A One Person Company (OPC) is a unique and relatively new concept in India’s corporate law, introduced through the Companies Act, 2013. It allows a single individual to establish a company with limited liability, combining the benefits of a sole proprietorship with the corporate advantages of a private limited company.
Before OPCs, an individual operating alone would typically have to form a sole proprietorship, which comes with unlimited liability. OPCs address this gap by providing a formal corporate structure for a single entrepreneur.
Key Characteristics of a One Person Company (OPC)
Single Shareholder
An OPC can have only one shareholder who is also often the sole director. This individual holds 100% of the company’s shares.
Separate Legal Entity
Like other company forms, an OPC is a separate legal entity distinct from its sole shareholder/director. This means the company has its own identity, can own assets, incur debts, and sue or be sued in its own name.
Limited Liability
The liability of the sole shareholder is limited to their contribution (unpaid amount on shares) to the company. Their personal assets are protected from the company’s debts and losses.
Nominee Director
This is a crucial and unique feature of an OPC. The single shareholder/director must appoint a nominee in the Memorandum of Association (MOA) and Articles of Association (AOA). In case the sole shareholder/director dies or becomes incapacitated, the nominee will take over the company. The nominee must give their written consent and can withdraw their consent.
Perpetual Succession
An OPC technically has perpetual succession because of the nominee concept. Even if the sole shareholder dies, the company’s existence continues with the nominee stepping in.
Minimum One Director
An OPC requires a minimum of one director. The sole shareholder can also be the sole director.
No Minimum Capital
Similar to Private Limited Companies, there is no minimum paid-up share capital requirement for an OPC.
“OPC” Suffix
The name of every One Person Company must end with the words “(One Person Company)” or “(OPC) Private Limited”.
No Invitation to Public
An OPC cannot invite the public to subscribe to its shares.
Restrictions
- An OPC cannot be incorporated or converted into a Section 8 Company (non-profit organization).
- An OPC cannot carry out non-banking financial investment activities, including investment in securities of any body corporate.
- A person cannot be a member (shareholder) in more than one OPC at any given time.
- A minor cannot be a member or nominee of an OPC.
Advantages of a One Person Company (OPC)
Limited Liability
Offers the significant advantage of protecting the personal assets of the entrepreneur from business risks.
Separate Legal Entity
Provides a distinct legal identity to the business, enhancing its credibility.
Easy to Fund (relative to Proprietorship)
Being a company, it can potentially raise funding from banks more easily than a proprietorship.
Less Compliance than Pvt Ltd Co
While more compliance than a proprietorship, an OPC has fewer mandatory compliances compared to a Private Limited Company (e.g., no requirement for board meetings every quarter, can have only one director). It is exempt from some provisions like holding an Annual General Meeting (AGM) and Cash Flow Statement in financial reports.
Structured Business
Provides a more organized and professional structure, which can be appealing to clients and suppliers.
Continuous Existence
The nominee concept provides continuity to the business.
Simple Management
Single individual holds full control, simplifying decision-making.
Disadvantages of a One Person Company (OPC)
Conversion Limitations
An OPC is mandatorily required to convert into a Private Limited Company or Public Limited Company if its:
- Paid-up share capital exceeds ₹50 Lakhs, OR
- Average annual turnover exceeds ₹2 Crores for three consecutive preceding financial years.
- The conversion must be done within 6 months of meeting these criteria.
Nominee Requirement
The mandatory appointment of a nominee adds a unique compliance layer.
Limited Funding Options
Cannot raise equity funding by issuing shares to external investors like angel investors or venture capitalists (as it has only one shareholder).
Higher Compliance vs. Proprietorship
Still entails more statutory filings and costs compared to a sole proprietorship.
Perpetual Succession
An OPC technically has perpetual succession because of the nominee concept. Even if the sole shareholder dies, the company’s existence continues with the nominee stepping in.
Single Shareholder Restriction
A person can only incorporate or be a nominee of one OPC at a time.
