OVERVIEW

The concept of One Person Company was introduced by Companies Act 2013 which brought landmark changes in corporate law to allow only one person to incorporate a company.  It can be started only with one person. The same person can be a director as well as shareholder of the Company.  A separate feature of One Person Company is that the Director has to appoint one separate person as his Nominee. One Person Company enjoys all the benefits and privileges which are allowed to a Private Limited Company. If a person incorporates a One Person Company then he cannot form another One Person Company. In other words, a person can form only a single One Person Company at a time.  

Main Features of One Person Company are as follows:

• Legally a single individual can incorporate a One Person Company and it is entitled to all benefits which are allowed for Private Limited Company. 
• Only one person can become Director as well as Director of the Company. A single member has to mandatorily appoint his/her nominee.
• Minimum number of Directors can be one and the maximum number of Directors can be 15.
• There is no perpetual succession in One Person Company because in case a single member of OPC dies then the nominee may deny becoming a member of OPC.
• There is no requirement of minimum paid up capital to start an OPC.
• Name of One Person Company must be followed by the suffix OPC. For example XYZ international OPC. 

ADVANTAGES

• One Person Company is not supposed to hold Annual General Meetings which is mandatory compliance for a Private Limited Company.
• Rule of compulsory change of auditor after stipulated period is not applicable for OPC.  Therefore, OPC can appoint auditors for years with no bar. 
• While preparing their Financial Statements, OPC is not required to prepare Cash Flow Statements. 
• Concept of OPC is a boon for those small and unorganized businesses which want to give their business a corporate tag with less compliance and cost. 
• OPC has a separate legal status from its members. By this virtue, there is the concept of limited liability. This means losses and damages to the OPC cannot be recovered from the personal assets of its members.  
• Due to only single member ownership and centralized control over the company, it results in speedy decision making and its executions. 

FREQUENTLY ASKED QUESTIONS

1. What do you mean by One Person Company?

As per Companies Act 2013, OPC means a company which has only one person as a member.

2. Is it mandatory to use the suffix “One Person Company” after the name of the company?

Yes. It is mandatory that the name of OPC must be followed by the word ‘One Person Company”.

3. Who is eligible to incorporate an OPC?

If a person possesses the following qualifications then he can form an OPC-

• He should be a natural person i.e. Body Corporate or LLP cannot become a member of OPC.
• He should be Indian Resident Only. I.e. foreign residents cannot become members of OPC.
• He must be a resident of India. i.e. Non Resident Indian (NRI) cannot become a member of OPC.

4. Who is eligible to be nominated as an OPC?

If a person possesses the following qualifications then he can be nominated as nominee of an OPC-

• He should be a natural person i.e. Body Corporate or LLP cannot become a nominee member of OPC.
• He should be Indian Resident Only. I.e. foreign residents cannot become nominated members of OPC.
• He must be a resident of India. I.e. Non Resident Indian (NRI) cannot become a nominee for an OPC.

5. Can a person incorporate more than one OPC at a time?
   NO. A person can form only one OPC at a time.
6. Can a person become a nominee in more than one OPC at a time?

       NO.A person can become a nominee on one OPC only at a time. 

7. What is the role of a nominee in OPC?

As per the requirement of Act, OPC member of OPC is required to nominate a person as a nominee. In case of death of the sole member or sole member loses his sound mind, then the nominee becomes the sole member of OPC. Written consent of the nominee is required before appointment as sole member. However, the nominee may refuse to become the sole member of the company. 

8. Can a sole member change the nominee in the future?

Yes. Sole members may change nominees at any time and can appoint another person as nominee. 

9. What is the minimum and maximum number of directors that can be appointed to the OPC?

Minimum one director and maximum 15 directors can be appointed to the OPC.

10. Is OPC supposed to file an annual return?

The answer is YES.

11. When OPC is compulsorily required to convert into a Private Limited Company?

It has to convert into Private Limited Company if any one of following condition is satisfied:

• It’s paid up capital exceeding Rs. 50 Lakh; OR
• Its average annual turnover of the last 3 years exceeds Rs. 2 crore.

12. Can OPC conduct any sort of business?

Yes. OPC can carry any legal business except the business of a Non-Banking Financial Company. 

13. What are the tax benefits OPC enjoys?

There are no such tax benefits for OPC. Income tax rate is the same as Private Limited Company.

14. What are the mandatory compliance requirements for OPC?

• OPC must hold at least one board meeting in each half year of the calendar year and the gap between the two board meetings must be no less than 90 days.
• Proper records in respect of financial transactions have to be maintained.
• Mandatory statutory audit.
• OPC is supposed to file its income tax return yearly irrespective of turnover.
• It is mandatory to file AOC-4 and annual return with ROC. 

DOCUMENT REQUIREMENTS FOR OPC

1. ID Proof: Members must have a valid self-attached PAN card which is used as Identity Proof. 
2. Address Proof: Self attached address proof of membership is required which includes A) Aadhar card, B) Voter ID card, C) Driving License, D) Passport

It must be taken care that details of address proof must be matched with PAN card like date of Birth, father’s name etc.

3. Address Proof for registered office must be one of the following:

If premises is owned then, A) Copy of Rent Agreement (B) Latest Electricity Bill C) No objection Certificate from the landlord. 

If the Property is owned then any latest electricity bill along with NOC is in favour of the Proposed OPC.