What is One Person Company (OPC): Meaning, Registration, and Features

The rising wave of entrepreneurship has inspired several individuals to tread the journey of being co-founders, promoters, and even a solopreneur. Here’s a quick guide for solo entrepreneurs to explore more about one person company and help them scale their ventures strategically.

Understanding the Concept of One Person Company (OPC)

With the enforcement of The Companies Act, 2013, corporate laws in India have been redefined with novel concepts that were not considered earlier such as One Person Company or OPC. According to Section 2(62) of the Act, OPC meaning refers to a type of company that only comprises one person as a member, and other involved people are considered subscribers of the memorandum of association or called shareholders.

An OPC is a company having only one member as the shareholder. Such companies are formed when there is solely one founder or promoter having complete control of the business operations and management. OPC has a very unique business structure allowing sole proprietors to separate their personal assets from the company’s assets. This gives solopreneurs confidence to strategically grow the business with peace of mind knowing their personal assets are secured.

Key Features of One Person Company (OPC)

Let’s understand One Person Company features here as follows:

Private company:

According to Section 3[1(c)] of the Companies Act, 2013 indicates that a company can be established and founded by a single person with any purpose according to the law. OPCs can be termed as private companies.

Single member:

Unlike other companies, OPCs are operated by a single director, who can be termed as the member or shareholder of the company.

Nominee:

Although OPCs have a sole director or member, one person company features include perpetual succession which is different from other business structures. The single member in OPC has to appoint a nominee, who will run the business operations after the unfortunate demise of the member.

Minimum one member or director:

Any one person company should have at least one director or member. The maximum number can extend up to 15.

No minimum paid-up share capital:

According to The Companies Act, 2013, there are no guidelines specified concerning any amount to be categorized as the minimum-paid-up capital for OPCs.

Special privileges:

Unlike other business structures, OPCs have special privileges as they have less legal compliances adhering to the Companies Act, 2013.

Advantages of One Person Company

One person company is generally suitable for small businesses. Let’s explore the advantages of one person company here:

Easy to acquire funds:

OPC is termed as a private company, streamlining the fundraising process and simplifying the process with angel investors, venture capitalists, incubators, etc. For banks and other lenders, a company is a preferred option over a proprietorship firm to grant funds for business.

Less compliance:

According to The Companies Act, 2013, there are some exemptions under legal compliances for the OPCs. It is not mandatory for the OPCs to prepare the cash flow records. The director can authorize the book of accounts and annual returns instead of the company secretary.

Perpetual succession:

When compared to other business structures, one person company has the advantage of perpetual succession. This implies the single member needs to appoint a nominee when registering the company who will manage the business operations in the unfortunate demise of the member.

Simple management:

One person company features include business operations managed by a solo member or director. This simplifies the structure of management with an easy and quick decision-making process. The regular resolutions related to the company can be easily implemented without any hassles or recorded in the minute book. Further, a one person company’s business operations are not delayed due to any time wasted in conflict resolutions.

Easy incorporation:

The process of establishing an OPC requires one single member or director and a nominee appointed by the member during the registration process. There is no prescribed amount for the minimum paid-up capital requirement and the minimum authorized capital to establish one person company is around ₹ 1 lakh.

One Person Company Registration Process

One Person Company registration involves several steps that need to be implemented in a streamlined manner. The details about the 6 steps are elicited here:

Step 1: Application for DSC

The first step in the registration process consists of applying for a Digital Signature Certificate (DSC) of the prospective director. This process requires submitting several documents such as the Aadhar card, PAN card, residential proof, photograph, and contact details such as email and phone number.

Step 2: Application of DIN

After the Digital Signature Certificate is ready, the next step in One Person registration involves applying for the Director Identification Number (DIN) of the nominated director by filling in the SPICe+ form with the address proof of the director. For the already existing companies, the only form available is Form DIR-3, which signifies the applicant need not separately file Form DIR-3 after January 2018. Presently, DIN can be applied under SPICe+ form for as many as 3 prospective directors.

Step 3: Approval for Company Name

The next step in the registration process includes getting the approval for the decided name of the company, which will be registered in the format as – ‘PQR (OPC) Private Limited’. The name of the company can be approved through SPICe+ application. It is to be noted that only one preferred name for the company can be applied for approval. One can mention the significance of selecting the specific name in the form. In case of rejection of the preferred name, one can apply for another name through SPICe+ application.

Step 4: Documentation

After approval of the company’s name through MCA, the next step is documentation for the Registrar of Companies (ROC). This consists of the following:

• The Memorandum of Association (MOA) with details about the nature of the business.
• The Article of the Association (AoA) with a comprehensive framework on company operations.
• Information about the appointed nominee in case of the unfortunate demise of the director or incapable of leading the company due to any reason. The consent has to be acknowledged in Form INC – 3 along with PAN Card and Aadhar Card.
• Address proof concerning the registered office along with proof of ownership and an NOC from the owner.
• Declaration and consent of the nominated director with Form INC-9 and DIR-2 respectively.
• Declaration form stating all legal compliances are met and certified by the professional.

Step 5: Filling forms with MCA

The next step of one person company registration includes uploading the compiled documentation with SPICe+ form, SPICe-MOA, and SPICe-AOA alongside the DSC of the Director and profession on the MCA site to get approval. The PAN number and TAN are generated inherently after the incorporation of the company.

Step 6: Issue of the Certificate of Incorporation

After verification of the forms and documents, the Registrar of Companies (ROC) will issue a Certificate of Incorporation to proceed further with the business.

Examples of Businesses Suitable for OPC Structure

One person company is one of the most preferred choices for solopreneurs in India considering the ease of fundraising, simplified management, and simple incorporation process. Let’s explore some business domains that have successful applications of this model.

Creative industries:

OPCs streamline workflow in creative industries such as interior designers, artworks-based companies, and creative or marketing agencies, where the creative control is in the hands of a single competent director and thus has seamless operations.

Example: Lifestyle Creations Pvt. Ltd is based in interior decoration and led by Aarti Mehta.

Edtech companies:

OPC as a business structure for edtech companies gives the scope to present innovative solutions in different domains of learning and establishes a benchmark for providing quality service under the discretion of a single member.

Example: Innovative Minds Education Pvt. Ltd founded by Dr. Priya Nair.

IT services:

When considering companies under IT services, OPCs can have a competitive advantage with streamlined decision-making and adaptability in the delivery of services.

Example: Emaar Technologies Pvt. Ltd. founded by Rahul Agarwal.

Agriculture and organic farming:

With agriculture taking up a major part of the economy, OPCs can shape the agriculture & organic farming domain where solopreneurs can get the benefits of starting a company with special privileges.

Example: Green Sprouts Organics Pvt. Ltd is an OPC founded by Rajiv Menon and supports agricultural ventures wanting to expand in international markets.

Conclusion

One person company or OPC is a type of business structure with a minimum of one member or director solely managing all the business operations. One person company features include simplified management, easy incorporation, and perpetual succession by appointing a nominee at the time of company registration. OPCs have special privileges as compared to other business structures with less legal compliances along with the identity of a private company.