Last Updated on September 24, 2026
In a country like India, which is known as the land of entrepreneurs, concepts like sole proprietorship, HUFs, partnership firms and other unstructured forms of business are the first and the most commonly chosen step for any individual towards starting a business. In such times, the Companies Act, 2013, has provided a safer, more secure entry point for these entrepreneurial initiatives into the structured corporate world through the One Person Company (OPC).
What is an OPC?
The theory of OPC, which was originally put forward in the J.J Irani Committee Report and is already practised in nations like the US, UK, Australia, Singapore, etc., has opened brand new prospects of opportunities and possibilities along with exploring new set of circumstances for the unstructured group of businesses to enjoy the benefits of limited liability and separate entity along with sole ownership of a regularised organisation in a systematic environment.
Section 2(62) of the Companies Act, 2013 defines a one person company as “a company which has only one person as a member”.
Even though OPC is still in the budding stage in India, it has encouraged the corporatisation of small firms and businesses with a better and simpler legal regime. The benefits of OPC include limited liability, separate legal entity, perpetual succession, relaxed or concessional legal compliances and sole ownership over management decision making and control of the operations, amongst several others. These are some of the most significant features of OPC that succeed in luring entrepreneurs to contribute to the economic growth and employment generation in the country.
Important Sections and Provisions of the Companies Act 2013 Governing OPCs
MEMORANDUM of ASSOCIATION (MoA) [Section 7]
The Memorandum of Association of a company is a legal document representing the charter of the company that helps to understand why the company was established and incorporated. The MoA of an OPC shall state the details regarding the name of the company, full and complete address of its registered office, liability of members, shareholding pattern, objects, name and details of members and nominees, amount of share capital and such other information as required under the Act.
DIRECTORS [Sections 1(b), 149(1)(a), 152(1)]
The Articles of Association (AoA) shall provide for the appointment of directors of OPC, and if the Articles of the Company are silent, the subscriber to the MoA shall be deemed the first director of the company. An OPC may have 1 director and a maximum of 15 directors on its Board of Directors, and it may increase this maximum limit by passing a special resolution to that effect. The director must be a natural person, not be less than eighteen years of age, a citizen of India and a resident of India, where a resident means a person who has stayed in India for a total period of not less than 182 days in the previous calendar year.
BOARD MEETINGS [Section 173(5)]
According to the Act, an OPC must conduct at least one board meeting in each half of the calendar year and the gap between two board meetings shall not be less than ninety days. However, this provision shall not be applicable if there is only one director appointed in the company.
CONTRACTS ENTERED INTO BY OPC [Section 193(1)]
Every contract entered into by the OPC with the sole member, who is also the director, the terms of the contract shall be in writing or be contained in the MoA or shall be recorded in the minutes of the Board Meeting held next after the contract and accordingly, the Registrar of Companies (RoC) shall be intimated within 15 days from the date of approval by the Board. Nothing in this provision shall apply to the contracts entered into by the company during the ordinary course of business.
ANNUAL RETURN [Section 92]
Annual Return shall be prepared in the prescribed form, containing particulars of OPC regarding the registered office, holding, subsidiaries, associates, shareholding pattern, indebtedness, remuneration of directors and key managerial personnel, etc., as on the close of the financial year, and shall be signed by the Company Secretary (CS) and in a case where there is no company secretary, then the annual return shall be signed by the director of the company.
FINANCIAL STATEMENTS [Section 134]
Financial statements shall be signed by one director for submission to the auditor, and they may not include the cash flow statement. The Board Report shall be attached to the financial statements. The Board Report of an OPC may contain only the explanations for the comments or adverse remarks made by auditors. After the financial statements have been duly adopted by the member, they shall be filed, along with other required documents, with the RoC within 180 days of the closure of the financial year.
EXEMPTIONS
OPC is exempted from Sections 96, 98, 100-111 of the Act.
CONVERSION OF AN OPC INTO A PRIVATE / PUBLIC LIMITED COMPANY
Before the Companies (Incorporation) Second Amendment Rules, 2021, where the paid-up share capital of an OPC exceeded ₹50 lakh, or its average turnover for the immediately preceding three consecutive financial years exceeded ₹2 crore, the company was required to lose its status as a one person company and convert into a private company (minimum 2 members and 2 directors) or public company (minimum 7 members and 3 directors), as the case may be, by passing a resolution and complying with the applicable requirements. That mandatory-conversion trigger was removed by the 2021 amendment. Crossing either figure today does not, by itself, require conversion an OPC may voluntarily convert into a private or public company by complying with the applicable requirements under Rule 6.
