One Person Company

Section 2(62) of Companies Act defines a one person company as a company that has only one person as its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year. A person can be member in only one OPC.

If an OPC has an average hattrick turnover of Rs. 2 crores and over or acquires a paid-up fund of Rs. 50 lakh and over, it has to be converted to a private limited company or public limited company within six months.

Benefits of OPC
  • Limited Liability
  • The directors' personal property is always safe in a private limited company, no matter the debts of the business.
  • Continuous Existence
  • Sole Proprietorships come to an end with the death of the proprietor. As an OPC has a separate legal identity, it would pass on to the nominee director and, therefore, continue to exist.
  • Greater Credibility
  • As an OPC needs to have its books audited annually, it has greater credibility among vendors and lending institutions.
FAQ

All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.

There is no difference in capital requirement between an OPC and a private limited company. It needs an authorised capital of Rs. 1 lakh to begin with, but none of this actually needs to be paid-up. This means that you don’t really need to invest any money into the business.

No, an individual can form only one OPC at a time. This rule applies to the nominee in an OPC, too.