What is a ‘One Person Company’?

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 Are you an entrepreneur with a business idea and rearing to go but have misgivings about putting your personal assets at risk of business loss and attachment by Creditors and compliance issues? There is a new solution.

The Companies Act, 2013 has created a new form of business titled ‘One Person Company’. Such a legal form of business is available in developed Countries.


1)          The ’’OPC’’ is an entity distinct from its single member and enjoys perpetual existence.

2)          It offers the entrepreneur complete control over the affairs of the business.

3)          It provides the entrepreneur protection of his personal and family assets from being attached by Creditors in case the ‘‘OPC’’ is unable to meet its obligations to creditors.

4)          The assets of the ’’OPC’’ alone are exposed to business risk not the personal assets of the Single Member or the Nominee.

5)          The entire Share Capital is subscribed to by the Single member.

6)          An ’’OPC’’ must have minimum ONE member who will be deemed to be the Director if he subscribed to the Memorandum of Association.

7)          If the single member of the ‘‘OPC’’ dies, the Nominee steps into the shoes of the deceased Member and can continue the business. This provides continuity of the legal entity and smooth transition of management.

8)          An ’’OPC’’ can have more than ONE Director but less than 15 Directors [Sec.149 (1)].

9)          The sole member can enter into a Contract with the ‘OPC’.

10)       Facilitates easier management of the affairs of the ‘OPC’ and compliance with the law.

11)       It gives the business time to grow until it is ready to convert to other forms of Companies.


1)               This form of business entity limits the scope of the business to grow

2)               Once the Paid up Share Capital of the ‘OPC’ exceeds Rs.50 Lacs or the turnover as per last Profit and Loss Account exceeds Rs.2 Crores the ‘OPC’ has to convert itself into a Private or a Public Limited Company. The ‘OPC’ has to file Form_INC -5 (Sec.469 (1); Rule 6(4) of the Companies (Incorporation) Rules, 2014)

3)               If the Sole member wants to induct another person as a Member or transfer part of his shareholding to another person, the ‘OPC’ has to be converted into either a Private Limited Company or a Public Limited Company.

4)               Succession planning is limited to the Nominee who can be changed by the Sole Member at any time with the result the nominee may not have sufficient experience in running the business unless inducted as a Director or Manager.

5)               Control and management of the business becomes more and more difficult as it grows.


‘One Person Company’has been defined in the Companies Act, 2013 as

‘One Person Company’ means a Company which has only one person as a Member [Sec. 2(62)].

 How to form an ‘One Person Company’:

1)     Apply for Directors Identification Number (DIN) in Form_DIR-3 (Section 153 of the Companies Act, 2014 & Rule 9(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014) for self as well as nominee attaching proof of identity and proof of residence of both.

2)     Ascertain availability of the business name and reserve the same by filing Form-INC-1 (Section 4(4) of the Companies Act, 2013 and Rule 8 & 9 of Companies (Incorporation) Rules, 2014)and digitally sign with DSC.

3)     Obtain consent of the Nominee.

4)     Prepare the Memorandum and Articles of Association of the OPC.

5)     File with the MCA/ROC Form_INC-2  (Section 3(1) and 7(1) and of the Companies Act, 2013 and Rule 4, 10, 12 and 15 of the Companies (Incorporation) Rules, 2014)

6)     File Form_inc-3 (Section 3(1) of the Companies Act, 2013 and rule 4(2), (3), (4), (5) & (6) of Companies (Incorporation) Rules, 2014)

7)     File Form_INC-22 (Section 12 (2) & 12 (4) of the Companies Act, 2013 and rule 25 & 27 of the Companies (Incorporation) Rules, 2014)

8)     Pay the appropriate fees


Every attempt has been made to strictly adhere to the definition and procedures relating to the incorporation of an ‘OPC’ as laid down in the Companies Act, 2014 and the related Rules notified there under. References to the Section and relevant Rules have been given in italics.