Disadvantages of OPC
Suitable for only Small Business
OPC is suitable for small business structures. The maximum number of members the OPC can have is one at all times. More members or shareholders cannot be added to OPC to raise additional capital. Thus, with the expansion and growth of the business, more members cannot be added.
Restriction of Business Activities
The OPC cannot carry out Non-Banking Financial Investment activities, including the investments in securities of anybody corporates. It cannot be converted to a company with charitable objects mentioned under Section 8 of the Companies Act, 2013.
Ownership and Management
Since the sole member can also be the company's director, there will not be a clear distinction between ownership and management. The sole member can take and approve all decisions. The line between ownership and control is blurred, resulting in unethical business practices.
Created
& Posted by (Ramesh Kumar Gupta)
Senior
Accounts Manager at TAXAJ
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