Introduction

Section 2(62) of the Companies Act defines a one-person company as a company that has only one person as its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.

The Companies Act, of 2013 completely revolutionized corporate laws in India by introducing several new concepts that did not exist previously. On such game-changer was the introduction of the One Person Company concept. This led to the recognition of a completely new way of starting businesses that accorded flexibility which a company form of entity can offer, while also providing the protection of limited liability that sole proprietorship or partnerships lacked.

FORMATION OF ONE-PERSON COMPANIES.

A single person can form an OPC by subscribing his name to the memorandum of association and fulfilling other requirements prescribed by the Companies Act, 2013. The such memorandum must state details of a nominee who shall become the company’s sole member in case the original member dies or becomes incapable of entering contractual relations.

This memorandum and the nominee’s consent to his nomination should be filed with the Registrar of Companies along with an application of registration. Such nominee can withdraw his name at any point in time by submission of requisite applications to the Registrar. His nomination can also later be canceled by the member.

FEATURES OF A ONE PERSON COMPANY

Here are some general features of a one-person company:

01.

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.

03.

Nominee: -

A unique feature of OPCs that separates it from other kinds of companies is that the sole member of the company must mention a nominee while registering the company.

05.

Minimum one director: -

OPCs need to have a minimum of one person (the member) as director. They can have a maximum of 15 directors.

07.

Special privileges: -

OPCs enjoy several privileges and exemptions under the Companies Act that other kinds of companies do not possess.

02.

Single member: -

OPCs can have only one member or shareholder, unlike other private companies.

04.

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.

06.

No minimum paid-up share capital: -

Companies Act, 2013 has not prescribed any amount as minimum paid-up capital for OPCs.

TYPES OF ONE PERSON COMPANY (OPC)

As per the Companies Act of 2013, there are five types of OPC you can establish. They are:

OPC Limited by Shares.
OPC Limited by Guarantee with Share Capital.
OPC Limited by Guarantee without Share Capital.
Unlimited OPC with Share Capital.
Unlimited OPC without Share Capital.

DOCUMENTS REQUIRED FOR THE INCORPORATION

Here are the documents required for incorporation of any Type of OPC:

A declaration in Form INC-8.
A declaration by the member and the nominee in Form INC-9.
The consent to perform as a director in DIR-2.
Self-attested copies of PAN and Driving License/Passport/Voter ID of the member, nominee, and all the directors.
Self-attested copy of utility bill or bank statement not less than two months old.
Ownership proof such as municipality tax paid receipt or sale deed.
Filled and signed Form INC-3

PROCEDURE FOR INCORPORATION OF ONE PERSON COMPANY (OPC).

S.No.	Particulars
01.	Obtain digital signature of the proposed member and OPC.
02.	Name approval of the Company-In accordance with Rule 9 of the Companies (Incorporation) Rules, 2014, an application for reservation of name shall be made by using Form RUN (Reserve Unique Name) along with fee of Rs. 1000/-. Log in into MCA and reservation of name can be done by filing in a simple pro forma.
03.	The name if allotted shall be valid for a period of 20 days.
04.	Form No. lNC-32 (Spice) –For Incorporation Form INC. 32 is to be filed with the Registrar along with the following attachments: Declaration by professional in INC. 8. Declaration by all the proposed members/Directors/nominee in Form INC.9. Consent to act as Director in Form DIR. 2 Self-attested copy of PAN of all the proposed member/Directors/nominee Self-attested copy of driving license/passport/voter ID card of all the proposed member/Directors/nominee Self-attested copy of bank statement/utility bill (not older than two months) of all the proposed member/Directors/nominee NOC from the owner of proposed registered office along with utility bill (not older than two months) and ownership proof such as municipal tax paid receipt, sale deed, conveyance, etc. Signed INC- 3
05.	File Form Spice MOA and Form Spice AOA with the Registrar pursuant to section 4 and 5 of Companies Act, 2013 respectively. Further, the MOA of an OPC shall contain an additional clause i.e., nominee clause.
06.	After all the requirements, ROC shall issue a certificate of incorporation in Form No. INC-11.

PRIVILEGES OF ONE PERSON COMPANY

OPC enjoy the following privileges and exemptions under the Companies Act:

They do not have to hold annual general meetings.
Their financial statements need not include cash flow statements.
A company secretary is not required to sign annual returns; directors can also do so.
Provisions relating to independent directors do not apply to them.
Their articles can provide additional grounds for the 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 form 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 in time.

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 ONE PERSON COMPANIES INTO OTHER COMPANIES.

Rules regulating the formation of one-person companies expressly restrict the conversion of OPCs into Section 8 companies, i.e., companies that have charitable objectives. OPCs also cannot voluntarily convert into other kinds of companies until the expiry of two years from the date of their incorporation.