Monday, 3 October 2016


The concept of One Person Company has been in existence in the European countries.  Thelandmark judgement of House of Lords in the case of Salomon vs.  Salomon & Co. Ltd. [1896] UKHL cemented the way to the idea of a one man company. 

In India the concept of One Person Company is a new vehicleof business, introduced by The Companies Act, 2013. One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided concessional requirements to incorporate under the Act. Companies Act, 2013, defines OPC Section 2(62) as a company which has only one person as a member. OPC can be registered only as a private company which means that all the provisions applicable to private company will be applicable to an OPC. Section 3 (1) (c) of company Act, 2013 provides that - A company may be formed for any lawful purpose by one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

OPC can be formed by any naturally born Indian who is also a resident of India."Resident in India" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding financial year. Steps to Incorporate One Person Company (OPC)- (i) Obtain Digital Signature Certificate [DSC] for the proposed Director(s). (ii)  Obtain Director Identification Number [DIN] for the proposed director(s). (iii) Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name. (iv) Draft Memorandum of Association and Articles of Association [MOA & AOA].(v) Sign and file various documents including MOA & AOA with the Registrar of Companies electronically. (vi) Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty. (vii) Scrutiny of documents at Registrar of Companies [ROC]. (viii) Receipt of Certificate of Registration/Incorporation from ROC.

The memorandum of One Person Company shall indicate the name of the other person as nominee, with his prior written consent, who shall become the member of the company in the event of the subscriber’s death or his incapacity to contract  and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles. For a Nominee- he/ she should be a natural person, an Indian citizen and resident in India.Nominee in an OPC will- (a) become a member of OPC (b) be entitled to all shares of the OPC, and (c) bear all liabilities of OPC. A Nominee may, withdraw his consent by giving a notice in writing to the sole member and to the OPC. The sole member then nominates another person as nominee within 15 days of the receipt of the notice of withdrawal. Further, the OPC is required to file with Registrar of Company.

OPC shall have at least One Director. The Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.  Section 152(1) of the Act, provides that an individual being member of OPC is deemed as First Director of the OPC until the director(s) are duly appointed by the member.

Regarding Board of Director meeting and Annual General Meeting in OPC -Where there is only one director on the Board of an OPC, it is sufficient if a resolution has entered into the minutes book by such director and signed & dated by such director (section 114, 118, 122).
OPC is deemed to have conducted at least one meeting of the BoDin four month. The gap between two meetings is not less than 90 days (Section 173). Quorum of Meeting of BoD will not apply to an OPC in which there is only one director on its Board (Section 173 and 174). Regarding Annual General Meeting in OPC, an OPC is not required to hold an AGM.

Regarding Financial Statement of an OPC – it has to be approved by the Board and needs to be signed by only one director for submission to the auditor.  No need to prepare Cash Flow Statement as part of its financial statement. 

Regarding Annual Returns of an OPC – it must be signed by a company secretary and the director. In case there is no company secretary, the signature is required only from the Director.  Mandatory rotation of auditor after expiry of maximum term is not applicable to an OPC.

Following sections are not applicable ( exemptions)  to OPCs- 98 (Power of Tribunal to call meetings of members, ), 100 (Calling of EGM)101 & 102 (Notice of Meeting & Statements to be annexed to Notice), 103 (Quorum of Meetings), 104 (Chairman of Meetings), 105 (Proxies), 106 (Restriction on Voting Rights), 107 108 (Voting by show of Hands & by Electronic Mode), 109 & 110 (Demand for Poll & Postal Ballot), 111 (Circulation of Member’s Resolutions).

Regarding name of company, words ‘‘One Person Company (OPC)’’ shall be mentioned in brackets below the name of such company, wherever its name is appeared. Incorporation of OPC shallenable the Businessperson(s) to carrying on the Sole-Proprietor form of business to enter into a Corporate Framework.

Prof. (Dr.) Pallavi Gupta, JEMTEC School of Law

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