As per Section 2(62) of the Companies Act 2013, a One Person Company (OPC) is a type of company that has only one individual as its member. The member of the company refers to the subscriber of the Memorandum of Association (MOA) or the shareholder of the company.
In simple terms, an OPC is a company that is owned and controlled by a single shareholder.
The concept of One Person Company was introduced to encourage small entrepreneurs who wish to start a business independently but in a corporate structure. It eliminates the need to arrange additional partners for implementing business ideas and helps individuals establish micro or small-scale enterprises in a structured manner.
An OPC can be viewed as a blend of a private company and a sole proprietorship. It provides the benefit of limited liability while allowing a single person to manage and operate the business. Registered under Section 2(62) of the Companies Act, 2013 along with the applicable rules, OPCs are preferred by many entrepreneurs due to fewer compliance complexities and the absence of multiple partners. The advantage of limited liability further makes OPC an attractive option for starting a business independently.
The concept of a One Person Company (OPC), introduced under the Companies Act 2013, was designed to support individual entrepreneurs who wish to operate their business in a corporate structure. The main reasons behind introducing OPC are as follows:
Easy conversion of business idea into corporate form: An individual can establish a company structure without the need for partners, making it simple to formalize a business idea.
Limited liability protection: The liability of the member is restricted to the amount invested in the company, protecting personal assets from business liabilities.
Single-person management: The entire business can be owned and managed by one individual without involving other shareholders.
Minimal resource requirement: OPC can be started and operated with comparatively fewer resources and compliance requirements.
No minimum paid-up capital requirement: There is no mandatory minimum paid-up share capital prescribed under the Companies Act, 2013 for incorporating an OPC.
Perpetual succession: The company continues to exist even in the event of death or incapacity of the member, as a nominee is appointed to take over.
These features make OPC a suitable option for small entrepreneurs and startups seeking a structured yet flexible business model.
Registering a One Person Company (OPC) under the Companies Act 2013 offers several advantages to individual entrepreneurs in India. The key benefits are explained below:
1. Limited Liability Protection
In an OPC, the sole member’s liability is restricted to the amount invested in the company. Since a single individual holds full ownership and control, personal assets remain protected from business liabilities beyond the capital contribution.
2. Separate Legal Identity
An OPC has its own legal existence distinct from its owner. This means the company can own property, enter into contracts, and initiate or face legal proceedings in its own name.
3. Lower Effective Tax Burden
The sole member can draw remuneration as a director and may also earn rent (if property is leased to the company) or interest (if funds are lent to the company). Such payments are treated as allowable business expenses, which reduce the company’s net profit and ultimately lower its taxable income.
4. Faster Decision-Making
Since the company is managed by only one person, decisions can be taken promptly without the need for consultation or approval from multiple partners or shareholders. This leads to quick execution of business strategies.
5. No Minimum Capital Requirement
There is no mandatory minimum capital contribution required for incorporating an OPC under the Companies Act, 2013, making it easier for small entrepreneurs to start a business.
6. Audit Requirement Based on Threshold Limits
Statutory audit becomes mandatory only when the paid-up capital exceeds ₹25 lakhs or the annual turnover crosses ₹40 lakhs.
These benefits make OPC registration a practical and attractive option for solo entrepreneurs looking to operate in a structured corporate form in India.
As per the provisions of the Companies Act 2013, the following essential conditions must be fulfilled for incorporating a One Person Company (OPC):
1. Eligibility of the Member and Nominee
The individual incorporating the OPC, as well as the nominee appointed for the company, must:
Be a natural person (not an artificial legal entity),
Be an Indian citizen, and
Be a resident of India.
Note: A person is considered a resident of India if he or she has stayed in India for at least 182 days during the immediately preceding calendar year.
2. Restriction on Incorporation of Multiple OPCs
An individual is not permitted to incorporate more than one OPC at the same time.
3. Restriction on Becoming Nominee in Multiple OPCs
A person cannot act as a nominee in more than one OPC simultaneously.
4. Situation of Dual Membership
If a person is already a member of one OPC and subsequently becomes a member in another OPC by virtue of being appointed as a nominee, he or she must regularize the situation within 180 days to comply with the above restriction.
These conditions ensure that the structure of an OPC remains limited to a single eligible individual and maintains regulatory discipline.
Under the provisions of the Companies Act 2013, the following additional rules apply to a One Person Company (OPC):
1. Capital Requirements
An OPC can be incorporated with a minimum authorized capital of ₹1 lakh. There is no compulsory requirement for a minimum paid-up capital, meaning the company may be started with a very small capital contribution.
However, if the paid-up share capital exceeds ₹50 lakh, the OPC must compulsorily convert into a Private Limited Company. Similarly, if the average annual turnover of the company during three consecutive financial years reaches or exceeds ₹2 crore, conversion into a Private Limited Company becomes mandatory.
2. Restriction on Section 8 Registration
An OPC cannot be incorporated as, or converted into, a company registered under Section 8 of the Act (i.e., a not-for-profit company).
