A New Business Concept in India - One Person Company (OPC)


The Companies Act, 2013 opens a new segment for organizing a business in India by providing the concept of One Person Company (OPC) which is a legitimate way to incorporate a company with only one member. OPC is similar to the existing concept of Sole-proprietorship with separate legal entity distinct from its proprietors and promoters. OPC can run and undertake its business like Sole-proprietorship with the status of Company. This form of business is already flourished in some of the developed countries like USA, Singapore, China and various other countries in Europe. This new concept of business may encourage various small and medium size enterprises doing business as sole proprietors to organise their business into the corporate domain.

Meaning of OPC:

Sub-section 62 of Section 2 of the Companies Act, 2013 defines OPC as a company which has only one person as a member where all the legal and financial liabilities are limited to the company only and not to its Member. This model has been shifted from the existing concept of Companies Act, 1956 where a minimum of two members are required to incorporate a private limited company in India.

Status of OPC:

Sub-section 68 of Section 2 of Companies Act, 2013 provides for the definition of private company to include OPC. This implies that all the provision of the Companies Act, 2013 applicable to private company shall also be applicable to OPC unless otherwise expressly excluded from the compliance. Section 3 of the Companies Act, 2013 further clarifies that OPC shall be treated as private company for all legal purpose with only one member.

An OPC can be formed in any of the following category:
  (a) a company limited by shares; or
  (b) a company limited by guarantee; or
  (c) an unlimited company.
An OPC limited by shares shall comply with the following requirement: 
  (i)    Minimum paid up capital: Rs. 1,00,000/- (Rupees One Lakh only)
  (ii)   Restrict the right to transfer of its shares.
  (iii)  Prohibits any invitation to the public to subscriber for any securities of the Company.
Name of OPC:

Every OPC shall include in its name the words One Person Company in brackets below the name of such company, wherever its name is printed, affixed or engraved.
Memorandum and Articles of Association of OPC:

Although the OPC will be formed by One Person only by subscribing the Memorandum of Association but the Memorandum of OPC shall also indicate the name of any other person nominated by member of OPC with his prior written consent in the prescribed form, who shall, in the event of the subscriber's death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the OPC along with its Memorandum and Articles of Association. The Member of OPC may at any time change the name of such other person by giving notice to the Registrar of Companies in such manner as may be prescribed.

On death of member of OPC the nominee shall entitle to all the shares and entitle to same rights & liabilities to which sole member of company was entitle or liable. On becoming member such nominee will nominate any other person as nominee with his prior written consent in the prescribed form and intimate the same to Registrar of Companies.

Number of Directors

A Minimum of One director is required for OPC but there is no constraint to recruit more than one director with a maximum of fifteen. Every OPC shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

Appointment of Director:

If there is no separate provision made in the Articles of OPC, an individual being the member of OPC shall be deemed to be its first director. Other Directors shall be appointed in General Meeting. The Articles of OPC may confer on its Board of Director the power to appoint any person as an additional director at any time who fails to get appointed as a director in a general meeting who shall hold office up to the date of the next annual general meeting.

Board Meeting

The OPC having only one director shall not require holding Board Meeting. In case of more than one director then at least one meeting of the Board of Directors shall be conducted in each half of a calendar year and the gap between the two meetings shall not be less than ninety days to comply with the provisions under the Companies Act, 2013.

Where there is only one director on the Board of Director of OPC, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if the resolution by such director is entered in the minutes-book which is required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all the purposes under this Act.

Annual General Meeting:

Section 122(1) of Companies Act, 2013 provides that the provisions of Section 98, Section 100 and Section 111 are not applicable to OPC. In other words the provisions relating to General Meeting, Extra-Ordinary General meeting and Notice convening to general meeting are not applicable to OPC.

However, for the purposes of Section 114 where any business is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if the resolution is communicated by the member to the company and entered in the minutes-book which is required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.

Due date of filling Financial Statement & Return:

The OPC shall file with the Registrar of companies, a copy of financial statements duly adopted by its member along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year.

Signing of Financial Statement and Annual Return:

The Financial Statement shall be signed by only one director and the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the OPC.

Contract by OPC:

The OPC limited by shares or by guarantee when enters into a contract with the sole member of the company who is also the director of the company, the OPC shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract. However, this condition shall not apply to contracts entered into by the company in the ordinary course of its business.

The OPC shall inform the Registrar of Companies about contract entered into by it and recorded in the minutes of the meeting of its Board of Directors within a period of fifteen days of the date of approval by the Board of Directors.


This concept of organizing business will definitely help in bringing the unorganized sector of proprietorship into the organized corporate domain i.e. private limited company. It will also help enterprises to get more favorable banking facilities such as availing loan etc. This concept will also encourage foreign entrepreneurs to expand their business in India.

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