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One Person Company

One Person Company is a new concept introduced by Companies act 2013. This concept of OPC was first recommended by the expert committee of Dr. JJ Irani in 2005.OPC will give the young businessman all benefits of a private limited company which means they will have access to credits, bank loans, limited liability, legal protection for business, access to market etc all in the name of a separate legal entity.

Section 2(62) defines a One Person company which read as follows “One Person Company” is a company which has only one person as a member.

It shall also be important to note that Section 3 classifies OPC as a Private Company for all the legal purposes with only one member. All the provisions related to the private company are applicable to an OPC, unless otherwise expressly excluded.

The only exception provided by the Act to an OPC is that according to the rules only “NATURALLY-BORN” Indian who is also a resident of India is eligible to incorporate an OPC. It means that the advantages of an OPC can only be obtained by those INDIANs who are naturally born and also a resident of India. At the same, it shall also be worth mentioning that a person cannot form more than 5 OPC’s.

OPC and its formation

An OPC is incorporated as a private limited company.

  • An OPC can be formed under any of below categories :
    •  Company limited by guarantee.
    •  Company limited by shares.
  • An OPC limited by shares shall comply with following requirements :
    •  Shall have minimum paid up capital of INR 1 Lac.
    •  Restricts the right to transfer its shares.
    •  Prohibits any invitations to public to subscribe for the securities of the company.

The words ‘One Person Company’ should be mentioned below the name of the company, wherever the name is affixed, used or engraved.

The Memorandum of One Person Company shall indicate the name of other person, who shall, In the event of subscribers ‘s death or his incapacity to contract become the member of company.




Conversion of OPC into private or public company

OPC can get itself converted into a private or public company after increasing the minimum number of members and directors as the case may be, and by maintaining the minimum paid-up capital as per requirements of the 2013 Act for such class of company and by making due compliance of section 18 of the 2013 Act for conversion. [Rule 2.4(6)]

The rules prescribe certain circumstances when an OPC will be mandatorily required to convert into a private or public company. In terms of Rule 2.4,

  • where the paid up share capital of an OPC exceeds 50 lakh rupees or
  •  its average annual turnover during the period of immediately preceding three consecutive financial years exceeds 2 crore rupees, it will not be entitled to continue as an OPC.

Such OPC shall be required to convert itself into either a private company or a public company in accordance with the provisions of section 18 of the 2013 Act:

(i)                  within 6 months of the date on which its paid up share capital is increased beyond 50 lakh rupees; or


(ii)                the last day of the period immediately preceding three consecutive financial years during which its average annual turnover exceeded 2 crore rupees; or


(iii)                the close of the financial year during which its balance sheet total exceeds 1 crore rupees, as the case may be. The OPC is required to alter its memorandum and articles by passing an ordinary or special resolution in accordance with sub-section 5 (3) of section 122 of the 2013 Act to give effect to  the conversion and to make necessary changes incidental thereto


Exemptions available to One Person Company

An OPC has certain privileges and exemptions which are not available to private companies. Such exemptions are enlisted below

v Signatures on Annual Returns – Section 92

It is provided in section 92 of The Companies Act, 2013, that the annual returns in the case of One Person Company shall be signed by the company secretary or where there is no company secretary, then by the director of the company.


v Holding Annual General Meetings – Section 122
Section 122(1) of The Companies Act, 2013, provides that the provisions relating to General Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are not applicable to One Person Company. However, for fulfilling the purposes of S.114 of the Companies Act,2013, where any business is required to be transacted at an Annual General Meeting, or other General Meeting of the company by means of an ordinary or special resolution, it shall be sufficient if the resolution is communicated by the member of the company and entered in the minutes book which is required to be maintained U/s 118 and signed and dated by the member and such date shall be deemed to be the date of meeting under the purposes of Companies Act,2013.


Board Meetings and Directors – Section149, 152 & 173 of the Act
One Person Company needs to have one director. It can have maximum of 15 directors which can also be increased by passing a special resolution as in case of any other company. For the purposes of holding board meetings, in case of a OPC which has only One director, it shall be sufficient compliance if all resolutions required to be passed by such a company at a board meeting are entered in a minute book – signed and dated by the member and such date shall be deemed to have the date of the board meeting for all the purposes under Companies Act, 2013


Signatures on Financial Statements – Section 134 and 137 of the Act.
The OPC shall file with the RoC a copy of financial statements duly adopted by its members within 180 days from the closure of the financial year along with cash flow statements. The financial statement shall be signed by only one director.


v Contract by a One Person Company


In case a One Person Company enters into any contract, not in the ordinary course of business , with its sole member who is also a director, then such contract must:


–          Either be in writing

–          Entered in the memorandum

–          Recorded in the minutes of meeting.



  • A one person company can be incorporated as a private limited company only.
  • It may have only one person as a member.
  • It may have only one director.
  • The words “one person company” must be mentioned in brackets below the name of company.
  • Exemption is available from holding board meetings (in case of only one director) and general meetings.

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