One Person Company (OPC) was a concept introduced under the Companies Act, 2013 which allowed a resident Indian citizen to start a company by himself or herself. It was thought at the beginning that the same would allow many sole proprietary concerns to shift to the company structure without being required to dilute ownership or control.
However, the concept really did not take off. The main reason for the same were the requirements for compulsory conversion to a private company or a public company upon crossing the paid up capital of INR 50 lakhs or the average annual turnover of past 3 years crossing 2 crores. The turnover criteria deterred many traders from giving a serious thought to this form of business.
The Government finally took the corrective action through the Companies (Incorporation) Second Amendment Rules, 2021 and removed the requirement of compulsory conversion.
The Amendment rules have made the following changes to the existing framework which are effective from 1st April, 2021:
- Any Indian citizen (whether a resident in India or not) can incorporate a One Person Company.
- There is no compulsory conversion requirement for a OPC i.e. there is no limit on the scale of funding and activity in the OPC.
- Any existing private company can be converted into OPC irrespective of its turnover or paid-up capital.
One comment
Thirupal Gorige
June 4, 2021 at 7:19 am
Very good article.