||As per S. 3 of the Companies Act, 2013, OPC is given the status of Private Companies.
||An OPC enjoys various statutory exemptions from holding annual or extraordinary general meetings;
signature on annual returns can be done by Director himself, restriction on voting rights, demand
for the poll, notice for the meeting, Signature on financial statements, etc.
||The liability of the shareholder is limited and personal assets are safe. The liability of the
shareholder will only be limited to the unpaid subscription money in his name. OPC is a separate
entity and there will be a true distinction between the promoter and the company.
||There is only one owner who can act both as a shareholder as well as the director.
||This leads to fast decision making and execution. Yet he/she can appoint as many as 15 directors in
the OPC for administrative functions, without giving any share to them.
& SOCIAL RECOGNITION
||One Person Company is a Private Limited Structure in the eyes of law, which gives suppliers and
customers a sense of confidence in business.
||A company is a legal entity and a juristic person established under the Act. Therefore a company
form of organization has a wide legal capacity and can own property and also incur debts. The
members (Shareholders/Directors) of a company have no liability to the creditors of a company for
||OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed
with the Registrar of Companies (ROC). No need to conduct the Annual General Meeting (AGM), so
lesser compliance cost.
||A company has 'perpetual succession', that is continued or uninterrupted existence until it is
legally dissolved. A company, being a separate legal person, is unaffected by the death or other
departure of any member but continues to be in existence irrespective of the changes in membership.
||A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as
unsecured and can also accept deposits from the public, etc. Even banking and financial institutions
prefer to render large financial assistance to a company rather than partnership firms or
||Shares of a company limited by shares are transferable by a shareholder to any other person. Filing
and signing a share transfer form and handing over the buyer of the shares along with a share
certificate can easily transfer shares.
||A company being a juristic person, can acquire, own, enjoy and alienate, property in its name. No
shareholder can make any claim upon the property of the company so long as the company is a going
Why should I form
An OPC is a good alternative to running a sole proprietorship, largely because
it gives limited liability to the business owner. This means that your liability is limited to the
amount you’ve invested in the business; business debts cannot be recovered from personal possessions.
Also, a sole proprietorship ceases to exist on the death of its promoter. In the case of an OPC, the
nominee director takes over and the entity continues to exist. Single entrepreneurs who do not have
another partner to start a private limited company may also consider it.
Who can register an
Only Indian residents can register an OPC, and that, too, only one at a time,
as per the specifications of the Ministry of Corporate Affairs.
What are the
mandatory requirements of an OPC?
All such businesses must maintain books of accounts, comply with statutory
audit requirements and submit income tax returns and annual filings with the RoC.
How much capital is
required to start an OPC?
There is no difference in capital requirement between an OPC and a private
limited company. It needs an authorized capital of Rs. 1 lakh to begin with, but none of this needs to
be paid-up. This means that you don’t need to invest any money into the business.
What are the tax
benefits available to an OPC?
No general advantages; though some industry-specific advantages are available.
Tax is to be paid a flat rate of 30% on profits, Dividend Distribution Tax applies, as does Minimum
What is the main
drawback of an OPC?
The MCA is skeptical about a single person in charge of a large corporation.
Therefore, it requires all OPCs to be converted into private limited or public limited companies on
crossing a certain revenue number. Currently, in case of an average turnover of Rs. 2 crores or more for
the three consecutive years or a paid-up capital of over Rs. 50 lakh, the OPC must mandatorily be
converted into an OPC.
How many directors
can there be in an OPC?
An OPC has certain limitations. The person starting the business is its only
director and shareholder. There can be a maximum of 15 directors in OPC. There is also a nominee
director, but this person has no power whatsoever for raising equity funds or offer employee stock
options. The nominee exists only to take over in case of the death or incapacitation of the director.
The nominee is chosen by the director and can be anyone, such as your spouse, parents or siblings. The
nominee will need to provide identity proof during registration.
Is OPC is a Private
Yes, One Person Company will be formed as similar to a "Private Limited
Company". It can be formed a company limited by share capital or limited by guarantee or unlimited
company. The words "One Person Company" will have to be mentioned in brackets below the name of such a
company, wherever its name is printed, engraved or affixed.
Is OPC required to
follow fewer compliances than a Private Limited Company?
OPC is one of the easiest forms of corporate entities to manage. Very few ROC
filing is to be filed with the Registrar of Companies (ROC). No need to conduct the Annual General
Meeting (AGM), so lesser compliance cost than a private limited company.
Who can incorporate
Only a person, who is an Indian citizen and resident in India, shall be
eligible to incorporate a One Person Company. For becoming a director in a company, no professional or
educational qualification is required. Any individual can become a shareholder in a one person company.
What are the
Requirements to become nominee in an OPC?
Only a natural person who is an Indian citizen and a resident in India is
eligible to be a nominee member. A nominee must also be over 18 years of age.
Can an OPC convert
into a Private Limited Company?
When a One Person Company gets incorporated, it
cannot convert itself to a Private or Public company for a period of not less than two years from the
date of incorporation. Means if you want to get converted voluntarily you have to wait for two years to
Compulsory Conversion When a One Person Company has a paid-up capital more or equal to Rs. 50
lakhs or, the Annual turnover for the relevant financial year exceeds Rs. 2 crores, then in such
conditions, the company has to compulsorily convert itself into Private Limited Company or Public
How long is the
company valid for?
Once a Company is incorporated, it will be active and in-existence as long as
the annual compliances are met with regularly. In case, annual compliances are not complied with, the
Company will become a Dormant Company and may be struck off from the register after some time. A
struck-off Company can be revived for a period of up to 20 years.
Can an NRI /
Foreign National be a director in a One Person Company?
No, an NRI or Foreign National cannot be a shareholder for an OPC.
Can a Salaried
person become the director in One Person Company?
Yes, a salaried person can become the director in an OPC, there is no legal
bondage in this, but you have to go through with your employment agreement if it contains any
restrictions on doing so.
How to inform RoC
about changes in OPC?
• Change in membership to be informed in Form INC-4 for providing new
• Inform RoC in Form INC-5 about the requirement of conversion into the private or
public company if the threshold limits exceed within 60 days.
Which form is to be
filed for the conversion of OPC?
Form INC-6 shall be filed by an OPC for conversion into the private or public
company within 30 days in case of voluntary conversion & within 6 months in case of mandatory
Which form to be
filed in case of a change in Nominee?
Form INC-4 shall be filed in case of withdrawal of consent by the nominee or
in the case of intimation of change in nominee by the member.