In India, a One Person Company (OPC) is a company formed by a single person as a director. OPC is introduced under the Companies Act of 2013. It promotes entrepreneurship and encourages small businesses to form their own companies. Only residents and citizens of India can apply for One Person Company. Knowing the eligibility criteria for OPC is the most important thing before applying.
On this page
What is OPC?
The One Person Company separately provides limited liability and legal entity for the owners. It would not create a necessity for partners or other board members. A single person can handle the firm, and it is like a Private Limited Company.
A one person company faces several restrictions on the number of OPCs a person can form. The paid-up capital and turnover are limited for an OPC. To convert OPC into a Public or Private company, its turnover must exceed INR 2 crores. And the paid-up capital for OPC must be above 50 lakhs.
What are the eligibility criteria for OPC?
Under the Companies Act of 2013, the eligibility criteria for OPC setup in India are as follows:
- OPC can be formed only by Indian citizens who reside in India.
- Neither a company nor a legal entity can form an OPC. It is only for a natural person.
- There is a chance for only one person to be the shareholder and director.
- The age criteria are above 18 years.
- The person cannot be a nominee of more than one OPC.
- OPC cannot be formed by a person who is disqualified under the Companies Act 2013.
Who cannot form an OPC in India?
Like the eligibility criteria for OPC, certain sections cannot form an OPC. They are;
- Banking institutions.
- Financial institutions.
- Non-profit organization.
- Securities investment companies.
Other conditions for incorporation of OPC
OPC comes under section 2 (62) of the Companies Act 2013. It is a private limited company. Only one person can serve as the sole member of OPC.
- The term “OPC” must be included in the name of OPC.
- A person cannot incorporate another OPC if they already have one.
- Only natural persons and Indian citizens are included in OPC.
- Only one natural person for one OPC.
- Minors are not allowed to be members or nominees. They should be above 18 years.
- Incorporation or conversion into a Section 8 company is impossible in OPC.
- Investments in securities of corporate bodies are not possible.
- Non-banking financial investment activities are not possible in OPC.
- OPC members can appoint a nominee to become a member in case of death.
- A person must be an Indian resident for at least 182.
Conclusion
In conclusion, One Person Company has one person to handle the firm. It is formed under a single shareholder. Introduced under the Companies Act 2013 to encourage entrepreneurs. It also helps small businesses to grow on their own. There are some eligibility criteria for OPC.
Following those criteria helps in smooth OPC formation. The most important thing is a person must be an Indian citizen and resident. One person can be a nominee for only one OPC. So, eligibility criteria for OPC is most important thing one should know.
24efiling is the ultimate guide for registering your companies with expert guidance and user friendly process.
FAQs
1. What can OPC provide to its owner?
The one person company provides limited liability and legal entities for the owners.
2. What are the eligibility criteria for OPC?
1) Only Indian citizens can form an OPC.
2) Only one person is the shareholder and director.
3) Age should be above 18 years.
4) A person can be the nominee of only one OPC.
5) Qualify conditions under the Companies Act 2013.
3. Who cannot form an OPC?
Mainly neither a company nor a legal entity can form OPC.
4. Why cannot banking institutions form OPC?
Banking institutions typically cannot form an OPC due to regulatory restrictions and the nature of their operations.
5. What are the age criteria for the formation of OPC?
A person, to form an OPC must not be a minor. They should be above 18 years.
6. Under which act an OPC comes?
OPC comes under Section 2 (62) of the Companies Act 2013.
