You want to start a company but not sure if you want it to be a proprietorship, partnership or private limited…amidst the confusion there comes a new concept called OPC. If you as an entrepreneur are capable of starting a venture on your own then OPC is for you. It allows you to create a single person economic entity. Read on to understand what exactly OPC is and how it can help you.


Introduced through the Companies Act, 2013 the concept of ‘One person Company’ (OPC) encourageVs self-employment with a backbone of India’s legal system. OPC is the best way to start a company if there is only one promoter/founder; you avail of the advantages of limited liability and the benefit of separate legal entity as well. OPC requires only one member and that is its biggest advantage; for a private limited company minimum of two members are required.

OPC comes with its own benefits where the liability of the member is limited; any loss or debts which is purely of business nature will not impact personal savings or wealth of an entrepreneur. Since complete control of the company is with the single owner, it helps in making fast decisions and execution. The owner can appoint as many as 15 directors in the OPC for administrative functions, without giving any share to them. Though OPC has its advantages and it allows a single entrepreneur to operate a corporate

entity with limited liability protection, it has its limitations too.
OPC is suitable only for small businesses. It can have maximum paid up share capital of Rs.50 lakh or turnover of Rs.2 crore. If the annual turnover crosses Rs.2 crore then the company has to be converted into a Private Limited Company and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of companies. OPC cannot carry out non-banking financial investment activities.


Therefore it is important to understand all aspects of this One Person Company prior to incorporation.
It is essential to have a nominee who becomes the member of the company in case of death or any other incapacity of the original member. You also need to know that you cannot incorporate more than one OPC or be the nominee of more than one OPC. Also a minor cannot be a member or nominee of OPC.
Only a natural person (Not Association of persons, Body of Individuals, Company, or any other entity) who is a resident of India in preceding calendar year (stayed in India for 182 days) can form OPC. There is threshold of paid up capital (Rs. 50 lakh) and average annual turnover (Rs. 2 crore) in 3 immediate preceding financial years, beyond which the status of OPC is lost.

Digital Signature Certificate (DSC) – You need to apply for DSC, which is required to digitally sign all documents submitted online under Information Technology Act, 2000 as Application for incorporation of companies is done online. DSC is issued by Certifying Authorities, registered with Controller of Certifying Authorities.
Director Identification Number (DIN) – After getting DSC done one needs to apply for the DIN of the proposed Director in Form DIR – 3 along with the name and the address proof of the director.
Name Approval Application – The next step while incorporating an OPC is to decide on the name of the Company. INC – 1 has to be filed for the name approval to the Ministry of Corporate Affairs (MCA) by giving 6 names in the order of the preference.
Documents – The Memorandum of Association (MoA) stating the business for which the company is going to be incorporated and The Articles of the Association (AoA) which lays down the bylaws on which the company will operate will have to be prepared.
Nominee – Nominee has to appointed and his consent in Form INC – 3 will be taken along with his PAN card and Aadhar Card.
Proof of ownership – Proof of the registered office of the proposed Company, proof of ownership and Affidavit and Consent of the proposed Director is required. Also a declaration by the professional certifying that all compliances have been made.
Application for incorporation- This application has to be filed with the Registrar within whose jurisdiction your registered office will be located via e-form INC-32.
Once the Registrar of Companies (ROC) issues a Certificate of Incorporation business can start.

Surabhi, Associate Advocate with Legal Consultus, a New Delhi based law firm gives us more insight into One Person Company. Surabhi specialises in Corporate and Consumer laws.
Q. Can a private company convert itself into OPC?
A. Yes a private company can convert itself into OPC provided it meets the following conditions – it must have a paid up capital of Rs. 50 lakh or less; it must have its average annual turnover of Rs. 2 crore or less. It will have to pass a special resolution in General Meeting and then file an application in Form No. INC. 6 for its conversion into One person Company.
Q. When will a company cease to operate as an OPC?
A. It will cease to operate as an OPC where the paid up capital exceeds Rs.50 lakh or its average annual turnover during the relevant period exceeds Rs.2 crore.
Q. When can an OPC be converted into Private Limited Company?
A. OPC has an option of getting converted into a Private Limited Company but only when 2 years have expired from its date of incorporation except where the paid up share capital is increased beyond Rs 50 lakh or its average annual turnover exceeds Rs. 2 crore during the relevant period.
One Person Company then can file forms with the registrar of companies for conversion into Private Limited Company within a period of six months on breaching the above threshold limit.
Q. What if, a nominee of one OPC becomes a member of another OPC?
A. A nominee of one OPC cannot be a member of another OPC as per the Act. If he is a member of two OPCs he will have to withdraw his membership from either of the OPCs within 180 days.
Q. What is the Process of Conversion of a Private Limited Company to an OPC?
Obtain NOC from members and creditors of the Private Limited Company
Pass a Special Resolution for conversion
File Special Resolution in Form No. MGT.14 with ROC
File fees and application in Form No. INC.6 and supporting documents with ROC.
Q. Whether a Non-Banking Financial Investment Company can be formed as a One Person Company?
A. As per the provisions of the Act, the OPC cannot carry the business of Non-Banking Financial Investment activity including investment in security of any corporate.
Q. Which form is to be filed in case of withdrawal of consent by the nominee of an OPC or in case of intimation of change in nominee by the member?
A. The member shall file Form INC-4 in case of withdrawal of consent by the nominee or in case of intimation of change in nominee.
Q. When can a One Person Company apply for its closure?
A. OPC can apply for its closure if-
It was non-operative for at least one year.
At least one year should have lapsed from the date of incorporation.