1. Meaning of One Person Company

As per definition provided under section 2(62) of the Companies Act, 2013, One Person Company (OPC) means a company which has only one person as a member.

3. Checklist for Registering a Company in India

Rule 3(1) of the Companies (Incorporation) Rules, 2014 provides that only a natural person who is an Indian citizen and resident in India:-

• Shall be eligible to incorporate a OPC
• Shall be a nominee for the sole member of a OPC.

3.I   Meaning of resident in India

Explanation to Rule 3(1) of the Companies (Incorporation) Rules, 2014 as amended by the Companies (incorporation) Third Amendment Rules, 2018, w.e.f. 27-7-2018 provides that resident in India means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

It has been further provided that while counting the number of days of stay of a director in India for the financial year 2018-2019, any period of the stay between 01.01.2018 till the date of notification i.e. 27-07-2018 shall also be counted.

3.2 A person cannot have more than a one OPC or become nominee

No person shall be eligible to incorporate more than one OPC or become member in more than one OPC.

A natural person shall not be member of more than a One Person Company at any Point of time and the said person shall not be a nominee of more than a One Person Company. {Rule 3 (2)}

4. Types of OPC

Section 3(2) of the Companies Act, 2013 provides that the OPC formed under section 3(1) may be either-

• a company limited by Shares; or
• a company limited by guarantee; or
• an unlimited company.

5. Name of the OPC must include the last word a Private Limited

Section 4(1) of the Companies Act, 2013 provides that the memorandum of the company shall state the name of the company with the last words “Private Limited” in the case of a private limited company, except a company registered under section 8 of the Act.

6. Liability of the subscriber in case of OPC

The liability of the member of the OPC may be limited or unlimited, and the Memorandum of Association of the OPC shall state,-

• in the case of a company limited by shares that liability of its member is limited to the amount unpaid, if any, on the shares held by them; and
• in the case of a company limited by guarantee, the amount up to which member undertakes to contribute-
• to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and
• to the costs, charges and expenses of winding-up and for adjustment of the rights of the contributories among themselves.

The Companies (Incorporation) Rules, 2014 put certain restrictions on the OPC as under:

• No minor hall become member or nominee of the OPC or can hold share with beneficial interest.
• OPC cannot be incorporated or converted into a company under section 8 of the Act.
• OPC cannot carry out Non-banking Financial Investment activities including investment in securities of any body corporate.
• OPC can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of OPC, except threshold limit (paid up share capital) is increased beyond fifty lakh rupees and its average annual turnover during the relevant period exceeds two crore rupees.