement".
First Published: Sunday, September 8, 2013, 18:00