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Need to Know About One Person Company Features

characteristics of one person company

The Companies Act, 2013 revolutionized Indian corporate law with many new concepts. One Person Company features was a game-changer. It opened up a whole new avenue for starting businesses just like after company registration in Kolkata or any other state.

A company, as an entity, could provide the flexibility and control that a company can offer. The new Companies Act 2013 also protects limited liability, which was absent in sole proprietorships and partnerships.

The Companies Act, 2013, completely changed Indian business rules by introducing new concepts and ideas. One person and one idea.

A company called an individual company (OPC), is a company that has one member (one) instead of the usual practice of having at most two members. This is an acknowledgment of a single-man economic organization, which opens up opportunities for service providers and small businesses to get into the business through corporate ownership.

One Person Company Features Definition

According to section 2 (62) under the Companies Act 2013, “one-person” is a company that has one member. One Person Company (OPC), which is a company’s shareholders or subscribers to its Memorandum of Association are functionally one person companies. OPCs are formed when a business has only one promoter or founder. OPCs are preferred by entrepreneurs who have just started their businesses.

Any natural person (but not a minor) who is Indian citizen, regardless of whether or not they are Indian citizens. The NRI will now be eligible to join One Person Company and appoint an OPC nominee. India’s non-resident timeline has been reduced down to 120 days.

Sole Propertorship vs. One Person Company Features

One person company vs sole proprietorship forms of business may appear to be similar since they each have one owner. However, in reality, these two types of business are very different. The major difference between them is in the nature of their liabilities.

OPC is a legal entity that is independent from its promoter and has its own assets and liabilities. The promoter is not liable for the payment of company debts.

The sole proprietorship and its owner are one. In the event of non-fulfillment of business liabilities, the law attaches and sells the promoter’s assets.

Significant One Person Company Features

These are the main characteristics of a One Person Company are.

Private company

The Companies Act, 2013 states that a company may be created by one person for any purpose authorized by law. OPCs can also be called private companies.

Single – Member

OPCs are not like other private companies and can only have one shareholder or member.


During the opc registration process, the sole member nominates a nominee. This unique feature distinguishes OPCs from other types of companies.

No Perpetual Succession

A nominee can choose to be the sole member or reject the death of the only member. The concept of perpetual succession of One Person Company Features applies to other types of companies.

Minimum One Director

One person must be OPCs director, which in this instance is the member. Maximum 15 directors are allowed.

No minimum paid-up Share Capital

OPCs do not have a minimum share capital. This is contrary to the Companies Act 2013.

Special Privileges

The OPCs of Companies Act enjoy many privileges and exemptions that other types companies do not possess.

Concept of One Person Company

A single person can create an OPC with One Person Company Features by signing the Memorandum of Association. He must also meet the requirements of the Companies Act, 2013. A MoA must mention the details of any nominee who will be able to take over as sole member of the company in the event of death or incapacity.

In addition to the registration application, the MoA and consent of the nominee must be submitted to Registrar of Companies. The nominee can withdraw his name at any time by submitting the appropriate application to the Registrar. A member can also cancel his nomination at any time.

Membership of One-Person Companies

Only natural persons who are citizens or residents of India are eligible to establish a One Person Company Features. This directive also applies to OPC nominees. This directive also prohibits a natural person from being a member or nominee for more than one OPC at the same time.

An important point to remember is that an OPC membership can only be granted to a natural person. This does not apply to companies. Companies cannot become members of their own business and have shares in their company. The law prohibits minors from being members or nominees for OPCs.

Conversion from One Person Company (OPCs) into Other Companies

OPCs cannot be converted into Section 8 companies. This is for philanthropic purposes only. OPCs cannot convert to other types of companies until the expiry two years after the date of formation.

Advantages Of One Person Company

Companies that are One Person Company Features benefit from the following exemptions and privileges under the Companies Act

  • OPCs do not have to hold annual general meetings.
  • Financial statements should not include cash flow statements.
  • Directors could also sign the annual returns; a company secretary are not required.
  • OPCs do not have to comply with the provisions regarding independent directors.
  • Directors are able to take home higher remuneration than other companies.