A One Person Company (OPC) is a unique business structure introduced in India under the Companies Act, 2013. It allows a single person to establish and operate a limited liability company. 

is combines the advantages of a sole proprietorship with the legal protection of a private limited company.

Here’s a breakdown of key features of an OPC:

• Single Member: An OPC has only one person as its shareholder and director. This individual manages and controls the entire company.
• Limited Liability: Similar to a private limited company, the owner’s personal assets are shielded from business liabilities. This means creditors can only go after the company’s assets, not the owner’s personal wealth, in case of debts.
• Separate Legal Entity: The OPC is a distinct legal entity from its sole member. This offers advantages like perpetual succession (company continues to exist even if the owner dies) and easier access to funding.

Benefits of an OPC:

• Limited Liability: Protects personal assets.
• Increased Credibility: Having a company structure can enhance business reputation and attract investors.
• Easier Access to Funding: Banks and other financial institutions might be more willing to lend to an OPC compared to a sole proprietorship.
• Perpetual Succession: The business can continue even if the owner exits.

Suitability of an OPC:

• Ideal for entrepreneurs starting a business venture.
• Suitable for professionals like consultants, freelancers, or architects who want to operate under a limited liability structure.

Limitations of an OPC:

• Minimum Capital Requirement: There’s a minimum authorized share capital requirement for OPCs (as per current regulations).
• Compliance Requirements: OPCs need to comply with various company law regulations like filing annual returns and conducting audits.
• Limited Number of Directors and Shareholders: Only one person can be a director and shareholder.

In conclusion, a One Person Company offers a unique option for individuals seeking the benefits of a limited liability company structure while maintaining sole ownership and control. However, it’s essential to consider the legal and compliance requirements before choosing this business structure.

Case laws

Focus on Relevant Sections

The Companies Act, 2013 lays out the legal framework for OPCs. Look for case laws related to specific sections dealing with OPCs, such as:

• Section 2(62):Definition and Eligibility for OPCs
• Sections 8 and 9:Appointment and Removal of Directors in OPCs
• Sections 12 and 13:Requirements for Subscribers and Members in OPCs

Keywords and Concepts

When searching legal databases, use keywords and concepts related to OPCs and the specific legal issue you’re interested in. Here are some examples:

• Nominee Director: Search for cases related to “nominee director” requirements in OPCs (as per Section 3(3) of the Act).
• Conversion from OPC: Look for judgments concerning conversion of an OPC to a different company type.
• Liability of Sole Member: Find cases related to the extent of liability for the sole member of an OPC.

Legal Databases

Utilize online legal databases to search for relevant case laws. Here are some helpful resources:

• Indian Kanoon
• National Law Library

Faq questions

• What is a One Person Company (OPC)?

An OPC is a type of company in India that allows a single person to be the sole director and member (shareholder). It offers a way to establish a limited liability company with fewer formalities compared to a traditional private limited company.

• Who can incorporate an OPC?

An Indian citizen and resident above 18 years old, with no disqualifications to become a director, can incorporate an OPC.

• What are the benefits of an OPC?
  • Limited liability: Protects personal assets from business liabilities.
  • Separate legal entity: Enhances credibility and professionalism.
  • Easier to set up: Less complex compared to a private limited company.
  • Tax benefits: May be eligible for certain tax advantages depending on the business nature.
• What are the limitations of an OPC?
  • Minimum paid-up capital: Requires a minimum paid-up capital (amount can vary).
  • Conversion: Converting to a private limited company might involve additional procedures.
  • Number of members: Limited to one member (director can change in case of incapacity).

Eligibility and Requirements

• Can a Non-Resident Indian (NRI) be the director/member of an OPC?

Currently, only Indian citizens and residents can be the director and member of an OPC.

• How many OPCs can one person be associated with?

An individual can only be associated with one OPC as the director and member.

• What documents are required to incorporate an OPC?

Documents typically include:

• PAN card and address proof of the director/member.
• Proposed name and object clause of the company.
• Nominee details (individual chosen to succeed the member in case of death or incapacity).

Registration and Compliance

• How is an OPC registered?

An OPC is typically registered electronically through the MCA portal using the INC-29 form.

• What are the ongoing compliances for an OPC?

OPCs need to comply with various regulations like filing annual returns, conducting board meetings, and maintaining statutory records. However, the requirements are generally less stringent compared to private limited companies.

• Do I need professional help to incorporate and manage an OPC?

While not mandatory, consulting a Company Secretary (CS) can streamline the incorporation process and ensure ongoing compliance with regulations.