ONE PERSON COMPANY

INTRODUCTION:
The introduction of OPC in the legal system is a move that would encourage
corporatization of micro businesses and entrepreneurship with a simpler legal
regime so that the small entrepreneur is not compelled to devote considerable time,
energy and resources on complex legal compliances. This will not only enable
individual capabilities to contribute economic growth, but also generate
employment opportunity. One Person Company of sole-proprietor and company
form of business has been provided with concessional /relaxed requirements under
the Companies Act, 2013.With the implementation of the Companies Act, 2013, a
single national person can constitute a Company, under the One Person Company
(OPC) concept.

PERQUISITS:
(i) Only one person is required as a member/ shareholder.
(ii) One Person company can be registered only as a Private Company.
(iii) One Person Company may be either a Company limited by share or a Company
limited by guarantee or an unlimited Company.
(iv) An OPC limited by shares shall comply with following requirements:
a. Shall have minimum paid up capital of Rs.1,00,000/-.
b. Restricts the right to transfer its shares.
c. Prohibits any invitations to public to subscribe for the securities of the company.
(v) An OPC is required to give a legal identity by specifying a name under which the
activities of the business could be carried on.
(vi) As specified in the Companies (Incorporation) Rules, 2014, only a natural person
who is an Indian citizen and resident in India shall be eligible to incorporate a One
Person Company and shall be a nominee for the sole member of a One Person
Company. Non-resident Indians or individuals who do not reside in India for over
182 days cannot incorporate a OPC.

PROHIBITED ACTIVITIES:
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.

RESTRICTIONS/LIMITATIONS:
No person shall be eligible to incorporate more than a One Person Company or
become nominee in more than one such company.
Where a natural person, being member in One Person Company, becomes a
member in another such Company, by virtue of his being a nominee in that
One Person Company, such person shall meet the prerequisites within a period
of one hundred and eighty days.
No minor shall become member or nominee of the One Person Company or
can hold share with beneficial interest.
Such Company cannot be incorporated 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 anybody corporate.
No such company can convert voluntarily into any kind of company unless
two years have expired from the date of incorporation of One Person
Company, except threshold limit (paid up share capital) is increased beyond
fifty lakh rupees or its average annual turnover during the relevant period
exceeds two crore rupees.

COMPARATIVE
ANALYSIS
OF
APPLICABILITY
OF
PROVISIONS TO OPC, SOLE PROPRIETORSHIP, PRIVATE CO.:
Details

One Person
Company
Governing Law
Companies Act,
2013.Income Tax
Act, 1961.
Liability
Limited to the
extent of unpaid
amount of shares
held by the sole
member.
Registration
Mandatory.
Number
of Only one member
Members Required is
required
to
incorporate a
OPC.
Number

of At

least

Sole
Private Company
Proprietorship
Income Tax Act, Companies Act,
1961.
2013.Income Tax
Act, 1961.
Unlimited. Risk is Limited to the
higher ascompared extent of unpaid
to OPC or Private
amount of shares
Company.
held by the sole
member.
Not Applicable
Mandatory.
Only one person At
least
two
required to form a persons
are
Sole
required
to
Proprietorship.
incorporate a
private company.
one Not applicable.
At
least
two

Directors Required

Separate
Entity

director
required. The sole
member can be the
director.
Legal Separate
Legal
Status. Has an
identity
distinct
from the members
of the OPC.

Perpetual
Succession

Credibility

Annual Meetings

Name Clause

Taxation

Mandatory
Conversion

Death of the sole

member does not
affect the OPC.
The
nominee
becomes
the
member of the
OPC in such an
event.
Credibility of a
OPC
can
be
evaluated on the
basis of the past
commitments
of the OPC.
Holding of Annual
Meeting is not
mandatory.
The words One
Person Company
in brackets has
to be mentioned
below the name of
the Company
wherever
it
is
printed or
engraved.
Base tax rate of
30% applicable.

directors
are required.

No distinct entity.
Owner and the
Proprietorship are
Not
distinguishable.
Death of the owner
amounts to death
of the Sole
Proprietorship.

Credibility of Sole
Proprietorship can
be evaluated on
the basis of the
credibility of the
Owner.
Not applicable.

Not applicable.

Separate
Legal
Status. Has an
identity distinct
from the members
of
the
Private
Company.
Death
of
the
members does not
affect
the
Company.
Members
may come and go,
a Company stays
on.
Credibility of a
Company can be
evaluated on the
basis of the past
commitments of
the Company.
Holding of Annual
Meetings
is
mandatory.
The name of the
Company
must
end with Private
Limited.

Slab
Rates
as Base tax rate of
applicable to
30% applicable.
an
individual.
Benefit of Tax
Deduction under
Section 80C can be
claimed.
When the paid up Not Applicable.
Not Applicable as
Capital of the OPC
long as all the
exceeds the
conditions of

prescribed limit, it
becomes
mandatory for
OPC to convert to
Private or Public
Company.

Private Company
are complied with.