One Person Company Registration– Step by Step Overview

Introduction to One Person Company

In India, One Person Company is a new concept. It is also known as OPC Company. It was first introduced in Companies Act, 2013. The Companies Act, 1956 didn’t have the concept of OPC. In older Companies Act, 1956, the minimum directors are two and shareholders are required to form a basic type of company. It was difficult to a single entrepreneur to start his company. By analysis this kind of difficulties, the amended act introduced in 2013. One Person company contains only one person as member and he can be a director and a shareholder of his company. So, it is called as One Person Company. If he needs another person for better operating capabilities, will nominate a person as a nominee director or a shareholder. One Person Company concept is mainly used for the sole proprietor and entrepreneur who can start his/her business in startup level. An OPC can provide the advantages of limited liability and corporatization for the director. An OPC concept opens the spectacular possibilities to the entrepreneur who wants to start the business.

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Sole proprietorship versus One Person Company

A Sole proprietorship firm is operated by one person and its liability is unlimited. In this type of entity does not have the option of adding an additional director and shareholder. Unlimited liability is a main drawback of sole proprietorship firm. The owner or proprietor is only responsible for any profits or losses of his entity. If any losses occurs he must spent his personal asset like house, jewelry and bank accounts. Legally, no one can support the owner of the sole proprietorship entity. On the other hand, An OPC is formed by one person and he can eligible to nominate another person as nominee director. In this way, he can share his business liability with nominee director. Business liability is nothing but the initial capital amount, Investment, annual turnover, profits and losses. An OPC can reduce the risk of a director in some critical situations. If any losses occur, it will be limited to only the business assets.

One share holder

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It is the fundamental concept of One Person Company. As defined in Companies Act 2013, OPC consists only one person as member. A director is acting as a director, shareholder, and member. As said in company incorporation rules, only a natural person who must be resident in India and must be an Indian citizen. The other legal entities cannot form One Person Company. Other legal entitles like companies or societies or other corporate entities. An individual cannot be a director of two or more companies at the same time. The foreign citizens of NRI (Non-resident Indians) cannot be a director of a One Person Company. According to the rules, the shareholder also be a shareholder in only one company at given time. From this, an individual cannot own two different OPCs in his name at the same time.

One Director

The other important feature of OPC is that it may have only one director. At the same time, there is no bar on number of directors. An OPC can have more than 1 to 15 directors. As per the Companies Act, 2013 the incorporation of one person company can have the sole director and sole shareholder. By practically, more number of OPCs has only one person as director and only one person as shareholder.


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Nominee entry is very important feature of a One Person Company. An individual can have the right to nominate a nominee person for their company. The duty of the nominee is to take care of the assigned company if any inconvenient situations like director’s death or inability. He must step forward to own the company, take over the profits, investment and business liability and losses. The nominee must be resident in India and also citizen of India. The Foreign citizens and non-resident in India cannot be nominee. If the nominated person becomes a member of another company, at the same time, according to the rules he has the responsibility to decide within 6 months which company he has to continue. The director has the right to change the nominee at any time. The director must nominate a nominee with written consent of that OPC. On the death of the director or owner of the OPC, the nominee is the recognized person to take over the business liabilities of the company. He is only responsible for the profits and losses of the OPC. Such nominee has the same rights and liabilities as of the director of the OPC. Such person can nominate another person as nominee for take care of the OPC after his death and inability situations.


The taxation of the OPC is same as the taxation of the Private Limited Company. It is fixed by the finance ministry. The Net profits are calculated from the company’s turnover with less of allowable expenses of that company. The turnover calculated from the annual sales report. The taxation shall be taxable at the rate of 30 percentages.

Free from Compliance

One person Companies are free from the compliance like other type of companies (private company). Some sections of Companies Act, 2013 are strictly prohibited for One Person Company. These sections are Section 96, 98, 100 and 111. These companies need not conduct annual general meeting and ordinary meeting. Why because, an OPC contain only one person as a director and member. So only the resolution passed and noted in the minutes book. Instead of Company secretary, he signed the annual returns of his company. The director need not prepare the cash flow in the annual financial statements.

Related party transactions

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The One person company enters into a contract with the sole member of the company, may be a director or owner of the company, the company shall entitled to ensure the terms of the contract or offer are contained in memorandum. A memorandum which is contains the minute book of the general meeting. The company shall inform the Registrar about every contract of the company and recorded minutes of the meeting of its board directors under sub-section (1) within a period of 15 days. The business of an OPC uses the owner’s personal assets many times and after that pays the compensation amount to the owner. The1 compensation is provided like pay the interest of the loans and pay salaries to the owner.

Conversion from One Person Company into private company

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According to the Companies Act, 2013, the one person company can be convert itself into a private limited company, if its paid up capital increases 50 lakhs rupees and its annual turnover increases more than 2 crore rupees or more for a period of three years. For this conversion, the necessary changes are made in the memorandum of association (MOA) and Articles of Association (AOA). The changes will meet the requirements of private limited company. The private limited company also convert itself into a One Person company, if its paid up capital is less than 50 lakh rupees and its annual turnover is less than 2 core rupees for more for a period of three years.


As the whole an OPC is a back bone of our country’s economic growth while compared to other type of companies. It is definitely benefit for the upcoming entrepreneur who starts their business in startup level. This concept motivates a person to turn himself into an entrepreneur. It is not suitable for a big organization. The rules formed for one person company is very sensible and it provides more liabilities to the entrepreneurs. For more clarification about One Person Company Registration in Coimbatore, kindly visit our site and feel free to contact us. Thanks for reading!!!

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