One Person Company (OPC) is a single-member entity with limited liability protection.

ONE PERSON COMPANY (OPC)

According to Section 2 (62) of the Companies Act, 2013, One Person Company means a company which has only one person as a member. Owned, managed, and controlled by a single individual, OPCs offer a unique platform for visionaries to transform their ideas into reality while enjoying limited liability protection and full control over their businesses.

OPC or Proprietorship Concern! Your Choice

A One Person Company (OPC) is a separate legal entity with limited liability, ensuring that the owner's assets are protected from business liabilities. It enjoys perpetual succession, meaning the company's existence is not affected by changes in ownership. Additionally, any loans taken by the company are not the sole responsibility of the owner, further safeguarding personal finances. Registration is mandatory for an OPC, and its financial credibility is determined by the company's credit record rather than the owner's individual credit history.

Comparison: One Person Company (OPC) vs. Sole Proprietorship

         •         Legal Status: OPC is a separate legal entity, whereas a sole proprietorship is not.

         •         Liability: OPC has limited liability, while a sole proprietorship has unlimited liability.

         •         Perpetual Succession: OPC has perpetual succession, but a sole proprietorship does not.

         •         Loan Responsibility: In OPC, the loan is not solely the owner's responsibility, whereas in a sole proprietorship, it is.

         •         Registration: OPC requires registration, while a sole proprietorship does not.

         •         Finance & Credit Record: OPC's credit is based on the company's record, while a sole proprietorship,s credit is based on the owner's record.

Features

        •         Single Ownership: OPCs are owned and operated by a single individual, consolidating ownership and control in one person's hands.

        •         Limited Liability: Enjoy limited liability protection, shielding personal assets from business liabilities.

        •         Separate Legal Entity: OPCs have a distinct legal identity, enabling them to enter into contracts, acquire assets, and pursue legal actions in their name.

        •         Perpetual Succession: Ensure continuity of business operations, even in the owner's absence, with perpetual succession.

Eligibility Criteria

         •         Natural Person and Indian Resident: Only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate a one-person company.

         •         Limitation on Multiple OPCs: No person shall be eligible to incorporate more than one OPC or become a nominee in more than one such company.

         •         Exclusion of Minors: No minor shall become a member or nominee of an OPC or hold shares with beneficial interest.

         •         Restriction on Section 8 Conversion: An OPC cannot be incorporated or converted into a company under section 8 of the Companies Act

         •         Limitation on Financial Activities: OPCs cannot engage in Non-Banking Financial Investment activities,

         •         Voluntary Conversion Restriction: OPCs cannot voluntarily convert into other types of companies unless two years have passed since incorporation, except under specific conditions related to capital and turnover.

Incorporation Process of One Person Company (OPC)

          •         Select a unique name for your OPC, make an application to the Ministry of Corporate Affairs for the availability of a name

          •         Obtain a Digital Signature Certificate [DSC] for the proposed Director(s)

          •         Draft Memorandum of Association and Articles of Association    

          •         Sign and file various documents including MOA & AOA with the Registrar of Companies electronically

          •         Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty

          •         Scrutiny of documents at Registrar of Companies [ROC]

          •         Receipt of Certificate of Incorporation

In essence, one-person companies (OPCs) offer solo entrepreneurs a straightforward path to business ownership with limited liability protection. With simplified processes and regulatory requirements, OPCs empower individuals to pursue their entrepreneurial dreams while ensuring stability and continuity in their ventures.