One Person Company (OPC) in India – Complete Guide

What is a One Person Company (OPC)?

A One Person Company (OPC) is a private limited company that allows a single entrepreneur to start and run a business with all the benefits of a corporate structure. It combines the simplicity of a sole proprietorship with the advantages of a limited liability company.

Key Features of OPC:

• Minimum 1 shareholder (owner) and 1 director.

• Maximum 15 directors allowed.

• Separate legal entity: The company is distinct from the owner.

• Limited liability: The owner is liable only for the capital invested.

• Perpetual succession: The company continues even if the owner passes away.

• Nominee system: A nominee takes control in case of death or incapacity of the owner.

Advantages of OPC

• Limited Liability Protection: Owner’s personal assets are safe.

• Full Ownership: The entrepreneur retains 100% control.

• Separate Legal Identity: The company can sign contracts, own property, and sue or be sued.

• Credibility: Registered company status increases trust with banks, clients, and suppliers.

• Simplified Compliance: Less paperwork compared to a Private Limited Company.

• Perpetual Succession: The business continues even after the owner’s demise.

Disadvantages of OPC

• Single Owner Dependency: Decision-making relies entirely on one person.

• Limited Funding Options: Cannot issue shares to the public; raising capital is harder.

• Growth Restrictions: Must convert to a Private Limited Company if turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh.

• Nominee Limitation: The nominee cannot make business decisions until the owner is deceased or incapacitated.

Eligibility Criteria for OPC

• Must be a resident Indian (residing at least 182 days in India in the previous year).

• Must be an individual, not a company or partnership.

• Must appoint a nominee who takes control in case of death/incapacity.

Steps to Register an OPC

1. Obtain Digital Signature Certificate (DSC) – Required for online filings.

2. Apply for Director Identification Number (DIN) – Unique ID for directors.

3. Reserve Company Name via MCA portal using the RUN (Reserve Unique Name) service.

4. Draft Memorandum of Association (MOA) and Articles of Association (AOA) – Outline objectives and management rules.

5. File Incorporation Form (INC-2) – Submit details of nominee, director, registered office, and capital.

6. Receive Certificate of Incorporation (COI) – Confirms legal registration and provides Corporate Identity Number (CIN).

7. Apply for PAN & TAN – For company taxation purposes.

8. Open a Bank Account – Using COI, PAN, and KYC documents.

Compliance Requirements for OPC

Even though OPC compliance is easier than Private Limited Companies, it must adhere to:

• Annual Return Filing (MGT-7)

• Financial Statement Filing (AOC-4)

• Income Tax Return Filing

• Maintain Statutory Records – Minutes, resolutions, and registers.

• Conversion Compliance – Mandatory if turnover > ₹2 crore or paid-up capital > ₹50 lakh.

Taxation of OPC

• Taxed as a company, not as an individual.

• Corporate Tax Rate: Around 25–30%, depending on turnover.

• Eligible for presumptive taxation schemes under Sections 44AD or 44ADA.

• TDS Compliance is required if the company has employees or makes certain payments.

Conversion of OPC

• Mandatory Conversion: If turnover > ₹2 crore or paid-up capital > ₹50 lakh.

• Voluntary Conversion: Can convert to a Private Limited Company anytime.

• Process: File conversion forms on MCA portal (Form INC-5).

Documents Required for OPC Registration

• PAN and Aadhaar of the owner and nominee

• Proof of registered office (electricity bill, rent agreement, utility bill)

• Address proof (passport, driving license, bank statement)

• Digital Signature Certificate (DSC) and Director Identification Number (DIN)

• Memorandum of Association (MOA) & Articles of Association (AOA)

OPC vs Sole Proprietorship

Who Should Opt for OPC?

• Solo entrepreneurs who want limited liability protection.

• Professionals such as consultants, freelancers, IT developers, and small business owners.

• Businesses planning low-scale operations initially with potential for future growth.

Conclusion

A One Person Company (OPC) is the ideal solution for single entrepreneurs who want the benefits of a private company without the complications of multiple partners. It provides limited liability, legal recognition, credibility, and simplified management.

With proper planning, OPC can grow into a Private Limited Company as the business expands.

4. Minimum and Maximum Capital Requirements

• No mandatory minimum capital is required for OPC registration.

• Paid-up capital can be up to ₹50 lakh; exceeding this requires conversion to a Private Limited Company.

• This makes OPC flexible for startups with low initial investment.

15. Costs of OPC Registration

Approximate costs involved in India (can vary by service provider):

16. Frequently Asked Questions (FAQs)

Q1: Can an NRI start an OPC in India?

• No, only a resident Indian (residing at least 182 days in India) can start an OPC.

Q2: Can an OPC have more than one director?

• Yes, OPC can have 1 to 15 directors, but only one shareholder initially.

Q3: What happens if the owner dies?

• The nominee automatically becomes the member of the OPC.

Q4: Can OPC raise funds from investors?

• OPC cannot issue shares to the public, but can raise funds through private loans or venture capital.

Q5: Is AGM mandatory for OPC?

• No, since OPC has only one member, AGM is not required.

17. Industries Suitable for OPC

OPC is ideal for:

• Freelancers & Consultants (IT, Design, Marketing)

• Small Trading & E-commerce Ventures

• Service-Based Businesses (Legal, Accounting, Coaching)

• Startups Testing Ideas Before Expansion

• Professionals Looking for Credibility & Legal Protection

18. Legal and Regulatory Aspects

• Governed by Companies Act 2013, primarily Sections 2(62), 3(1), 7, 8.

• MCA (Ministry of Corporate Affairs) regulates OPC compliance.

• Nominee system is mandatory for continuity.

• Conversion to Private Limited is legally required if thresholds are crossed (turnover > ₹2 crore or paid-up capital > ₹50 lakh).

19. Perks of OPC for Entrepreneurs

• Simple structure makes it ideal for first-time business owners.

• Bank loans and credit facilities are easier to obtain compared to sole proprietorship.

• OPC can enter contracts, own property, and open business accounts in the company’s name.

• Enhances professional credibility when dealing with clients or suppliers.

20. Optional Services Often Needed by OPCs

For smoother operations, many OPCs consider:

• Accounting & GST Filing Services – Compliance made easier.

• Legal Documentation Support – Drafting contracts, agreements, and MOA/AOA amendments.

• Digital Presence Setup – Website, domain, and branding for credibility.

• Tax Planning & Advisory – Helps in reducing corporate tax liability.

21. OPC Conversion Example

Scenario:

• Startup “ABC Tech OPC” has initial capital of ₹10 lakh.

• After 2 years, revenue exceeds ₹3 crore.

• Mandatory conversion: OPC → Private Limited Company to comply with Companies Act 2013.

• Once converted, it can raise equity, hire more directors, and scale operations.