Incorporating features of One Person Company across the world
                     Incorporating features of One 
Person Company across the 
world
In this blog, we have discussed about the incorporating features of 
one person companies and their advantages in world-wide
Incorporating features of One Person Company across the world
One person companies are not provided under the companies Act, 
1956. It was introduced by the Companies Act, 2013. One Person 
Company, the name itself suggest that it should contain only one 
member. Moreover, an OPC is a vehicle that seeks remedies to solve 
problems faced by companies such as Sole proprietorship. It has the 
unlimited liability and able to balance the extensive requirements 
of incorporating and running business. Therefore, one person 
companies will be best choice of business for the person who wish to 
start a business venture with the structural and organizational 
advantages.
Moreover, an one person company
 is a vehicle that seeks remedies 
to solve problems faced by 
companies such as Sole 
proprietorship. It has the 
unlimited liability and able to 
balance the extensive 
requirements of incorporating and 
running business. Therefore, one 
person companies will be best 
choice of business for the person 
who wish to start a business 
venture with the structural and 
organizational advantages.
Incorporating an OPC:
Several countries have already recognized the ability of individuals 
incorporating a company before the enactment of the new 
Companies Act in 2013. Furthermore, members of a companies are 
nothing but subscribers to its memorandum of association (MOA), or 
its shareholders. Therefore, OPC is a company that has only one 
shareholder as its member. Such companies are generally created 
when there is only one founder or promoter for the business. 
Entrepreneurs whose businesses lies in early stages can start OPCs 
instead of sole proprietorship business because they provide several 
advantages.
Incorporating History of OPC:
The concept of one person company was 
first recommended by the experts 
committee of Dr. JJ Irani in 2005. 
Chiefly, the committee decided to 
classify the companies based on size, 
members and the control. In reference 
to the OPC, it is said that “it is the time 
that entrepreneurial capabilities of the 
people are given an outlet for the 
participation in the economical 
activates”.
Moreover, it is also recommended that a simpler rule through 
exemptions be made applicable to OPCs in order that an entrepreneur 
is not required to expend excessive time and resources on procedure 
that could otherwise be applied to its business activities.
Consequently, major counterparts of Indian OPCs are found in Europe, 
United States and Australia have resulted in strengthening the 
economies of the countries. Similarly, OPC will give businessmen all 
the benefits that a private business will give. OPCs provides the 
opportunity to people to take advantage of the unique characteristics 
of a company while remaining independent.
Reason for the formation:
Under the old companies act, there was a requirement of at least two 
people to form a private limited companies. Hence, this is considered 
to be the major difficulty for those business people who wish to start 
the business alone. The only option will be going for a private limited 
companies or public limited companies with seven members.
Specifically, The reason why a private limited company necessarily 
have at least two people is to differentiate it from a 
sole proprietorship, which any individual could start on his own 
consensus.Incorporating features may vary from one company to other,
Idea of an OPC:
To over this problem, the companies are incorporating by individuals 
on appointing directors. They were given only one share, which is 
mandatory to become the member of the companies. The rest of 
the shares are retained by the owner of the company. In other 
words, the idea of one person company was introduced for the first 
time in the year 2009, but unfortunately, the idea could not cope up 
itself into something concrete. Then again in 2012, efforts were 
made to implement the idea, and it became a reality with the 
introduction of the Companies Act, 2013.
Features of a One Person Company
Some of the general features of a one-person company:
Private company:
Section 3(1)(c) of the Companies Act says that a single person can form a company 
for any lawful purpose. It further describes OPCs as private companies.
Single member:
Moreover, One person companies should have only one member or shareholder, 
unlike other private companies.
Nominee:
A unique feature of OPCs that separates it from other kinds of companies is that the 
sole member of the company has to mention a nominee while registering the 
company.
NO PERPETUAL SUCCESSION:
Since there is only one member in an OPC, his death will result in the nominee choosing or 
rejecting to become its sole member. This does not happen in other companies as they follow 
the concept of perpetual succession.
MINIMUM ONE DIRECTOR:
In essence, OPCs need to have minimum one person (the member) as director. They can have a 
maximum of 15 directors.
NO MINIMUM PAID-UP SHARE CAPITAL:
Companies Act, 2013 has not prescribed any amount as minimum paid-up capital for OPCs.
SPECIAL PRIVILEGES:
OPCs enjoys privileges and exemptions under the Companies Act compared to other 
companies.
Who can form a one person company?
In addition, Only a ‘natural person’ who is an Indian citizen and 
resident in India, i.e., a person who has stayed in India for a period 
of not less than one hundred and eighty two days during the 
immediately preceding one calendar year can incorporate a One 
Person Company and a nominee for the sole member of a 
One Person Company.
AS PER ONE PERSON COMPANY (RULE 3 OF COMPANIES 
(INCORPORATION) RULES, 2014)
• A person cannot incorporate more than one OPC or be the nominee of more than One 
Person Company
• A minor shall not become member or nominee of the One Person Company or can hold 
share with beneficial interest.
• Therefore, Company cannot be incorporated or converted into a company under 
section 8 of the Act.
• Consequently, Company cannot carry out Non-Banking Financial Investment activities 
including investment in securities of anybody corporate.
• No such company can convert voluntarily into any kind of company unless two years 
have expired from the date of incorporation of One Person Company, except when 
threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its 
average annual turnover during the relevant period exceeds two crore rupees.
Privileges of One Person Companies:
OPC enjoys the following privileges under the Companies Act:
• They do not have to hold annual general meetings.
• Their financial statements need not include cash flow statements.
• Annual returns are not signed by the company secretary, only directors can do so.
• Provisions relating to independent directors do not apply to them.
• Their articles can provide for additional grounds for vacation of a director’s office.
• Several provisions relating to meetings and quorum do not apply to them.
• They can pay more remuneration to directors than compared to other companies.
Membership in One Person Companies:
Only natural persons who are Indian citizens and residents are 
eligible to incorporating a one person company in India. The same 
condition applies to nominees of OPCs. Further, such a natural 
person cannot be a member or nominee of more than one OPC at 
any point of time.
Chiefly, it is important to note that only natural persons can 
become members of OPCs. This does not happen in the case of 
companies wherein companies themselves can own shares and be 
members. Further, the law prohibits minors from being members or 
nominees of OPCs.
Conversion of OPCs into other Companies:
Under the rules regulation the incorporating features 
of one person companies, the OPC cannot be 
converted into Section 8 companies, because the 
section 8 companies have the charitable objectives. 
Furthermore, OPCs can be converted into all other 
kinds of companies until the expiry date of 2 years for 
the date of company incorporation.
An OPC will be terminated, if its paid-up share capital 
of the company exceeds 50 lakh or either the average 
annual turnover of the company exceeds 2 crores. In 
such a case, the OPC will be convert into a private or 
public limited company. The company can obtain no 
objection certificate, and the resolution should be 
filed with the registrar of companies within 30 days in 
Form no. MGT14.
One Person Company as a Global Perspective:
Although OPC is a recent concept in India, it has been widespread in the 
United Kingdom for many years by Lord Herschel in the renowned case of 
Saloman v. Saloman & Co. Ltd where he acknowledged the idea of a one-
person company as lawful. Further, under Section 7 of the UK Companies 
Act, 2006, a one-person public and a private company can be formed by 
complying with the registration and Memorandum of Association 
requirements, as laid down in the UK Act.
Similarly, in the United States, almost all states issues license for single 
member limited liability companies with different state-specific laws. 
Amongst Asian countries, Pakistan, Singapore and China adopted OPC in 
their legal systems in 2003, 2004 and 2005 respectively.