SYNOPSIS

THE CONCEPT OF ONE PERSON COMPANY UNDER COMPANIES ACT, 2013

ABSTRACT- The enshrined goal behind the incorporation of the concept of One person
Company is to promote entrepreneurship. Prior to the introduction of the concept of One
Person Company, Companies Act, 1956(the Old Act) required minimum two shareholders
for establishing a private company and hence, the only option available to persons seeking to
start a venture alone was sole proprietorship . Since, proprietorship is not legally recognized
as a separate legal entity, it discouraged persons from undertaking business ventures. Hence,
this concept is being well received by the entrepreneurs and it is likely to change the manner
in which traditional and household businesses function.
The term One Person Company seems to be an oxy-moron because in general parlance, a
company means an enterprise having at least two persons. One Person Company has been
defined under Section 2 (62) of the Act as a company which has only one person as its
member. Further, Rule 2.1 of the Draft Rules under Companies Act , 2013 clarifies the term
Person by stating that the person as contemplated by the Act should be a natural person. An
OPC is incorporated as a private limited company, where there is only one member and
prohibition in regard to invitation to the public for subscription of the securities of the
company.
The research deals with the salient features of One person Company, Liability of the
company in contractual obligations and tort liability etc. The research also deals with the
formation of OPC and the exemptions available to OPC and the difference of OPC 1 and Sole
Proprietorship. The research also deals with the conversion of OPC into public and private
company and vice versa and advantages and disadvantages of OPC. The research is
concluded by discussing of OPC in India and conclusion and suggestions by the researcher.

1 One Person Company

INTRODUCTIONThe One Person Company is a very new concept introduced by the Companies Act 2013.
Section 2(62) of the Companies Act 2013 defines One Person Company. Though the
meaning of the term can be determine by the name itself that it consists of one member only.
OPC provides a whole new bracket of opportunities for those who look forward to start their
own ventures with a structure of organized business. Earlier the company meant association
of persons, where the liability was limited. This research focuses on the liability of the
members of the member of the One Person Company, as unlike other companies here the
member is one and also deals with the situation when there will be lifting of corporate veil.
Though the concept of OPC is new in India but it is very successful in U.K and several
European Countries since a very long time now. Limited liability is considered as the most
significant feature of Corporate Enterprise. The shareholders of a company have limited
liability to the amount of shares held by them. In case the company incurs large losses then
the shareholders can be required to pay only the unpaid amount on their shares. In case
unlimited companies, the whole liabilities are required to be meet by only one person. This
was mostly in the case of Sole proprietorship. The One Person Company is newly
introduced. So, it is pertinent to know the liabilities in case of these types of companies where
the member is only one. Company or a body corporate is a legal entity with perpetual
succession. It is a voluntary association of persons formed to carry out the same purpose. Its
existence is independent of the life of its members. But the One Person Company as
described by the Section 2(62) of the Companies Act 2013 means a company which has only
one person as a member. Thus, One Person Company is basically a legal entity which
functions on the same principles as that of a private company but has only one person
(natural) as its shareholder.
One Person Company may be constituted under any of the following three categories:
A company limited by shares; A company limited by guarantee or; An unlimited company.
Hence, the Act enables even an individual to establish a company by subscribing his name to
the memorandum of the company and complying with the provisions of registration under the
Act.

STATEMENT OF THE PROBLEM - This research deals with the newly introduced
concept One Person Company and the legal and financial liability of the member of the
One Person Company. The liability of its shareholders is limited to the value of shares they
have purchased. In case the company incurs huge liabilities, the shareholders can only be
called upon to pay the unpaid balance of their shares. In this new concept One Person
Company, the member is only one, so it is pertinent to know the liability of the member in
the OPC. The meaning of OPC, its salient features, meaning of limited liability and the
legal and financial liability, the formation and conversion of OPC to public and private
company are mainly focused.
METHODOLOGY:- The research methodology which is involved is doctrinal approach.
The study has been conducted through books, journals, statutes, rules and regulations of
different statutes. The documents on the subject have been reviewed and the cases decided in
India and the foreign jurisdictions have been studied.
OBJECTIVE OF THE STUDY- The main objectives of the study are1)
2)
3)
4)

To study the concept of One person company under Companies Act, 2013.
To study the difference between one person company and Sole proprietorship.
To study the salient features and the liability of OPC.
To study the formation and conversion of OPC to public and private company and

vice versa.
5) To study the impact of OPC in India.

