One Person company under Companies Act, 2013

One Person Company

The Companies Act, 2013 introduces a new concept of “One person company”. This is the first time such a concept is being introduced in India. Basically it is giving legal corporate status of Proprietorship form of doing business. Salient features of this new concept are explained below:


Section 2(62) defines a “One Person Company” means a company which has only one person as a member.


Section 3(1)(c ) – OPC can be formed only as a private company.

In the subscription clause of the memorandum of association of an OPC, the member will state that he is subscribing to all the shares in the capital of the company.

The Table F which is the model Articles of Association of a company limited by shares incorporates provisions of an OPC especially regarding membership, nominees, annual general meetings and board meetings.  The relevant clauses are clause 27, 48 and 76 respectively.

Rule 3 of Companies (Incorporation) Rules provides that

–      only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate a OPC and to become a nominee for the sole member of the OPC

(so body corporates, foreigners cannot incorporate an OPC);

–      a person cannot incorporate more than one OPC or become a nominee in more than one OPC; (But he can be a member of one OPC and nominee of another OPC)

–      Where a member of an OPC becomes a member of another OPC by virtue of his nomination in that second OPC, he shall opt out of either one within a period of 180 days;

–      A minor cannot become a member or nominee of OPC or holds shares with beneficial interest;

–      An OPC cannot be incorporated or converted into a company under section 8 of the Act, which is the erstwhile section 25 companies or not for profit companies;

–      An OPC cannot carry out NBFC activities including investment in securities of any body corporate;

–      An OPC cannot convert itself voluntarily into any kind of company for a period of two years from the date of its incorporation unless within that period its paid up share capital increases to more than Rs.50 lakhs OR average annual turnover during the relevant period exceeds Rs.2 crores;

Section 12(3) second proviso states that the words “One Person Company” shall be mentioned in brackets below the name of such company wherever it is printed, affixed or engraved.  So it should be mentioned as follows:

ABC Private Limited (OPC)


Rule 6 of the Companies (Incorporation) Rules, provides that where the paid-up share capital of an OPC exceeds Rs.50 lakhs or its average annual turnover during the relevant period exceeds Rs.2 crores then within 6 months from the date on which its paid up share capital increased as above or the last day of the relevant period for the turnover purposes, it shall convert itself into either a private company or a public company. “Relevant period” means a period of three immediately preceding consecutive financial years.

An OPC can however voluntarily convert itself into a private company or a public company by increasing its members but only after 2 years from the date of its incorporation.


An existing private company other than a section 8 company (i.e. not for profit company) having paid up share capital of Rs.50 lakhs or less OR average annual turnover during the relevant period of Rs.2 crores or less can convert itself into an OPC by passing a special resolution in the general meeting;

Before passing such special resolution, the private company should obtain No Objection to conversion in writing from members and creditors;

The private company can then start the procedure for conversion by submitting the relevant documents to the ROC.

A public limited company cannot obviously convert itself into an OPC.


The memorandum of OPC  shall indicate the name of the other person who has given his consent in the prescribed form to be so named and who shall, in the event of the member becoming incapacitated due to death or incapacity to contract, become the member of the company. The written consent of such other person shall also be filed alongwith the incorporation documents while forming OPC;

The memorandum of the company shall state the name of the person who in the event of the death of the subscriber shall become the member of the company.

The member has powers at any time to change the name of the nominee by giving notice in the prescribed form. The new nominee should also give his consent to his name so appearing and any change in the nominee shall require amendment in the memorandum of association.

Rule 4 of the Companies (Incorporation) Rules deals with nomination process:

The nominee can withdraw his nomination by giving his consent to the member and also the OPC. In that case, the member shall nominate another person within 15 days of the notice of withdrawal after obtaining his written consent and send intimation of such nomination to the company. The OPC is required to file the notice of withdrawal of consent and fresh nomination within a period of 30 days from the notice of withdrawal.