CONVERSION OF A PRIVATE COMPANY INTO AN OPC
Any private company other than a company registered under Section 8 of the Act may convert itself into an OPC by passing a special resolution in the general meeting, along with a no-objection certificate (NoC) from all members and creditors. Before the Companies (Incorporation) Second Amendment Rules, 2021, this conversion was only available to private companies with paid-up share capital below ₹50 lakh and average annual turnover below ₹2 crore. The 2021 amendment removed that paid-up capital and turnover ceiling, so eligibility today no longer depends on the company’s size.
DEATH OR WITHDRAWAL OF CONSENT BY NOMINEE OR MEMBER
In case of death or withdrawal of consent by the nominee, the member shall nominate another person as nominee within 15 days of the receipt of written notice of withdrawal and intimate the company and RoC of such nomination along with the written consent of another person so nominated within the prescribed time and form. The member may change the name of the nominee for any reason and nominate another person as the nominee after obtaining his written consent.
In case of death or incapacity of the member to contract, his nominee shall become the member and nominate another person as his nominee within fifteen days of becoming the new member and inform the company and RoC accordingly.
Legal Criteria To Be Kept In Mind Before Forming a One-Person Company
- An OPC must have one member and may have only one director.
- The member shall nominate a person as his nominee, after obtaining his prior written consent, who shall become the member in case of his death or incapacity to contract.
- Both the member and nominee shall be natural persons, not less than eighteen years of age, and citizens of India. Residency in India is not required for either the member or the nominee the Companies (Incorporation) Second Amendment Rules, 2021 changed the eligibility wording to “Indian citizen, whether resident in India or otherwise,” so an Indian citizen who is not resident in India can also be a member or nominee.
- No minor shall become a member or nominee or shall even hold a beneficial interest in the share capital of OPC.
- No OPC shall undertake non-banking financial investment activities, including investing in another body corporate.
- Before the Companies (Incorporation) Second Amendment Rules, 2021, an OPC could not voluntarily convert itself into a company of any other kind unless two years had passed from the date of its incorporation (except where the mandatory-conversion threshold limits were reached). The 2021 amendment removed this two-year lock-in period along with the mandatory-conversion trigger, so an OPC may now voluntarily convert into a private or public company at any time after incorporation, subject to the applicable requirements under Rule 6.
- The shares in an OPC cannot be transferred.
- The minimum authorised share capital is Rupees one lakh.
- An OPC shall not be formed as a non-profit entity under Section 8 of the Companies Act 2013.
- There may not be an annual general meeting for an OPC under Section 96 of the Act, and it shall be sufficient compliance if the minutes are duly communicated to the member and signed, dated and recorded in the statutory minutes book of the meeting.
Conclusion
The legal bodywork of an OPC under the Companies Act 2013 empowers individual entrepreneurs and provides them a chance to start and manage a small business while stimulating growth, investment and development of the economic market with the status of a corporation. This makes an OPC not only attractive but also a viable option for the passion-driven and entrepreneurial-spirited community of the country to explore and exploit new ventures and build a promising future.
Related Service
One Person Company Registration in Chennai
FAQs
1. What defines an OPC?
An OPC is an entity incorporated under the Companies Act 2013 with only one member.
2. What is the minimum capital requirement for OPC?
Incorporating an OPC has no set minimum paid-up capital requirement.
3. What is the turnover limit for OPC?
Crossing ₹50 lakh in paid-up capital or ₹2 crore in average turnover no longer forces conversion that mandatory trigger was removed by the Companies (Incorporation) Second Amendment Rules, 2021. An OPC may voluntarily convert into a private company or public firm by complying with the applicable requirements under Rule 6, regardless of these figures.
4. Who qualifies for an OPC?
Only a natural person who is an Indian citizen can incorporate an OPC – residency in India is not required. Since the Companies (Incorporation) Second Amendment Rules, 2021, an Indian citizen is eligible to be the sole member whether resident in India or not. See Can an NRI or Non-Resident Indian Start an OPC in India?
5. What are the restrictions for OPC?
Non-banking financial investment projects are not possible for an OPC; it cannot have more than one member, and its potential for growth is constrained.
6. Which is better—OPC or Private Company?
For single entrepreneurs, OPC structures are better, but for corporations wanting to grow, having more than one shareholder, and needing money, private limited firms offer more advantages.
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