OPC Registration Process in India (Online with MCA)
The registration process for an OPC is similar to that of a Private Limited Company and is done online through the Ministry of Corporate Affairs (MCA) portal using the integrated SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form.
Key Steps:
Obtain Digital Signature Certificate (DSC)
- The sole shareholder/director and the nominee must obtain a Class 3 Digital Signature Certificate (DSC).
Obtain Director Identification Number (DIN)
- The sole director must obtain a DIN. This can be applied for directly within the SPICe+ form (Part A).
Name Reservation (Part A of SPICe+)
- Propose names for the OPC in Part A of the SPICe+ form. The name must be unique and end with “(One Person Company)” or “(OPC) Private Limited”.
- The name, if approved, is reserved for 20 days.
Prepare Memorandum of Association (MOA) and Articles of Association (AOA)
- e-MOA (INC-33): Defines the company’s objectives, capital, and nominee clause.
- e-AOA (INC-34): Contains internal rules. Both must explicitly state it’s an OPC.
File Integrated Incorporation Form (SPICe+ Part B)
- This is the main incorporation form for OPC. It’s used for:
- OPC incorporation.
- Allotment of DIN (if not already obtained).
- Application for company’s PAN and TAN.
- Mandatory registration for EPFO and ESIC (if applicable based on employee count).
- Opening a company bank account (mandatory for some banks, integrated through AGILE-PRO-S).
- Application for GSTIN (optional).
- Attach all necessary documents, including the consent of the nominee (Form INC-3).
- Pay the prescribed government fees (registration fees, stamp duty on MOA/AOA).
- This is the main incorporation form for OPC. It’s used for:
Issuance of Certificate of Incorporation (COI)
- Upon successful verification, the ROC issues the Certificate of Incorporation (COI), which includes the Corporate Identity Number (CIN), PAN, and TAN of the OPC.
Open a Bank Account
- After receiving the COI and PAN, open a current bank account in the name of the OPC.
Documents Required for OPC Registration (Commonly)
For Sole Shareholder/Director & Nominee (Indian Nationals)
- PAN Card: Mandatory.
- Identity Proof: Aadhaar Card, Voter ID, Driving License, or Passport.
- Address Proof: (Not older than 2 months) Bank Statement, Electricity Bill, Telephone Bill, Mobile Bill.
- Passport-sized Photograph: Recent.
- Consent of Nominee (Form INC-3): Duly signed by the nominee.
- Declaration by Nominee (Form INC-3): Stating they are not a member of any other OPC.
For Registered Office Address
- Proof of Registered Office:
- If Rented: Rent agreement/lease deed and latest utility bill (not older than 2 months).
- If Owned: Sale deed/property deed and latest utility bill.
- No Objection Certificate (NOC): From the property owner/landlord.
Post-Incorporation Compliances for an OPC
While less stringent than a Private Limited Company, OPCs still have mandatory annual filings and compliances:
Commencement of Business (Form INC-20A)
File this within 180 days of incorporation, after the sole member has paid for shares and the company has a registered office.
Annual Filings with MCA
- Form AOC-4: Annual Financial Statements, filed within 180 days from the end of the financial year. (No requirement for AGM for OPC).
- Form MGT-7A: A simplified Annual Return form for OPCs, filed within 60 days from the due date of filing AOC-4.
Appointment of Auditor (Form ADT-1)
Mandatory for all OPCs, regardless of turnover/capital.
Income Tax Return (ITR-6)
Annual filing of corporate tax returns.
TDS/TCS Returns
Quarterly filing if applicable.
GST Returns
Monthly/quarterly/annual filing, if GST registered.
EPF/ESIC Returns
Monthly/bi-annual returns if registered.
Maintenance of Statutory Registers
Maintaining essential registers at the registered office.
Get help for opc registration from our tax experts. An OPC is an excellent option for individual entrepreneurs who want the legal protection of limited liability and a formal corporate structure, without the complexities of managing multiple shareholders or extensive compliance associated with a private limited company, as long as their business remains within the prescribed turnover and capital limits.