Frequently Asked Questions (FAQ’s) on One Person Company (OPC) 

Based on the questions raised by my Clients, I have collated below list of FAQ’s on OPC.

Q1.  What is a One Person Company?

Ans. As per Section 62 of Companies Act, 2013, One Person Company means a company which has only one person as a member. One Person Company is popularly known as OPC.

Q2.Who is eligible to incorporate OPC?

Ans. A natural person who is an Indian citizen and resident in India:-

(a) shall be eligible to incorporate a One Person Company;

(b) shall be a nominee for the sole member of a One Person Company.

(Resident means a person who has stayed in India for period of not less than 182 days in the immediate preceding Financial Year)

Q3. How many OPC’s can one person incorporate?

Ans. A person cannot incorporate more than one (1), One Person Company.

Q4. What are the nomination requirements?

Ans. A subscriber to memorandum of a OPC shall nominate a person to become the member of OPC in the event of subscriber’s death or his incapacity to contract.

Q5. Whether prior consent of nominee shall be required to become a nominee?

Ans. Prior written consent of nominee shall be required.

Q6. Can nominee withdraw his/her consent?

Ans. Nominee can withdraw his consent by giving a notice in writing and subscriber shall nominate another person within 15 days on the receipt of withdrawal.

Q7. Can subscriber change nominee?

Ans. Yes. The subscriber or member of a One Person Company may, by intimating in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the prior consent of such another person.

Q8. What if subscriber ceases to be member, in the event of death?

Ans. If subscriber ceases to be member then his nominee becomes the member of such One Person Company and such new member shall nominate another person as nominee within 15 days of becoming the member.

Q9. Can OPC be converted itself into a public limited company or private limited company?

Ans. Yes, OPC can be converted itself into a public limited company or private limited company. No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.

Q10. Can private Limited company convert into OPC?

Ans. Yes. As per Companies (Incorporation Amendment Rules, 2015, a private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less and average annual turnover during the relevant period is two crore rupees or less may convert itself into One Person Company by passing a special resolution in the general meeting.

Q11. Under what circumstances OPC shall be liable to convert itself into a public limited company or private limited company?

Ans. OPC shall be liable to convert into Public limited company or private limited company where the paid up share capital of OPC exceeds Rs. 50 lakhs or its average annual turnover of last three years exceeds Rs. 2 crore it shall cease to be entitled to continue as a One Person Company. OPC can be converted into Private or Public company after two years from the date of incorporation of OPC.

Q12. What are the compliances to be followed after conversion of OPC into a public limited company or private limited company?

Ans. Refer below compliances

i) Alter its memorandum and articles by passing an ordinary or special resolution

ii) Intimate to ROC within 30 days that it ceased to be OPC.

iii) OPC can get itself converted into a private limited or public limited after increasing minimum number of members & directors to two or minimum to seven members & three directors.

Q13. What are the naming guidelines for OPC?

Ans. The same naming guidelines which are applicable to private limited or public limited company are applicable to OPC.

Q14. What are the secretarial compliance applicable for OPC?

Ans.The OPC shall be deemed to have complied with the provisions of holding board meeting if at least one meeting of board of directors has conducted in each half of the calendar year and the gap between the two meetings is not less than 90 days. If OPC has only one director on its board of directors, the provision shall not apply.

The OPC shall not be required to hold Annual general meeting in each year. The provisions of calling of Extra Ordinary General meeting, notice of General meeting, statement to be annexed to the notice, quorum, chairman, proxy for the meetings, restrictions on voting rights, postal ballot, circulation of members’ resolution are not applicable.

The financial statement of OPC may not include the Cash Flow Statement.

After incorporation of OPC, the company shall paint or affix its name as “One Person Company” in brackets below the name of the company.

Q15. Can I convert my Proprietorship business to OPC? Since I have already established brand name, can I retain the same name while registering for OPC?

Ans. Yes, surely you can convert proprietorship firm to OPC and can retain the same name while registering for OPC.

Q16. Can I nominate my friend or family member ?

Ans. Yes member can nominate his friend, spouse, relative.

Q17. What is a difference between One Person Company and a Proprietorship concern? What is recommended? Could you specify some comparison points? advantages and drawbacks of both?

a) Proprietorship firm is single person firm, where the liability is not defined, it is unlimited and in case of OPC liability of member is limited.

b) Firm is not separate legal entity. OPC is legal entity and has perpetual succession

c) Being OPC, member can represent his company.

d) In case of OPC, on the demise of the original One Person Company (OPC) director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member. This is not possible in case of proprietorship firm.

Q18. Can I sell my OPC to another person?

Ans. Yes, you can sell OPC to another person.

Q19. Can I purchase already established OPC from another person?

Ans. Yes, you can purchase already established OPC from another person.

Q20. I am a 15 year old student. Can i start my own OPC in Software Development? Initially I would like to register a OPC, once the business grows can I convert it to a Private company or LLP?

Ans. For being member of OPC, one should have completed 18 years of age.  

Q21. If I am a director, can I appoint another partner as a sleeping partner in OPC?

Ans. No, appointment of sleeping partner in OPC is not possible

Q22. If my OPC makes a loss, still I need to file the Statutory returns with the RoC?

Ans. Yes, though there is no business transaction during the year till end of financial year, annual filing must be done on time.

Q23. Do I need to apply for the Shop Act Establishment License, once registered as OPC?

Ans. Yes, in Maharashtra, as per Bombay Shop and Establishment Act, OPC must apply for shop act licence.

Q24. What is the Statutory return filing frequency? Is it annual ?

Ans. Financial statements of a One Person Company need to be filed with the Registrar of Companies (RoC), after they are duly adopted by the member, within 180 days of closure of financial year.

Q25. What are the different Taxes I have to pay for OPC?

Ans. Director shall pay Profession tax, Income tax to the Government.

Q26. Do I need to apply for IEC for exporting Software once the OPC is registered?

Ans. Yes, OPC can make application for IEC license (Importer Exporter Code).

Q27. Can OPC become a member of another Private Limited company

Ans. Yes, there is no restriction with respect to OPC becoming a member of Private Limited company.

Q28. Can member of  OPC incorporate a company outside India?

Ans. Yes, a member of OPC can incorporate a company outside India.

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