One Person Company is newly added in the newly passed Companies Act in the
year 2013, earlier there was no concept of a one-person Company. The J.J
Irani Committee in its report suggested the formation of One Person Company.
The main aim was to promote the individual having the resources to form a
company by reducing the complications and challenges faced while
incorporation of a legal entity. It can be said as it is a company which is
owned by a single person.
Section 2(63) of Companies Act 2013 defines about the OPC as one-person
means a company which has only one person as member.
Now while incorporating a One Person Company is there are various
Preliminary conditions which are to be fulfilled as per the Companies
(Incorporation Rules) 2013.
According to it only a natural person who is Indian citizen and Resident of
- Is eligible to incorporate a One Person Company.
- Shall be the Nominee for the Sole member of a One Person Company.
The term resident in India means a person who has stayed in India
for a period of not less 182 days immediately preceding one calendar
- Minor shall not become member or nominee of the One Person Company
or can hold share with beneficial interest in such One Person Company.
- One Person Company are restricted to do business of Non-Banking
Financial Investment activities including investment in securities of
any other body corporate.
- It is Mandatory for a OPC to write OPC in bracket after
the name of the Company.
- OPC can be incorporated as a Private Limited Company
- OPC cannot be incorporated or converted under Section 8 of
- OPC cannot be converted to any form of company before the
expiration of two years of incorporation.
Privileges to incorporate OPC
- The privilege to incorporate OPC is that the owner has
a limited liability, unlike in a sole Proprietorship where the owner has
- OPC has a minimum requirement of One director only
which can be extend up to maximum of 15 directors.
- The annual general meeting is not mandatory in OPC.
- The OPC is required to conduct minimum two board meetings
in a calendar year, and one meeting in each half of a calendar year.
- The sole proprietor business can easily be converted into OPC.
- Only Rs. One Lakh is required as minimum authorized share
Capital to incorporate OPC.
Restrictions imposed on OPC
- No such company can convert voluntarily into any kind of company unless
2 years have expired from the date of incorporation, except in cases where
capital or turnover threshold limits are reached.
- Such Company cannot be incorporate or converted into a company under
section 8 of the Act.
- Such Company cannot carry out Non-Banking Financial Investment
activities including investment in securities of any-body corporate.
Conversion of OPC into Public Company or Private Company
The OPC has a beautiful feature of conversion as provided by law, and a OPC
can be converted into other form of company other than company under section
8 of the Act.
The Conversion can be done by two ways:
- Compulsory Conversion.
- Voluntary Conversion.
Compulsory Conversion of OPC
- When the paid up Capital of OPC exceeds 50 lacs or the average
annual turnover gets exceeded more the 2Cr. For the three consecutive
- For such OPC then it becomes mandatory for to convert it into
Public company or Private Company in accordance with Section 18 of the Act.
- As per section 122(3) the Shall make amendments in its Articles of
Association and also in its Memorandum of Associations, by passing a
resolution and has to give effect to such conversion and make necessary
changes as required.
- Within the period of sixty days from the date of such conversion the OPC has to send a notice to the Registrar and informing him that the OPC
has been ceased to exist by Conversion into a Private or Public Company by
the virtue of its paid up capital or the exceeded the limit of average
annual turnover as prescribed in the Act.
Voluntary conversion of OPC
· A OPC can be voluntary be converted itself into a Private or
Public company by increasing the minimum number of members and directors to
two or minimum of seven members and two or three directors as the case may
be, or by maintaining the minimum paid up capital as per requirements of the
Act for such class of company and by making due compliance of section 18 of
the Act for conversion.
Procedure of incorporation of OPC
In order to incorporate an OPC some major steps are necessary to be
followed. They are:
Applying and filling up of DIR3 and DSC- DIR3 form is the form launched by
the Ministry of Corporate Affairs which has to be duly filled by every
person who has applied DIN (Director Identification Number). This form has
to be filled by the person who is the existing director or is going to be
the director of the company. In OPC, the person starting the company will be
the director himself so, in order to commence his company, this is one of
major formality that has to be completed by that person. along with this
form, the person also needs to fill the DSC (Digital Signature Certificate),
it is an electronic form to be signed by the person as a proof. It is
governed under IT Act so that no fraud occurs.
There are some important documents that need to be attached with the DIR3
form in order to complete it. They include some of the common things that
are necessary for the verification such as ID proof, PAN card, address
proof, passport size phot, email Id, contact number etc. it basically
includes all the documents that are necessary to for the identification and
verification of the person filling it.
The documents needed along with DSC are similar to that of needed along with
DIR3 form. Both the forms need to be signed by the person who is filling it.
Applying for reservation of name- according to Section 4(4) of the Companies
Act, 2013, an application has to be made to the registrar of the company for
the reservation of the name. kit is not necessary that accompany gets the
name which it wishes for. Two references can be given for it. Along with the
name, its reference and explanation also need to be given. This is a very
important step as the name of the company plays a vital role.
Preparation and making of SPICe MOA and SPICe AOA- The memorandum and
article of association are two most of the important documents of a company
and they need to be made and formed by the director. These documents
describe the working and rules and regulations of the company.
Pre filling of SRN of INC-1 AND RUN will automatically generate the name of
the company. The name, address, pan, email and other details of the
subscriber of the forms have to be filled. Then these forms have to be
submitted to the registrar of the company.
Making online payment- Online payment has to be made to the Registrar Office
for the stamp duty and fees of the Registrar of the Company. This payment
depends on the capital and business of the company.
Approval of Documents by RoC- The registrar of the company approves the
documents submitted and calls for necessary changes needed. The company
cannot commence the working before the approval, of the documents. If any
changes are needed, they have to be made in a specified time period.
Certificate of Incorporation- after the final approval of the documents. The
RoC issues the certificate of incorporation to the director of the company
after which the company can commence its working but, it also includes some
of the formalities to completed before the commencement. They are as
follows. These are required for the validation of the certificate of
Opening of a current bank account, to apply for shop act licence etc. along
with it some other major things also such preparation of a financial
statement according to Section 134 of the Companies Act, 2013. This
financial statement may include the financial provinces of the company along
with some rules and regulations.
After this, an OPC is finally incorporated and can commence its working
according to the terms and conditions mentioned.
OPC enables a person to incorporate a company on its own conditions and
prevents interference. Thus, this concept creates opportunities too. The
process is a bit lengthy but a valid one so, it is important to follow them
in order to start an OPC legally and to work efficiently under it.