How to incorporate One Person Company?


As mentioned in my previous post( Read here), One Person company  is a new form of Company introduced by The Companies Act, 2013, there by enabling entrepreneurs operating as Sole Proprietors to enter into Corporate Framework.

 In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.

Who is eligible to act as member of OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.

For the above purpose, the term “resident in India” means 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 financial year.

A person can be member in only one OPC

Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.

How to incorporate an OPC?

Name reservation: Form INC-1 shall be filed for name availability in case of normal procedure followed.

Incorporate OPC: Within 60 days of the name approval, form INC-2 shall be filed for incorporation of the OPC. This shall be accompanied by Form DIR-12 except if promoter is the sole director of the OPC. Once company is incorporated, form INC-22 is also required to be filed within 30 days in case the address of registered office was not mentioned in form INC-2.

Incorporation of OPC with single Integrated Incorporation form INC-29 is also allowed. For this, form INC-1 is not a pre-requisite.

How to inform ROC about change in member of OPC?

The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.

What is the procedure for compulsory conversion in Private Ltd Company or Public Limited Company?

The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company. Form INC-5 shall be filed within sixty days of exceeding threshold limits.

Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.

Yes, a private company can also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.

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Starting a Company? Select which type suits your business.


Many of us who wish to incoporate our business tend to defer it due to fuzzy world of regulations, the never ending compliance requirements tend to make us step back. There are middlemens and agents who portray obscure regulations to escalate the billing and uninformed clients become the guinea pigs.

Ministry of Corporate Affairs has indeed eased the procedure for incorporating in India and every information you need is easily available.

First thing first, decide what type of Company you need:

  1. One Person Company – Enables an entrepreneur to start and manage a limited liability entity. OPC is formed to support single entrepreneurs and help them in running business with limited compliance requirement. (Procedure for starting OPC ) Following are its advantages:
    1. Less Regulations
    2. Legal identity for business
    3. Limited Liability
  2. Private Limited company -Private limited companies are the companies where minimum number of members is two and maximum 200. A private limited company has flexibility, greater capital combination of different and diversified ability, limited liability, greater stability and legal entity. In the grand of priveleges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is the subsidiary to the other public company.Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Borrowing Capacity
    4. Limited Liability
    5. Owning property
  3. Public Limited Company –  A limited company grants limited liability to its owners and management. They have a right to raise money from public for operations of the business and minimum number of members to start the business is  7 and no maximum limit. It has all the benefits of private limited company and ability to raise high funds, but has to follow many regulations and compliance requirements. Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Borrowing Capacity
    4. Limited Liability
    5. Owning property
    6. Ease of raising high funds
  4. Limited Liablity Partnership – It has been introduced in India by Limited Liabilities Act, 2008. The basic premise of the Act is to provide a form of business organisation that it is simple to maintain while at the same time providing limited liability to the owners. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence or negligence of the LLP’s employees or other agents.  Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Audit Not required
    4. Limited Liability
    5. Owning property