One Person Company (OPC) One Man Company in India: Notes

This new concept of one person company is a great initiative taken by Ministry of Corporate Affairs.

It would allow many businessmen who are desirous of establishing a registered company on their own without having to induct any other person in the board of the company and as a shareholder of the company.

What is an One Person Company?

It is a registered company who has only one shareholder.

An One Person Company is also informally known as an One Man Company.

An One Person Company, in short, is called as an OPC.


Provisions under the Companies Act, 2013 ('the Act')

Definition

Clause (62) of Section 2 of the Act defines an “One Person Company” as a company which has only one person as a member.

OPC is a Private Company 

A One Person Company is treated as a Private Company. [Section 3(1)(c)]

Name of the Company

The words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved. [2nd Proviso of Section 12(3)]

Shareholder

In order to incorporate an OPC, only one person (i.e. member or shareholder) is required. [Section 3(1)]

Director

An OPC shall have at least one director. [Section 149 (1)(a)]

In case of an OPC, an individual being member shall be deemed to be its first director until the director or directors are duly appointed by the member. [Section 152 (1)]

Board Meeting

OPCs are required to hold at least 1 board meeting in each half of a calendar year.
The gap between 2 board meetings shall not be less than 90 days.
The quorum for board meetings needs to be present as per the provisions of Section 174.
However, if there is only 1 director on its Board, the above provisions are not applicable.
[Section 173 (5)]

AGM Annual General Meeting of OPC

One Person Companies are not be required to hold annual general meeting. [Section 96(1)]

Signing of Annual Return

In case of OPC, the annual return is required to be signed by the company secretary (cs), or where there is no company secretary, by the director of the company. [1st Proviso to Section 92(1)]

The Central Government may prescribe abridged form of annual return for OPC. [2nd Proviso to Section 92(1)]

Joint shareholding

Joint-holding of same shares would not constitute double membership.

In case more than one person is holding some shares jointly as joint holders for those shares, then they will be treated as single member. [1st Proviso to Section 2(68)]

Financial Statements

Sign: The financial statements as approved by the Board of Directors shall be signed on behalf of the Board only by one director, for submission to the auditor for his report thereon. [Section 134(1)]

The financial statement of an OPC may not include the cash flow statement. [Proviso to Section 2(40)]

Directors' Report

The Board’s Report of an OPC is required to be prepared based on the stand alone financial statement of the company, which shall be in abridged form and contain the particulars as prescribed in Rule 8A of the Companies (Accounts) Rules, 2014 subject to the provisions of Section 134 of the Act.

Provisions under the Companies (Incorporation) Rules, 2014

Eligibility of Member/Nominee

The member(shareholder) or nominee of the sole member of the OPC must meet the following criteria[Rule 3(1)]
 • a natural person;
 • an Indian citizen; 
 • resident in India; (a person who has stayed in India for not less than 182 days during the immediately preceding financial year)
 • not being a minor.

A minor can not hold share with beneficial interest. [Rule 3(4)]

An artificial person i.e. a corporate can not be the member or nominee of the sole member of the OPC.

Refer Rule 4 for detailed provisions on Nomination by the Subscriber or Member of OPC.

Membership/Nominee in more than one OPC

A natural person shall not be member of more than one OPC at any point of time and the said person shall not be a nominee of more than one OPC. [Rule 3(2)]

Question: What happens when a natural person, who is already a member in an OPC, becomes a member in another OPC by virtue of his being a nominee in that OPC?

Answer: Such person, within 180 days, shall have to cease to be a member in any one of those two OPCs. [Rule 3(3)]

Restriction in business

An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates. [Rule 3(6)]

OPC - Section 8 company

An OPC cannot be registered as a company under section 8 of the Act.

An OPC cannot be converted into a company under section 8 of the Act.

[Rule 3(5)]

Voluntary conversion of OPC

An OPC cannot convert itself voluntarily into any other kind of company within the first two years from its date of incorporation. [Rule 3(7)]

(Exception: Rule 6) see below

Compulsory Conversion of OPC

In case the paid up share capital of an OPC exceeds INR 50 lakh and its average annual turnover during the relevant period exceeds INR 2 crore, it shall cease to be entitled to continue as an OPC. [Rule 6(1)]

Time limit for conversion [Rule 6(2)]

In such a case, as mentioned above, the OPC is required to covert itself within 6 months of the date on which its paid up share capital is increased beyond INR 50 lakh or the last day of the relevant period during which its average annual turnover exceeds INR 2 crore, as the case may be.

If the OPC wants to covert into:
  a private limited company - then min. 2 members and 2 directors is required;
  a public limited company - then min. 7 members and 3 directors is required.

The process of conversion will have to be completed as per the provisions of the Act.


First One Person Company (OPC) incorporated in India 

The first One Person Company in India was incorporated on 28th April 2014 at Delhi under RoC-Delhi jurisdiction. The company name is "VIJAY CORPORATE SOLUTIONS OPC PRIVATE LIMITED" having CIN: U93000DL2014OPC267546. Mr. VIJAY KUMAR SHARMA is the only Director and Shareholder of the Company.


Statistics on One Person Company in India

As on 30th November, 2019, a total of 25,763 OPCs were registered in India. Their collective authorized capital amounts to Rs. 749.08 crore.

Economic Activity-wise One Person Company November 2019
Source: MCA