28 Mar One Person Company (OPC): Everything You Need to Know

Starting a business alone? A One Person Company (OPC) might be the perfect choice! Introduced under the Companies Act, 2013, an OPC allows a single entrepreneur to run a legally recognized business with the benefits of limited liability, better credibility, and structured growth. Let’s dive into the features, advantages, compliance requirements, and legal framework surrounding an OPC.

What is a One Person Company (OPC)?

A One Person Company (OPC) is a company that has only one shareholder but enjoys the status of a separate legal entity, just like a private limited company. It bridges the gap between a sole proprietorship and a private limited company, offering better legal recognition and limited liability protection.

The concept of OPC was introduced under Section 2(62) of the Companies Act, 2013 to encourage solo entrepreneurs to incorporate a structured business while avoiding the risks of a sole proprietorship.

Key Features of an OPC 

1. Single Shareholder – Only one person can incorporate an OPC. However, an OPC can have more than 1 directors to assist in operations.
2. Nominee Requirement – A nominee must be appointed at the time of incorporation. If the sole member is unable to continue, the nominee takes over or decides the company’s future.
3. Limited Liability – The liability of the shareholder is limited to their investment, safeguarding personal assets.
4. Separate Legal Entity – The OPC is a distinct legal entity from its owner, ensuring better credibility and operational structure.
5. No Minimum Paid-up Capital – Just like private limited companies, OPCs have no mandatory capital requirement.
6. Exemptions from Compliance – OPCs are exempted from several compliances applicable to private limited companies, including AGMs (Annual General Meetings).

Benefits of One Person Company (OPC)

1. Limited Liability Protection – Unlike a sole proprietorship, the owner’s personal assets are not at risk.
2. Better Market Credibility – An OPC is viewed as more professional and trustworthy by banks, investors, and clients compared to an unregistered business.
3. Easy Funding Opportunities – Though an OPC cannot issue equity shares publicaly, it can raise funds via loans, venture capital, or debt financing.
4. Less Compliance Burden – No need for board meetings or AGMs; fewer filings compared to a private limited company.
5. Smooth Business Expansion – OPCs have an easy conversion process to a private limited company when the business scales.

OPC vs Sole Proprietorship: Key Differences

Process to Register an OPC in India

Step 1: Apply for Digital Signature Certificate (DSC) for the director to file incorporation documents online.
Step 2: Apply for Director Identification Number (DIN) for the director.
Step 3: Choose a unique name for the OPC & apply for Name reservation on the MCA portal.
Step 4: Prepare MOA (Memorandum of Association) & AOA (Articles of Association), and fill the SPICe+ (INC-32) Form for OPC incorporation.
Step 5: Once the application is processed, the Registrar of Companies (RoC) issues a Certificate of Incorporation, making the OPC legally operational.
Step 6: Along comes the PAN & TAN, and open a corporate bank account for transactions.

Mandatory Compliance for OPC

Although OPCs enjoy certain exemptions, they still need to fulfill key statutory requirements:

• Annual Filing – File MCA Form AOC-4 for financial statements and MGT-7A for annual return.
• Income Tax Return Filing – OPCs must file ITR-6 annually.
• Statutory Audit – A CA must audit financials even if there is no revenue.
• GST Registration – Mandatory if turnover exceeds ₹20 lakh (₹40 lakh for goods businesses).
• Director’s Report – A basic Board Report is required under Section 134 of the Companies Act.

Who Should Register an OPC?

An OPC is ideal for:

✔️ Solo entrepreneurs & freelancers who want legal security.
✔️ Small business owners looking to scale with limited liability.
✔️ Startups that don’t need multiple co-founders initially.
✔️ Consultants & professionals (CAs, lawyers, etc.) seeking credibility.

A One Person Company (OPC) is an excellent option for solo entrepreneurs who want to enjoy the benefits of a private limited company without the complexities of a partnership or multiple shareholders. It provides limited liability, tax benefits, and market credibility, making it a strategic choice for those serious about building a structured business.