One Person Company (OPC) under the Companies Act, 2013

One Person Company (OPC) under the Companies Act, 2013

For a long time, solo entrepreneurs in India had to choose between a sole proprietorship (unlimited personal liability) or bringing in a co-founder just to satisfy the two-member requirement for a private company. The One Person Company, introduced by the Companies Act, 2013, solved this by allowing a single individual to form a company with limited liability protection.

•      Formed by a single natural person who is an Indian citizen (residency requirement was relaxed to 120 days of stay in India in the preceding financial year, following the 2021 reforms; NRIs are also now eligible to form OPCs).

•      Requires only 1 director and 1 shareholder (who can be the same person).

•      Must have a nominee, named at the time of incorporation, who will become the member of the OPC in case of the original member's death or incapacity to contract.

•      Exempt from holding an AGM.

•      The words 'One Person Company' must be mentioned in brackets below the company's name wherever it appears.

Prior to 2021, an OPC was required to mandatorily convert into a private or public company if its paid-up capital exceeded ₹50 lakh or its average annual turnover exceeded ₹2 crore over 3 consecutive years. The Companies (Incorporation) Second Amendment Rules, 2021 removed both these thresholds, allowing an OPC to grow without any compulsory conversion requirement, and also reduced the residency period for eligibility from 182 days to 120 days, while permitting NRIs to set up OPCs in India.

•      No requirement to hold an AGM.

•      Minimum 1 board meeting in each half of the calendar year, with a gap of at least 90 days between the two.

•      Cash flow statement not required as part of financial statements.

•      Annual return can be signed by the director itself where there is no Company Secretary, instead of requiring a separate certification.

An OPC can voluntarily convert into a private or public company by increasing the minimum number of members and directors to comply with the requirements of the desired company type, altering the MOA and AOA, and filing the necessary forms with the Registrar.

•      Forgetting to update the nominee's details if personal circumstances change (for example, after marriage or nominee's death).

•      Assuming an OPC can have joint founders — it fundamentally supports only a single member by design.

•      Overlooking the still-mandatory board meeting frequency requirement, thinking OPCs face no meeting obligations at all.

•      Delaying conversion planning until an investor negotiation is already underway, causing timeline pressure.

Q1. Can an OPC be converted into a private company at any time?

Yes, an OPC can voluntarily convert into a private (or public) company at any time by following the prescribed procedure, without the earlier restriction that required a minimum period from incorporation before voluntary conversion.

Q2. Can a single individual form multiple OPCs?

No, a person can be a member of only one OPC at a time, and a nominee cannot be a nominee in more than one OPC simultaneously.

Q3. Is an OPC required to prepare a cash flow statement?

No, OPCs (along with small companies and dormant companies) are exempt from including a cash flow statement as part of their financial statements.

Q4. Can an OPC raise external equity funding from investors?

Structurally, an OPC has only 1 member by definition, so bringing in outside equity investors as members effectively requires converting the OPC into a private (or public) company first.

Q5. Can an OPC's nominee be a minor?

No, a minor cannot be named as a nominee for an OPC, since the nominee must be capable of becoming a member and fulfilling the legal responsibilities of ownership, which requires attaining majority.

Q6. Does an OPC pay tax at a different rate than a private limited company?

No, for income tax purposes, an OPC is taxed as a company under the applicable corporate tax rates, with no separate concessional OPC tax regime distinct from other companies of similar size/turnover.

Q7. Can an NRI now form an OPC in India?

Yes, following the 2021 reforms, NRIs (Non-Resident Indians) are permitted to incorporate OPCs in India, subject to meeting the (reduced) residency period requirement of 120 days' stay in India during the preceding financial year.

The One Person Company structure has become significantly more attractive since the 2021 reforms removed the artificial growth caps that once forced early conversion. For solo founders wanting limited liability without a co-founder, OPC remains one of the simplest and most cost-effective structures available under the Companies Act, 2013.