Section 92 provides that the annual return of an OPC should be signed by the company secretary or where there is no company secretary by a director.  This is a very queer kind of provisions because it fails to reason why an OPC should appoint a Company Secretary in its rolls since the provisions regarding mandatory appointment of KMP is way beyond the life of an OPC as per the Act. It should have been better if the requirement was that the annual return be signed by a Company Secretary in Practice.

Section 134(1)  states that the financial statement(s) of the OPC shall be signed by one Director on behalf of the OPC before they are given to the Auditors for their Report thereon. Section 2(40) excludes the cash flow statement from the definition of financial statement in case of OPC.

The Board report of the OPC need not contain the detailed disclosures as are enumerated in section 134(3) but should contain explanations or comments on every qualification, reservation or adverse remark made by the auditor in his audit report.

The Third Proviso to section 137(1) gives leeway to an OPC to file its financial statement along with other documents that are required to be filed/ attached with it, with the Registrar within 180 days from the closure of the financial year. Here since there is no concept of annual general meeting for OPC, it is 180 days from the closure of the financial year. So basically OPCs have six months to file its annual financial statements with the Registrar.


Section 96 provides that an OPC is not required to hold the mandatory annual general meeting.

Section 98 regarding power of tribunal to call meetings of members is not applicable to OPC.

Sections 100 to 111 is also not applicable to OPCs.

Section 100 – convening of extra-ordinary general meetings;

Section 101 – notice of general meeting

Section 102 – explanatory statement

Section 103 – quorum for general meetings

Section 104 – chairman of meetings

Section 105 – proxies

Section 106 – restriction on voting rights

Section 107 – voting by show of hands

Section 108 – voting through electronic means

Section 109 – demand for poll

Section 110 – postal ballot

Section 111 – circulation of members’ resolutions

Since the provisions of general meetings are being excluded for an OPC, the question remains how the matters that are generally decided upon at the general meetings in case of normal companies are dealt with in OPCs. This question has been answered in section 122 (3) as follows:

122 (3) For the purposes of section 114, any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.

Even in case of Board meetings of OPCs, section 122(4) gives the answer:

122(4) Notwithstanding anything in this Act, where there is only one director on the

Board of Director of a One Person Company, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by such director is entered in the minutes-book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all the purposes under this Act.

What this means is that where there is more than one Director in the Board of Directors of the OPC, then they should convene and hold Board meetings as are done by normal companies and the procedure and practices to be followed by normal companies in such cases should be followed by the said OPC.

Section 173(5) provides that OPCs shall be required to convene only one meeting in each half of a calendar year provided however that the gap between two Board meetings is not less than 90 days.  This is a peculiar provision which says that the gap between two Board meetings of an OPC should be not less than 90 days between each meeting. What will happen if an urgent Board meeting is required to be convened before 90 days from the conclusion of the first Board meeting. I thought the wording should have read as “not more than 90 days”

Again this provision is not applicable where the Board of Director of OPC comprises of only one Director. In that case of course the  provisions of section 122(4) applies.

Section 174 is regarding quorum of meetings of Board of Directors. This section will not apply to an OPC which has only one Director in its Board of Directors.


Section 149(1)(a) provides that minimum one director should be appointed in an OPC. There is no restriction to appointing more than one director in an OPC, but maximum no. of directors that can be appointed is 15 as per section 149(1)(b).

Section 152(1) provides that the subscriber to the memorandum shall be deemed to be the first director of the company until director(s) are duly appointed by the member in accordance with the provisions of the section.


Section 193 is important regarding related party contracts by OPC. It says:

193. (1) Where One Person Company limited by shares or by guarantee enters into a

contract with the sole member of the company who is also the director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract:

 Provided that nothing in this sub-section shall apply to contracts entered into by the company in the ordinary course of its business.

 (2) The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors under sub-section (1) within a period of fifteen days of the date of approval by the Board of

So related party contracts with the sole member who is also the Director of the company are required to be entered in the memorandum or minutes and also communicated to the Registrar within 15 days of the Board meeting where the contract is approved.

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