One Person Company in India is a new concept. Earlier if you wanted to set up a private company, you needed at least two persons because the law mandated a minimum of two shareholders. So, for the person wanting to venture alone, the only option was a proprietorship, which is not legally recognized as a separate entity. While doing business as a proprietorship firm, the personal assets of the proprietor can be at risk in the event of failure, but this is not the case for a One Person Company, as the shareholder liability is limited to his shareholding.

Key features of a One Person Company are:

1. Lesser compliance burden
2. More opportunities, limited liability
3. Separate legal entity
4. Taking decisions is more easy
5. No statutory requirement of holding AGM
6. Compulsory Nomination

Some important points to keep in mind:

1. Only a natural person (Not Association of persons, Body of Individuals, Company, or any other entity) who is a resident of India in preceding calendar year (stayed in India for 182 days) can form OPC.
2. You cannot incorporate more than one OPC or be the nominee of more than one OPC.
3. There is a threshold of paid-up capital (Rs. 50 lakh) and average annual turnover (Rs. 2 crores in 3 immediate preceding financial years) beyond which an OPC has to mandatorily convert itself into a private or public limited Company.
4. Rules of OPC do not permit Non-Banking Financial Institutions.

Incorporation process Flow Chart

Step 1:    Complete 1 simple form

Step 2:    Obtain DIN & DSC

Step 3:    Get name approval from MCA

Step 4:    Get Company’s PAN & TAN

Step 5:     Your Company is incorporated in just 10 working days

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