As per the provision of section 2(62) of the Companies Act, 2013 “one person company” means a company which has only one person as member. This member can also be the sole director even though it fall under the category of Private Limited Company only.
However, in a Private Company, a minimum of 2 Directors and 2 Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 Members. A single person could not incorporate a Company earlier.
OPC can be incorporated by only a natural person who is an Indian citizen and resident in India (i.e., stayed in India for at least 182 days in the previous calendar year).
A person can incorporate only one OPC and cannot be a nominee in more than one also Minors are not allowed to be members or nominees.
Procedure for Incorporation of OPC
Name Reservation via SPICe+ Part A (Form RUN)
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Prepare Documents:
– Memorandum of Association (MoA)
– Articles of Association (AoA)
– Nominee Consent (Form INC-3)
– Proof of Registered Office
– Declaration & Consent (INC-9, DIR-2)
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File SPICe+ Part B (Incorporation Form) with MCA
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Obtain Digital Signature Certificate (DSC)
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Pay Fees & Stamp Duty
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Verification by Registrar of Companies (RoC)
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Certificate of Incorporation Issued
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Apply for PAN & TAN (auto-generated with SPICe+)
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Start Business Operations
Some Key Features and Privileges of OPC
- Limited Liability: The member’s liability is limited to their shareholding.
- Single Owner: Just one person acts as both shareholder and director.
- Separate Legal Entity: The Company is distinct from its owner, meaning it can own property, sue, or be sued in its own name.
- Nominee Requirement: A nominee must be appointed during incorporation.
- Exemptions from certain compliances like cash flow statements.
- No need for annual general meetings
- Simplified filings and reduced regulatory burden, etc.
OPC vs Sole Proprietorship
| Features | OPC | Sole Proprietorship |
| Legal Status | OPC have Separate legal entity | Sole Proprietorship No separate legal identity |
| Liability | Liability in OPC is Limited | Liability in Sole Proprietorship is Unlimited |
| Taxation | Company tax rates are applicable on OPC | Individual slab rates are applicable on Sole proprietorship |
| Compliance | Compliance are Moderate | Compliance are Minimal |
| Succession | Nominee takes over the OPC after Succession | Sole Proprietorship ends with proprietor |
OPC vs Private Limited
| Features | OPC | Private Limited |
| Ownership | Single individual | Minimum 2, maximum 200 shareholders |
| Directors/Owner | Minimum 1 | Minimum 2, maximum 15 |
| Liability | Limited to the owner’s share | Limited to shareholders’ shares |
| Compliance | Fewer compliances as compared to Private Limited | Higher compliance and reporting obligations |
| Fundraising | Limited (no equity funding) | Easier to raise funds from investors |
| Ideal For | Solo entrepreneurs | Start- ups, growing businesses with co-founders |
| Annual General Meeting (AGM) | Not mandatory | Mandatory |
Conclusion –
One Person Company (OPC) is a progressive step under the Companies Act, 2013, designed to empower solo entrepreneurs with the benefits of a corporate structure. Through OPC Sole proprietors can experience limited liability, separate legal entity status, and greater credibility, while keeping compliance requirements minimal compared to a private limited company.
OPC is ideal for startups, professionals, and individual entrepreneurs who wish to operate independently without the need for partners or co-founders.
In essence, OPC strikes a balance between sole proprietorship and private limited companies, giving individuals the structure and protection of a company while retaining full control over their business.
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