The concept of One Person Company (OPC) was introduced in India under the Companies Act, 2013 to encourage individual entrepreneurs to venture into business with the benefit of limited liability and corporate status.
Prior to this, forming a company required at least two members. OPC allows a single individual to incorporate a private limited company while enjoying legal recognition, perpetual succession, and protection of personal assets.

OPC has proven especially beneficial for start-ups, professionals, and small entrepreneurs who want to operate as a corporate entity but without the complexity of a partnership or traditional private limited company.

Legal Definition

Under Section 2(62) of the Companies Act, 2013,

“One Person Company” means a company which has only one person as a member.

Key Features of OPC

• Single Owner: Only one person can be the shareholder (member).
• Limited Liability: Liability of the sole member is limited to the unpaid amount on shares.
• Separate Legal Entity: The company is distinct from its owner.
• Perpetual Succession: Business continues even if the sole member dies, through a nominee.
• Private Company Status: Treated as a private company for most provisions.
• No Minimum Capital Requirement: Can be incorporated with any amount of capital.

Eligibility Criteria

For Incorporation of OPC:

1. Member Requirements:
   • Must be a natural person (not an artificial/juristic entity).
   • Must be an Indian citizen and resident in India
     (Resident in India means staying in India for at least 120 days during the previous financial year — amended from earlier 182 days by MCA Notification, 1 April 2021).
2. Number of Members & Nominee:
   • Only one member and one nominee are mandatory.
3. Nominee Requirement:
   • Nominee must also be an Indian citizen and resident in India.
4. Business Restrictions:
   • OPC cannot be incorporated for Non-Banking Financial Investment (NBFC) activities.
   • Cannot carry out activities that require special licenses without compliance.

Process of Incorporation

The incorporation process of OPC is governed by the Companies (Incorporation) Rules, 2014, as amended.
Here’s the step-by-step procedure:

Step 1: Obtain Digital Signature Certificate (DSC)

• The sole member and nominee must have a valid DSC for filing electronic forms with the MCA.

Step 2: Apply for Director Identification Number (DIN)

• DIN for the proposed director(s) can be obtained through the SPICe+ form during incorporation.

Step 3: Name Reservation

• File Part A of SPICe+ (Simplified Proforma for Incorporating Company Electronically) to reserve the name.
• Name must follow the Companies (Incorporation) Rules, 2014 naming guidelines and should end with “(OPC) Private Limited”.

Step 4: Draft MOA & AOA

• Memorandum of Association (MOA) defines the company’s objectives.
• Articles of Association (AOA) contain internal management rules.

Step 5: Filing Incorporation Form (SPICe+ Part B)

• Fill details of registered office, capital structure, directors, and nominee.
• Attach necessary documents:
  • Proof of identity and address of member and nominee.
  • Proof of registered office (ownership proof/rent agreement & NOC).
  • Declaration in Form INC-9.
  • Consent of nominee in Form INC-3.

Step 6: PAN, TAN, and Bank Account

• PAN & TAN allotment is integrated into SPICe+.
• Open a current account in the company’s name after incorporation.

Step 7: Certificate of Incorporation

• Upon approval, ROC issues a Certificate of Incorporation with the CIN (Corporate Identification Number).

Provisions Related to OPC

Number of Directors

• Minimum: 1 Director (can be the sole member).
• Maximum: 15 Directors (can be increased by passing a special resolution).

Nominee Change

• If the nominee withdraws consent, the member must nominate another person within 15 days using Form INC-4.

Conversion of OPC

• Voluntary Conversion: Earlier restricted for 2 years from incorporation unless capital exceeded ₹50 lakh or turnover exceeded ₹2 crore.
  Amendment (2021) — now voluntary conversion to private/public company is allowed at any time.
• Mandatory Conversion: If turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh in the relevant financial year.

Exemptions Enjoyed by OPC

OPC enjoys several exemptions from compliance requirements applicable to other private companies:

• No need to hold Annual General Meeting (AGM).
• Certain provisions relating to Board meetings are relaxed.
• Cash Flow Statement not mandatory in financial statements.

Compliance Requirements

Although OPC has simplified compliance compared to other companies, it must comply with:

1. Filing of Annual Return – Form MGT-7A within 60 days from AGM due date.
2. Filing of Financial Statements – Form AOC-4 within 180 days from the end of financial year.
3. Maintenance of Statutory Registers – Register of members, charges, etc.
4. Board Meeting Requirements – At least one Board meeting in each half of the year, with a gap of at least 90 days.
5. Tax Compliance – Filing of income tax return and TDS returns if applicable.

Advantages of OPC

• Limited liability protection for the owner.
• Separate legal entity ensures business continuity.
• Easier access to loans and funding.
• Suitable for single entrepreneurs without needing a partner.
• Comparatively less compliance burden than other companies.

Limitations of OPC

• Only one member allowed — restricts scope for equity funding from multiple shareholders.
• Cannot carry out certain regulated activities without special permissions.
• Taxation at corporate rates (currently 22% plus surcharge & cess) even for small profits.

Latest Amendments & Notifications

• MCA Notification dated 1 April 2021:
  • Residency requirement reduced from 182 days to 120 days.
  • Allowed non-resident Indians (NRIs) to incorporate OPC in India.
  • Removed 2-year restriction on voluntary conversion.
• Relaxed compliance norms to encourage ease of doing business.

Conclusion

The One Person Company structure is a game-changer for solo entrepreneurs in India. It combines the flexibility of sole proprietorship with the legal advantages of a company. With the latest relaxations, OPC has become an attractive option for professionals, start-ups, and small business owners seeking corporate status without complex ownership structures.