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One Person Company (OPC)

The concept of One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a OPC is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership. Similar to a Company, a OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is easy to incorporate.

Though a One Person Entity allows a lone Entrepreneur to run a business with Limited Liability protection, a OPC does have a few limitations. For instance, every OPC must nominate a nominee Director in the MOA or AOA who will become the owner of the OPC in case the promoter Director is disabled. Also, a OPC must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year. Therefore, it is important for the Entrepreneur to carefully consider the features of a OPC prior to incorporation. IndiaFilings can help incorporate a One Person Company (OPC) in India.

Features of One Person Company (OPC)

1. Only One Shareholder:

Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company. Explanation: The term "Resident in India" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.


2. Nominee for the Shareholder:

The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder.  Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder.   Only a natural person, who is an Indian citizen and resident in India shall be a nominee for the sole member of a One Person Company.

3. Director: 

Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.

Terms and Restrictions of OPC

  • A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
  • Minor cannot shall become member or nominee of the One Person Company or can hold share with beneficial interest.
  • An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].
  • An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate. 
  • An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e., if the Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.


Steps to Incorporate One Person Company (OPC)

  1. Obtain Digital Signature Certificate [DSC] for the proposed Director(s).
  2. Obtain Director Identification Number [DIN] for the proposed director(s).
  3. Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name. 
  4. Draft Memorandum of Association and Articles of Association [MOA & AOA]. 
  5. Sign and file various documents including MOA & AOA with the Registrar of Companies electronically. 
  6. Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty. 
  7. Scrutiny of documents at Registrar of Companies [ROC].
  8. Receipt of Certificate of Registration/Incorporation from ROC.