The Companies Act, 2013 introduced a new type of business structure — the One Person Company (OPC). Apart from forming a Public or Private Limited Company, individuals can now register a separate legal entity with just one member.
Before starting a business, choosing the right entity is crucial. In India, the popular options are OPC, LLP, and Private Limited Company. LLPs are governed by the LLP Act, 2008, where each partner’s liability is limited to their agreed contribution. LLPs work best when external funding is not required. If needed, they can later be converted into a Private Limited Company.
Section 3(1) of the Companies Act, 2013 defines an OPC as a company that has only one member. OPCs differ from private limited companies, which require at least two members. In an OPC, the individual and the entity are treated as separate legal entities, and the liability of the owner is limited to their investment.
Based on the J.J. Irani Committee Report (2005), OPCs were introduced to support small businesses by reducing compliance and regulatory burdens. Examples of relaxations include:
OPCs are ideal for solo entrepreneurs. It is also easy to convert an OPC into a Private Limited Company when business expansion requires more members, capital, or external investments.
A One Person Company enjoys almost all benefits of a Private Limited Company and is regulated under the Companies Act, 2013.
| Particulars | OPC |
|---|---|
| Applicable Law | Companies Act, 2013 |
| Regulatory Authority | Ministry of Corporate Affairs (MCA) |
| Members Required | Minimum 1 – Maximum 1 |
| Directors Required | Minimum 1 – Maximum 15 |
| Minimum Share Capital | No minimum required; conversion to Pvt. Ltd. if capital exceeds ₹50 Lakhs |
| Board Meetings | One meeting every half-year; gap between two meetings must be minimum 90 days. |
| Statutory Audit | Mandatory |
| Liability | Limited |
| Transferability | Ownership transferable to nominee in case of director’s death or incapacity. |
| Annual Filing | Financial statements and annual returns must be filed with ROC. |
| FDI Eligibility | Not eligible for Foreign Direct Investment |
| Best Suited When | Capital requirement < ₹50 Lakhs and turnover < ₹2 Crores |
| Company Name | Must end with OPC Pvt. Ltd. / OPC Ltd. |