3. Restriction on Financial Activities
Such a company is not permitted to carry out non-banking financial investment activities, including investment in securities of any body corporate.
4. Voluntary Conversion Restrictions
An OPC cannot voluntarily convert into any other type of company before the completion of two years from the date of incorporation. The only exception to this rule is when:
The paid-up share capital exceeds ₹50 lakh; or
The average annual turnover during the relevant period surpasses ₹2 crore.
5. Mandatory Conversion into Private or Public Company
An OPC is required to convert into either a Private Company or a Public Company within six months from the date:
Its paid-up share capital exceeds ₹50 lakh; or
The last day of the relevant period in which its average annual turnover exceeds ₹2 crore.
Note: The term “relevant period” refers to the immediately preceding three consecutive financial years.
These provisions ensure that once an OPC grows beyond a prescribed financial limit, it transitions into a broader corporate structure.
As per the provisions of the Companies Act 2013, certain documents and basic requirements must be fulfilled for incorporating a One Person Company (OPC). These are explained below:
An OPC must have at least one director and one member.
Member: A member is an individual who subscribes to the shares of the company and whose name is recorded in the register of members. In an OPC, a single person acts as the sole shareholder.
Director: A director is the person responsible for managing and overseeing the affairs and operations of the company.
A self-attested copy of the PAN card of the member and the director is required.
Self-attested identity proof of the member and director must be submitted. Any one of the following documents is acceptable:
Passport
Voter ID
Aadhaar Card
Driving License
Self-attested address proof of the member and director (not older than two months) is required. Acceptable documents include:
Bank Statement
Electricity Bill
Telephone Bill
Mobile Bill
Two recent passport-size colored photographs of the member and director must be provided.
Proof of the company’s registered office address must be submitted:
If the property is owned – Copy of title deed or property papers along with a recent utility bill (not older than two months).
If the property is rented or leased – No Objection Certificate (NOC) from the owner along with a recent utility bill.
These documents are essential to complete the incorporation process of a One Person Company in compliance with the Companies Act, 2013.
For incorporating a One Person Company (OPC) under the Companies Act 2013, certain key details must be provided. These include the following:
1. Share Capital Details
Information regarding the authorized share capital and paid-up share capital of the proposed company must be disclosed. There is no prescribed minimum capital requirement, and the company may be incorporated with any suitable amount of capital.
2. Personal Details
The place of birth and the period of stay at the current residential address of the sole member, nominee, and director must be mentioned.
3. Occupation Information
The present occupation or professional background of the sole member, nominee, and director is required.
4. Business Objectives
A clear description of the main object or proposed business activities of the company must be specified.
5. Educational Qualifications
Details of the educational background of the sole member, nominee, and director need to be provided.
6. Contact Information
Valid email addresses and contact numbers of the sole member, nominee, and director must be furnished for official communication purposes.
These details are necessary to complete the incorporation process in compliance with legal requirements.
The Ministry of Corporate Affairs, through its notification dated 18 February 2020 (effective from 23 February 2020), amended the Companies (Incorporation) Rules, 2014. As part of these amendments, the earlier Form INC-32 (SPICe) was replaced with the web-based integrated system SPICe+ along with other procedural changes.
The step-by-step procedure for registering an OPC in India is explained below:
The first step is to procure a Digital Signature Certificate (DSC) for the proposed member and director of the OPC, as all incorporation forms are filed electronically.
Next, an application for reserving the company name must be submitted through the SPICe+ web service available on the MCA portal (www.mca.gov.in) along with the prescribed fee.
Before applying, it is advisable to:
Verify name availability on the MCA portal.
Ensure that no identical or similar trademark exists under the relevant class of business activity.
The SPICe+ form is divided into two parts:
Part A – Used for reserving the proposed company name.
Part B – Used for incorporation and other related services.
If desired, the applicant may complete both Part A and Part B together for name reservation and incorporation in a single process.
After name approval, Part B of SPICe+ must be completed for incorporation. The form allows saving and editing of details before final submission.
The following documents must be attached while filing Part B:
Consent to act as Director in Form DIR-2
Self-attested PAN card copies of proposed member, director, and nominee
Self-attested identity proof (Passport/Driving License/Voter ID, etc.)
Self-attested address proof (Bank Statement or Utility Bill not older than two months)
NOC from the owner of the registered office along with ownership proof and recent utility bill
Consent of Nominee in Form INC-3
Electronic preparation of Memorandum of Association (MOA) and Articles of Association (AOA)
After completing the form, it must be converted into PDF format to affix the Digital Signature Certificate (DSC).
The next step involves filing the AGILE-PRO linked form, which includes:
Mandatory registration under EPFO and ESIC
Compulsory application for opening a bank account
Option to apply for GSTIN
This form must also be converted into PDF format and digitally signed.
Once all forms are digitally signed, they must be uploaded on the MCA portal as per the prescribed procedure.
The declaration of the subscriber and first director, earlier filed through Form INC-9, is now auto-generated in PDF format and submitted electronically.
By completing these steps, an individual can successfully register a One Person Company in India and enjoy the benefits of limited liability along with a structured corporate identity.
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