Introduction to One Person Company (OPC)

One Person Company (OPC) registration in India was introduced as a concept under the Companies Act of 2013, enabling a single individual to establish a company and enjoy the combined benefits of both a sole proprietorship and a traditional company structure. This concept became available with the implementation of the Companies Act in 2013.
The primary objective behind creating one-person companies was to foster entrepreneurship and encourage the formalization of Micro, Small, and Medium Enterprises (MSMEs). According to Section 2(62) of the Companies Act 2013, a company can be formed with just one director and one member, and interestingly, these roles can be held by the same individual.

Eligibility Criteria

Before you go ahead and register a one-person company (OPC), it’s crucial to understand the specific eligibility criteria and limitations that govern its formation. The Companies Act sets out clear requirements that must be met to ensure that the individual promoting the OPC is eligible to do so.

Natural Person and Indian Citizen: Only a natural person who is an Indian citizen can establish an OPC. Legal entities like companies or LLPs cannot create an OPC.

Resident in India: The promoter must be a resident in India, meaning they should have lived in India for at least 182 days (about 6 months) during the previous calendar year.

Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1 00,000, the amount stated in the company’s capital clause during the registration.

Nominee Appointment: The promoter must appoint a nominee during the OPC’s incorporation. This nominee would become a member of the OPC in the event of the promoter’s death or incapacity.

Restrictions on Certain Businesses: Businesses involved in financial activities such as banking, insurance, or investments cannot be established as OPCs.

Conversion to Private Limited Company: If the OPC’s paid-up share capital exceeds 50 lakhs or its average annual turnover surpasses 2 Crores, it must be converted into a private limited company to comply with the regulatory requirements for larger companies.
It’s worth noting that an individual can establish only one OPC, and an OPC cannot have a minor as its member.