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One Person Companies In The Offing

No longer will one search for business partners or shareholders to form a company. Forming a company will not require company of anyone else and one can fulfill his or her dream of having a company on his own by there being just one member of that company.

Dr. Sanjiv Agarwal 

No longer will one search for business partners or shareholders to form a company. Forming a company will not require company of anyone else and one can fulfill his or her dream of having a company on his own by there being just one member of that company. The concept of One Person Company (OPC) has been introduced in the new Companies Act, 2013 which has now got the assent of the President on 29.08.2013.

 Under the existing law, a private limited company can be formed by a minimum of two persons and for a public limited company, at least seven persons or shareholders are required. As against this, the new Company Bill allows the countrymen to form a company by just one person being the sole shareholder so that effectively it will be a one person company (OPC).

The OPC can be formed for any lawful purpose by just one person. A one person company will be private limited company formed by subscribing the name of such one person to the memorandum of association of the company and complying with the registration requirements. To identify that a company is a one person company, the words ‘OPC’ shall be mentioned after its name, wherever its name is printed, affixed or used.

There will be a provision for appointment of nominee so that in the event of the shareholder’s death or incapacity to contract otherwise, such nominee may become member of that company. However, there will be written consent required from the nominee to this effect.  The law also provides flexibility to the member to change the name of such other person appointed as nominee after giving notice.

OPC : What does it mean

  • Any one person can form a company
  • Facility of nomination
  • No AGM required
  • Can have more than one director
  • To hold atleast two board meetings in a year
  • Less cumbersome
  • Shall promote entrepreneurship
  • Boost corporate culture 

 In case of OPC, while the shareholder can be one, it can have more than one director and can have board meetings as it happens in case of other companies. However, OPC will not be required to hold annual general meetings. OPC will not be required to hold quarterly board meetings as in case of any other company but holding just two board meetings on a half yearly basis shall serve the purpose.

Such OPC’s could be formed only by natural persons and not by artificial persons so as to discourage misuse of corporate status by entities which are already companies. Thus, a company or a firm cannot promote a OPC.

The concept of OPC shall boost corporate culture in India and more so in smaller towns where a large number of business entities are sole proprietorship firms or partnership firms. While it will promote entrepreneurship, it will also redefine how small businesses could be professionalized and more efficiently managed. With OPCs, compliance levels will also go up and it will bring in greater transparency in the business dealings. It is hoped that there will be positive change in the business spectrum all over.

Categories: Company Law

View Comments (6)

  • Hi, China has already ONE MAN COMPANY Act since from many years. We are too late for this law/Bill . Better late than never, I thanks to all who gave their best for this Bill.

    Please simplify registration process . Also give guidance for registration & closure process / steps of business for public interest.

    Thanking You,

  • What is the need for this concept of OPC. I think the governing bodies would lose control of such OPCs. Blade companies may find it easy to deceive the public.

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