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• One Person Company means a company with only one person as a member. He will be the shareholder of the company and avails all the benefits of a private limited company.

• The idea of One Person Company (OPC) in India was introduced to give a boost to entrepreneurs who have great potential to start their own venture by allowing them to create a single person company.

• The concept of One Person Company [OPC] is a new vehicle of business, introduced by The Companies Act, 2013.

What is One Person Company?

Features of OPC

•O

Only One ShareholderOnly a natural person, who is an Indian citizen and resident in India, shall be eligible to act as a member of One Person Company. 

Limited LiabilityThe liability of shareholder is limited to his shareholding.

Easy Transferability Shares are easily transferable by a shareholder to any other person. This can be done by Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate.

Separate Legal EntityA company has a separate legal entity and considered as a juristic person. Nominee for the

ShareholderThe Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original 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.

Easy FundingOne Person Company can raise funds through venture capital, financial institutions, angel investors etc and thus graduating itself to a private limited company.

DirectorA minimum of One Director is required under OPC. The Company may have a maximum number of 15 directors.

Pros & Cons of One Person Company

PROS It enjoys the status of Separate legal entity.

Liability of the sole member would be restricted to the amount unpaid on the shares held by him.

A company has perpetual existence and stays unaffected by death of any of its members or change in ownership.

Banks and financial institutions prefer lending to the company rather than proprietary firms. So it is preferable to register your startup as a One Person private limited rather than proprietary firm.

The more are the members the more longer time it takes to take a decisions and execute them. Being sole owner ensures that you can take quick decisions and executions.

CONS OPC restrict to have more than one member

and prohibits invitation to the public for subscription of the shares of the company.

No minor can become a member or nominee of OPC or can hold its share.

OPC is not easy to set up. It requires a lot of paper work and is a time-consuming process.

OPC being a private company is not entitled to borrow from others.

The company cannot convert itself into any other kind of company unless 2 years has been expired from the date of incorporation.

The capital of OPC is only to the extent of available funds of the person who owns OPC.

Power Points of OPC

Maximum turnover Limit -

Two Crore Rupees.

Following persons are not eligible to register an OPC in

India: A minor

Non Resident Indian

Company/LLP/Body Corporate

Overseas citizen of India

No additional shareholder or member can be included in the

OPC.

OPC should have at least one Director.

Provisions of conducting Annual General Meeting (AGM) and Extra Ordinary General Meeting do not apply to an OPC

Paid up capital in OPC is

Rs. 1 Lakh ( minimum)

Rs. 50 Lakhs (maximum)

•Paid up capital in OPC is •Rs. 1 Lakh ( minimum)•Rs. 50 Lakhs (maximum)

•Paid up capital in OPC is •Rs. 1 Lakh ( minimum)•Rs. 50 Lakhs (maximum)

In OPC, the member must be:

individual and not any business entityIndian nationality resident of India.

Brief of Procedure to Company

Incorporation

Brief of Procedure to Company

Incorporation

S.NO. PROCEDURE DETAIL1. Obtain Digital Signature

Certificate (DSC)Obtain a Digital Signature Certificate from authorized DSC issuing authority.

2. Obtain Director Identification No. (DIN)

Make Application in Form DIR-3

3. Register DSC in the name of Director on MCA portal

4. Apply for Reservation of Name Application in Form No. INC.1. The same shall be reserved for a period of 60 days.

5. Getting consent of a person to become its Nominee in Form INC-3 .

6. Drafting and Printing of Memorandum and Articles of Association.

7. Filing of INC -2, DIR 12 (except when promoter is the sole director of the OPC.) & INC 22.

8. Commencement of business Mandatory to file Declaration with ROC in Form No. INC.21

9. Registered Office A company shall have a registered office within 15 days of Incorporation and it shall file Form No.INC.22 within 30 days to verify the same.

Rules for Incorporation of One Person Company

Rules for Incorporation of One Person CompanyRules for Incorporation of One Person Company

Who can incorporate a One Person Company?

As per the new Companies Act 2013, only one individual of Indian nationality and resident of India can form OPC. “Resident of India” means he must have stayed for more than 182 days during the immediately preceding financial year. One member cannot incorporate more than 5 companies. Also, a person cannot incorporate more than five One Person Company.

 Nominee in a One Person Company

In case of the death or incapacity to contract of a person incorporating a One Person Company (original owner), he should nominate one person that would become the member of the OPC. The name of nominee should be specified in the memorandum and written consent should be obtained from the concerned nominee.

Automatic conversion of OPC into Private Limited or Limited Company

As per the new Companies Act 2013, owner can operate business entity as OPC if it fulfill following conditions:

• The paid-up share capital of a One Person Company should not exceed fifty lakh rupees.

• The average annual turnover during the relevant period should not exceeds two crore rupees.

In case, if either of the condition is not fulfilled, then it is required to be converted into a Private Limited or Limited Company within six months of the date on which paid-up share capital exceeds beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees or the close of the financial year during which its balance sheet total exceeds one crore rupees.

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