We will be talking about One Person
Company which is one of the types of company. But before that, we need to know
what company is?
Company is a legal entity/legal person
having status and personality, it is separate and distinct from the members who
As the name suggests, one person company
comprised of one person only. OPC is defined under subsection 62 of section 2 of the
Companies Act, 2013. It is defined as a one shareholder corporate entity
where legal and financial liability is limited to the company only (1 member
and 1 shareholder). Before the commencement of Companies
Act,2013 person had one option of sole proprietorship only, there was no
concept of OPC.
Difference between a sole
proprietorship and OPC:-
It is not separate from its promoters.
It is separate from its promoters.
Liability of promoter is unlimited.
Liability of promoter is limited.
of one person company:-
Concept of One Person Company was originated from the J.J Irani report of 2005. Idea promulgated was that small entity should be allowed to have a small business with simple legal regimes.
OPC is a private company because it is not a public company and according to section 3, any company which is not a public company is a private company.
most prominent and striking feature of an OPC is the fact that it has only:
One shareholder –
both rolled into one.
a member goes to incorporate memorandum of OPC, he should indicate the name of
the other person with his prior written
consent that shall in the event of promoter’s death or in his incapacity to
contract, becomes the member of the company.
consent of such person shall be filed with the registrar at the time of
incorporation of AOA and MOA.
the death of promoter/member, the nominated person shall be recognized as the
member of the company and shall be entitled to all the shares, dividends, rights
and liabilities to which the sole member was entitled to.
a person can withdraw his consent anytime. And even member of OPC can change
the name of such person anytime by giving notice. He must intimidate the change
to the company by indication in MOA and shall also intimidate the registrar.
“OPC” shall be mentioned in [ ] below the name of the company wherever it is
affixed, printed or engraved.
person is eligible to incorporate more than 1OPC (1person=1 OPC).
No person is eligible to be a nominee in 1 OPC.
Minor can’t be a member or a nominee in OPC.
By relaxation means some advantages that
OPC gets over other kinds of companies.
flow statement [s.2(40)]
OPC need not prepare a
cash flow statement whereas other companies have to prepare it.
In the case of OPC, it
can be signed by the directors and not necessarily by the company secretary.
While other companies have to get it signed by both directors and company
General Meeting (AGM) [s.96]
No necessity to hold
AGM in case of OPC while other companies have to hold AGM at the end of the
general meeting & general meeting [s.100 & 111]
These are not applied
to OPC. While other companies have to hold EGM and GM for the discussion of
Since OPC consists of
one member only, therefore, it exempted to hold any such meetings as that sole
member is competent to take any decision on his own.
transactions at AGM & GM by means of ordinary & special resolution
Compliance is said to
have been done if the resolution is entered in minutes in “book of
financial statement [s. 134]
It is sufficient if
only 1 director signs the audited financial statement.
of financial sheet [s.137]
It should be filed
within 6 months from the closure of the financial year i.e., 31st
March. While other companies have to file it within 30 days of AGM.
OPC needs to hold board
meetings, once in 6 months, twice a year.
The gap between 2 meetings should be 90 days. While in other cases,
board meetings should be held 4 times a year.
3 requirements need to be fulfilled to
resident of India (Person should stay in India past 182 days consecutively in
the preceding financial year)
of an OPC
An OPC ceases to be an OPC if:-
paid-up share capital exceeds 50 lakhs.
average annual turnover exceeds 2 crores.
Both 1 and 2 are cumulative requirements
that need to be fulfilled for the cessation of an OPC.
As a consequence of cessation, within 6 months
OPC has to convert itself into a private
company or public company from
the date of cessation by increasing its Directors
and members and paid-up capital to that of Private/Public Company and by
following the procedure of conversion in section 18 of the Act.
So OPC is a very good way for small start-ups and enterprises
to carry on their business as with the help of OPC they can enjoy some benefits
which they don’t get in other companies and they have less pressure and
obligations as compared to other companies and sole proprietorship.