By Manu Rao | Updated March 2026
What Is a One Person Company?
A One Person Company (OPC) allows a single individual to run a company with limited liability. Introduced under Section 2(62) of the Companies Act 2013, it was originally restricted to Indian residents. The Companies (Amendment) Act 2021 opened OPC registration to NRIs as well. This change came into effect from April 1, 2021.
An OPC has just one member who is also typically the sole director. It must nominate a second person as a nominee — this nominee steps in as member if the original member dies or becomes incapacitated (Section 3(1)(c)).
Legal Framework
Key statutory provisions governing OPCs:
- Section 2(62) — Defines a One Person Company
- Section 3(1)(c) — Only a natural person who is an Indian citizen (whether resident or NRI) can form an OPC
- Rule 3 of Companies (Incorporation) Rules 2014 — Nominee requirements and consent in Form INC-3
- Section 96 — OPCs are exempt from holding Annual General Meetings
- Section 122 — Simplified provisions for general meetings
After the 2021 amendments, the residency requirement was removed. NRIs with Indian citizenship can now form OPCs. The earlier thresholds — paid-up capital of Rs. 50 lakh and turnover of Rs. 2 crore — that triggered mandatory conversion to a private limited company were also removed.
Who Can Form an OPC?
Only a natural person who is an Indian citizen can be a member of an OPC. This rules out foreign nationals who do not hold Indian citizenship. The person can be a resident Indian or an NRI, but must hold an Indian passport. A person cannot be a member in more than one OPC at the same time.
How NRIs Can Set Up an OPC
Since April 2021, NRIs holding Indian passports can form OPCs. The process through MCA follows these steps:
- Obtain DSC — Get a Digital Signature Certificate from an Indian Certifying Authority
- Name reservation — Apply through RUN or Part A of SPICe+
- Nominee consent — Obtain written consent from the nominee in Form INC-3
- File SPICe+ Part B — Submit incorporation application with MOA and AOA
- Receive CIN — The Registrar issues a Certificate of Incorporation
NRI applicants must submit apostilled or notarized copies of their Indian passport, foreign address proof, and PAN card. The nominee must be an Indian citizen (resident or NRI) and cannot be a minor.
Restrictions on OPCs
OPCs carry specific restrictions that matter for business planning:
- No foreign national members — Only Indian citizens qualify. A U.S. citizen of Indian origin (OCI holder) cannot form an OPC.
- Cannot raise equity investment — Since there is only one member, issuing shares to external investors requires conversion to a private limited company first.
- Cannot carry out NBFC activities — OPCs are barred from Non-Banking Financial Company business.
- One OPC per person — A person can be a member of only one OPC and nominee of only one OPC.
However, many earlier restrictions have been lifted. There is no mandatory conversion threshold based on turnover or capital. OPCs can now voluntarily convert to a Private Limited Company or Public Limited Company at any time.
Annual Compliance
OPCs enjoy relaxed compliance compared to private limited companies:
| Requirement | OPC Rule | Private Ltd Rule |
|---|---|---|
| Annual General Meeting | Exempt (Section 96) | Required |
| Board Meetings | Minimum 2 per year (Section 173(5)) | Minimum 4 per year |
| Financial Statements (AOC-4) | Within 180 days of year-end | Within 30 days of AGM |
| Annual Return (MGT-7A) | Within 60 days of AGM (or year-end for OPC) | Within 60 days of AGM |
| Statutory Audit | Required if turnover exceeds Rs. 2 crore | Always required |
Cash flow statements are not mandatory for OPCs (Section 2(40) exemption). The single member's decisions recorded and signed in the minutes book serve as board resolutions.
Tax Treatment
OPCs are taxed as domestic companies. They can opt for the 22% concessional rate under Section 115BAA (effective rate ~25.17%). Since OPCs are companies, not proprietorships, the member's personal income and company income remain separate. Salary paid to the member-director is a deductible expense for the company.
Common Mistakes
- OCI holders applying for OPC — OCI cardholders are not Indian citizens. They cannot form an OPC. This trips up many people of Indian origin living abroad.
- Forgetting the nominee consent — Form INC-3 must be filed with the incorporation application. Without it, MCA rejects the filing.
- Using OPC for FDI — Foreign investors (non-citizens) cannot invest in OPCs. If you need foreign capital, start a Private Limited Company.
- Not changing nominee when the relationship breaks down — If your nominee withdraws, you must appoint a new nominee within 15 days and file Form INC-4 with the Registrar.
- Missing DIR-3 KYC — Even OPC directors must file DIR-3 KYC by September 30 each year. Failure leads to DIN deactivation.
Practical Example
An NRI software engineer holding an Indian passport lives in Singapore. She wants to start a freelance IT consulting business in India while keeping her Singapore job. She forms an OPC with herself as the sole member and her brother (an Indian resident) as the nominee.
Her Indian passport and Singapore utility bill are notarized by the Indian High Commission in Singapore. She files SPICe+ through MCA, pays the registration fee on Rs. 1 lakh authorized capital, and receives her Certificate of Incorporation within 7 working days.
She holds 2 board meetings per year (minimum requirement). Since her turnover stays below Rs. 2 crore in the first year, the statutory audit threshold does not apply. She files AOC-4 within 180 days of the financial year-end and MGT-7A within 60 days after that.
When her business grows and she wants to bring in a foreign investor from Singapore, she voluntarily converts the OPC to a Private Limited Company under Section 18 by passing a special resolution and filing Form INC-6 with the Registrar.
OPC vs. Sole Proprietorship
Many NRIs confuse OPCs with sole proprietorships. The key difference: an OPC is a separate legal entity with limited liability. A sole proprietorship offers no liability protection — the owner's personal assets are at risk. An OPC can open bank accounts, sign contracts, and own property in its own name. It also carries more credibility with clients and vendors.
For help deciding between an OPC and other structures, see our registration services.