SCOPE AND SIGNIFICANCE - The researcher is focusing on the concept of OPC which
is newly introduced in India by the Companies Act 2013. The liability in case of Contractual
obligations, tort etc. are also focused. After that formation of OPC, exemptions of OPC and
its impact in India is mentioned. It is pertinent to know how the new concept OPC may work
in India. Its a very new concept in India but it has worked successfully in other countries.
The researcher is working in this paper because some may confuse it with sole proprietorship,
but this is not so. As according to earlier definition of Company we all know it meant
association of persons with common purpose, but in this case that is OPC it is not
association of persons but the liability is limited unlike sole proprietorship. This paper
explains the reason of it being a company, its liability, corporate personality etc.
REVIEW OF LITERATURE

1) Ministry of Corporate Affairs2.

The official website of the Ministry of Corporate Affairs deals with information relating to
incorporation of OPC, conversion of OPC into private and public company, time limit for
filing the INC-5 and INC-6 form etc. The researcher has abstracted information from this
website for the purpose of understanding the registration process and technicalities regarding
the incorporation of OPC.
2) The Institute of Company Secretaries of India3
This article deals with the global development of the concept of OPC, origin of this concept
in India, impact of OPC in Indian entrepreneurship, privileges available to OPC, types of
OPC, MOA, conversion of OPC to public and private company. The article also deals with
various other legal provisions of OPC. The researcher has taken information from this article
to understand the various types of OPC, MOA, Directors, Meetings of board, exemptions
available to OPC etc.
3) One Person Company 4
This website specifically deals with incorporation of One Person Company in India. The
website deals with the definition, features, terms and restrictions and also the steps to
incorporate OPC under the Companies Act, 2013. The researcher has taken such information
from the website so as to understand the concept of OPC and the procedure to incorporate an
OPC in India.

4) One Person Company: A revolutionary Idea or a half Baked Concept? : Indian Law
Journal.5
2 http://www.mca.gov.in/MinistryV2/onepersoncompany.html last accessed on
9/9/16 at 4.45 pm
3 https://www.icsi.edu/Docs/Webmodules/ONE%20PERSON%20COMPANY.pdf last
accessed on 9/9/16 at 5.00 pm
4 http://www.onepersoncompany.in/ last accessed on 9/9/2016 at 4.30 pm.
5 http://indialawjournal.com/volume7/issue-1/article7.html last accessed on
9/9/16 at 5.20 pm.

This legal article deals background and rational behind the concept of OPC, features of OPC,
critical analysis of the concept of OPC and the difference between OPC and Sole
Proprietorship. The researcher has taken such information to understand the background and
rational behind OPC also to differentiate between OPC and Sole Proprietorship.
5) One Person Company: A critical Analysis6
This legal article deals with definition of OPC and the salient features of OPC. It also deals
with the advantages and short comings of OPC. The researcher has used such information to
understand the advantages and short comings and ambiguities of the concept of OPC.
6) Company Law: Avtar Singh 16th edition7
This book deals with the concept of One Person Company and the legal provisions attached
with OPC. The researcher has referred this book to understand the basic concept of OPC and
the Indian laws that deals with OPC.
7) V.S. Datey 3rd edition Taxmanns Company Law Ready Reckoner 8
This book deals with various provisions of the Companies Act, 2013. One of the chapter in
this book deals with the concept of OPC. The chapter deals with the definition, salient
features, and relaxations available to OPC, conversion of OPC into private and public
company. The researcher has referred this book to understand the concept of OPC and the
advantages and disadvantages of OPC.

6 http://www.worldwidejournals.com/indian-journal-of-applied-research(IJAR)/file.php?val=June_2015_1432984286__123.pdf last accessed on 9/9/16 at

5.30 pm.
7 Avtar singh 16th edition Company Law Eastern Book Company .
8 V.S Datey 3rd edition Company Law Ready Reckoner Taxmann.

TENTATIVE CHAPTERISATIONCHAPTER 1
Chapter 1 deals with the introduction of the concept of OPC, its history and background and
rationale behind the concept.
CHAPTER 2
Chapter 2 deals with the salient features and limited liability of OPC.
CHAPTER 3
Chapter 3 deals with laws regarding to formation of OPC.
CHAPTER 4
Chapter 4 deals with the exemptions available to One Person Company and difference
between OPC and Sole Proprietorship.
CHAPTER 5
Chapter 5 deals with conversion of OPC into private and public company and vice versa
CHAPTER 6
Chapter 6 deals with advantages and shortcomings of One Person Company.
CHAPTER 7
Chapter 7 deals with impact of OPC in Indian Entrepreneurship.
CHAPTER 8
Chapter 8 deals with the conclusion of the research and suggestions by the researcher.

BIBLIOGRAPHY

Bare Act of Companies Act, 2013

Introduction to Company Law; 2014, Eastern Book Company; Avtar Singh
One Person Company: A Revolutionary Idea or a Half Baked Concept on

http://www.indialawjournal.com/volume7/issue-1/article7.html
One Person Company- A Concept For New Age Business Ownership by Vatsala Singh on
http://www.mondaq.com/india/x/278154/Corporate+Commercial+Law