Who can form One Person Company?

An OPC can be formed only by a natural person who is an Indian citizen and stayed in India for a minimum of 182 days in the immediately previous calendar year.

What is the minimum number of Directors required to form an OPC?

Minimum one Director is required to incorporate an OPC. Further, the sole member can also become the first director of the Company till the member appoints any other director.

What is the minimum capital requirement to start an OPC?

As per the Companies Act, 2013 and Company (Incorporation) Rules these is no minimum capital requirement to incorporate an OPC in India. You can even start an OPC with a capital contribution as low as Rs. 2. However, the maximum capital allowed is Rs. 50 lakh.

Can I form two or more OPCs?

No, a member can’t incorporate more than one OPC as under Companies (Incorporation) Rules, 2014. Further, a Nominee can’t be a nominee and a member in two OPCs.

Who can be a Nominee?

As per Rule 3 of Companies (Incorporation) Rules, 2014 only a natural person who has attained majority and is an Indian citizen and resident of India in the previous calendar year can become a Nominee Director in an OPC.

When does a One Person Company require to convert itself mandatorily?

A One Person Company is required to be converted into a Private Limited or Public Limited company when it crosses the threshold limit of paid-up capital of Rs. 50 Lakhs or Average Turnover of Rs. 2 Crores in any year.

I am a sole member of an OPC (Name can’t be revealed). Recently my Average turnover crossed the threshold limit or Rs. 2 crores. What should I do now?

Once your threshold limit is crossed either the paid-up capital or the average turnover; the OPC is mandatorily required to convert itself into a Private Company or a Public Company. Follow the steps below after crossing the threshold limit.
File form INC-5 to inform ROC about the breach of threshold limit within 60 days of breach of limit.
Convert the OPC into public or private Company as per the Companies Act, 2013 within six months period from the date of breach of threshold limit.

What are the disadvantages of an OPC?

Disadvantages of forming an OPC are-

Ineligible to carry Non- Financial Business Activities,
Can’t convert voluntarily in any form of the company before two years of incorporation and prohibited to convert itself at any time into section 8 Company.
Restrictions of a Private Limited Company apply to OPC also.
It is more suitable for small entrepreneurs due to limited share capital structure.

How to inform ROC about the cessation of membership?

The OPC is required to file INC-4 in case of cessation of membership on account of death, incapacity or change in ownership. In the same form, the details of a new member are required to be mentioned.

Is there any form required to be filed in case of conversion of OPC into a Private Limited or Public Limited Company?

Yes, a form INC-6 is required to be filed with ROC in case of conversion of OPC into any form of the company whether Private or Public Company. Further, a private company is also required to file INC-6 in case of converting itself into an OPC.

What is the time limit to file INC-6?

Time limit for filing INC-6 is thirty days in case of voluntary conversion and Six months in case of mandatory conversion.

What if the Nominee of an OPC is now the member of the OPC and at the same time holds the position of the member in other OPC?

If a member of an OPC becomes the member of another OPC then within 180 days he will be required to fulfil the statutory eligibility criteria for becoming a member of only one OPC and will have to withdraw his membership from either OPC.

How to inform ROC about the change in Nominee?

File INC-4 with the ROC informing about the change in Nominee or withdrawal of consent by the Nominee.

Can I become a director in an OPC if I am in already in employment?

Yes, there is no such legal constraint in the Companies Act if not restricted by the employment agreement. All you need to do is check your employment agreement because it may limit you from becoming a director in other company simultaneously.