Summary: A One Person Company (OPC) under the Companies Act, 2013 enables a single entrepreneur to operate a business with the advantages of limited liability, separate legal identity, and perpetual succession, while enjoying simplified compliance. An Indian citizen, whether resident in India or abroad, can incorporate an OPC. However, an OPC cannot be incorporated as or converted into a Section 8 Company. Since there is only one member, appointment of a nominee is mandatory to ensure continuity in case of the member’s death or incapacity. The nominee’s name must be included in the Memorandum of Association (MOA), and written consent must accompany the SPICe+ incorporation form. A minor cannot act as a member or nominee. The nominee may withdraw consent, or the member may change the nominee by following prescribed procedures and filing Form INC-4 with the Registrar of Companies. An OPC may have only one member but can appoint more than one director.
One Person Company (OPC) – Companies Act, 2013.
An OPC is a type of company that can be incorporated with only one member and one director (the member can also be the director). It provides the benefits of a corporate entity, such as limited liability, separate legal identity, and perpetual succession, while allowing a single entrepreneur to operate a business in an organized manner.
√ Ideal for startups, professionals, and solo entrepreneurs who wish to enjoy the advantages of a private company with simplified compliance requirements.
One Person Company (OPC) – Key Legal Framework under the Companies Act, 2013
A One Person Company (OPC) is a suitable business structure for entrepreneurs who wish to enjoy the benefits of a corporate entity while operating with a single member.
Who can incorporate an OPC?
An Indian citizen, whether resident in India or otherwise, can incorporate a One Person Company (OPC).
Restriction on Section 8 Company
An OPC cannot be incorporated as a Section 8 Company (NGO/NPO) and cannot be converted into a Section 8 Company under the Companies Act, 2013.
Nominee Requirement
Since an OPC has only one member, Section 3 of the Companies Act, 2013 read with the Companies (Incorporation) Rules requires the member to nominate another person. In the event of the death or incapacity of the sole member, the nominee shall become the member of the OPC.
Minor Not Eligible
A minor cannot become a member or nominee of an OPC.
Disclosure and Consent of Nominee
The name of the nominee must be mentioned in the Memorandum of Association (MOA) of the OPC. Further, the nominee’s consent is required to be filed along with the SPICe+ Incorporation Form at the time of incorporation.
Withdrawal of Nominee’s Consent
A nominee may withdraw his/her consent by giving notice to the member and the company.
Upon receipt of such notice:
- The member shall nominate another person within 15 days and obtain the consent of the new nominee.
- The company shall file Form INC-4 with the Registrar of Companies (ROC) within 30 days of such withdrawal.
Change of Nominee by Member
The member of an OPC may change the nominee at any time, subject to obtaining the written consent of the new nominee and complying with the prescribed filing requirements.
Death or Incapacity of Sole Member
If the sole member ceases to be a member due to death or incapacity, the nominee shall automatically become the member of the OPC. The company is required to file Form INC-4 with the ROC within 30 days of such change.
Bonus Points:
√ Change in nominee shall not be treated as an alteration of the Memorandum of Association (MOA).
√ An OPC can have more than one director, although it can have only one member.
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