Who is eligible for OPC?

One Person Company (OPC) is a type of company that can be formed with only one person as a shareholder and director. Introduced under the Companies Act 2013, this structure encourages small businesses and entrepreneurs to establish their own companies. A One Person Company registration can be formed by a natural person who is an Indian citizen and resident of India. As per Rule 3 of the Companies (Incorporation) Rules, 2014, only a natural person who is an Indian citizen, whether residing in India or not, can be a member of an OPC. This article will examine in detail the eligibility criteria for forming an OPC.

One Person Company (OPC)

An OPC provides a separate legal entity and limited liability to the business owner. It allows the individual to carry out business activities without needing a partner or a board of directors. The concept of OPC is similar to that of a private limited company but with fewer compliance requirements. There are certain restrictions on the number of OPCs a person can form, and the turnover and paid-up capital of an OPC are limited. An OPC must be converted into a private or public limited company if its turnover exceeds Rs. 2 Crores or its paid-up capital exceeds Rs. 50 lakhs. Overall, an OPC is a good option for solo entrepreneurs who want to start their own business without needing a partner but still want the benefits of a separate legal entity and limited liability.

Who is eligible for OPC?

An OPC (One Person Company) can be formed by a natural person who is an Indian citizen and resident of India. The following are the eligibility criteria to form an OPC:

As per Companies (Incorporation) 2nd Amendment Rules 2021, only a natural person who is an Indian citizen whether resident in India or otherwise shall be eligible to incorporate a One Person Company. Note: Resident in India” means a person who has stayed in India for a period of not less than one hundred and twenty days during the immediately preceding financial year.
Only a natural person can form an OPC, not any legal entity or company.
The person forming the OPC must be at least 18 years old.
Only one person can be the shareholder and director of an OPC.
The person forming the OPC must not be a member or nominee of more than one OPC.
The person forming the OPC must not be disqualified under the Companies Act 2013.

Additionally, certain businesses cannot be formed as OPC, such as non-profit organizations, banking or financial institutions, and companies engaged in activities like investment in securities.

Other Conditions to Form OPC

As mentioned above, Only a natural person who is an Indian citizen and resident of India can form an OPC. Non-residents and foreign nationals are not eligible to form an OPC.

A person can form only one OPC at a time. If a person already has an OPC, they cannot incorporate another OPC.
The nominee of the OPC must be an Indian citizen and resident of India. The nominee is appointed by the person forming the OPC and will become the owner of the OPC in case the single person becomes incapacitated or dies.
An OPC cannot be formed for non-profit activities, and it cannot carry out any unlawful activities.
The paid-up share capital of an OPC must not exceed Rs. Fifty lakhs and its annual turnover must not exceed Rs. 2 Crores.

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