Clause (62) of section 2 of the Companies Act, 2013 – Definition of One Person Company

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

Under Companies Act, 1956 there was no concept of One Person Company (OPC) but Companies Act, 2013 introduced the concept of OPC and this OPC is a great tool for sole person or one person because earlier for single person there was only one form of business vehicle i.e. proprietorship but with the advent of the Companies Act, 2013 one man can also go for company where he can have limited liability in comparison to proprietorship (there will be unlimited liability for proprietor in proprietorship). Simply you can say OPC is one man show or single or sole member company. Now small scale businessman can also go for company with only one natural person.

One person company is not a new concept for other countries like Australia (section 114 of Corporation Act, 2001), Singapore (section 20A of  Companies Act), New Zealand (section 10 of the Companies Act, 1993), Germany (section 1 of Limited Liability Companies Act),  etc. where one person can go for company.

As per rule 3 of Companies (Incorporation) Rules, 2014, only a natural person who is an Indian citizen and resident in India and this natural person (you must be aware that artificial person like company , LLP etc. can also become member of a company in addition to natural person but OPC option is only available to natural persons i.e. human beings. One natural person can incorporate only single OPC (not more than one) and can become nominee for single OPC (not more than one)

Minor (age less than 18 years) cannot be member or nominee of the OPC and cannot hold shares with beneficial interest in a OPC.

To stop OPC from becoming member less company or incapacity of sole member’s to contract, there is requirement to have nominee in case of OPC and nominee is required to give consent in form INC-3 and Nominee can himself withdraw his consent by giving notice in writing and nominee can also be changed by sole member.

Amendment which is going to take effect from 1st April 2021 in rule 3 (One Person Company) of the Companies (Incorporation) Rules, 2014

As per Companies (Incorporation) Second Amendment Rules, 2021

1. natural person can be resident in India or otherwise,

2. for residency purpose 120 days or more will be substituted in place of 182 days or more and

3. lock-in period of 2 years for conversion into any kind of company (private or public company) will be not there.


Disclaimer – Author has exercised utmost care while writing this article, but still this article may contain some error or mistake and no part of this article/writing should be construed or considered as any advice or consultancy whether professional or otherwise.

Author may be reached at [email protected]

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Qualification: CA in Practice
Location: New Delhi, Delhi, India
Member Since: 26 Jan 2018 | Total Posts: 22
Chartered Accountant having more than 6.5 years of very rich experience in the field of GST, Custom, Income-tax, Company law, LLP law, Corporate law, pre-GST regime indirect tax laws (VAT, Service tax,, Excise law etc.), FCRA, FEMA, Accounting, Financial reporting, Ind-AS, IFRS, stock market etc. View Full Profile

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April 2021