Eligibility Criteria for Starting an OPC in India

Eligibility Criteria for Starting an OPC in India

One Person Company (OPC) is a type of business entity that allows a single individual to operate a corporate entity with limited liability protection. In India, the concept of OPC was introduced to support entrepreneurs who want to start a business on their own without the need for a partner.

Here are the eligibility criteria for starting an OPC in India:

1. Sole Proprietorship

The individual starting an OPC must be a resident of India and must be a natural person. Foreign nationals, non-resident Indians (NRIs), and persons of Indian origin (PIOs) are not eligible to form an OPC.

2. Nominee

Every OPC must have a nominee who will become the owner of the OPC in case the original owner is disabled or incapacitated. The nominee must be a natural person who is an Indian citizen and resident of India.

3. Share Capital

There is no minimum capital requirement to start an OPC in India. The owner can start the business with any amount of capital depending on the business requirements. However, the authorized capital of the OPC should not exceed Rs. 50 lakhs.

4. Business Activity

An OPC can engage in any lawful business activity except non-banking financial investment activities, including investment in securities of any company. Certain special licenses or permits may be required for specific business activities.

5. Conversion

An OPC can be converted into a private or public limited company after two years from the date of incorporation or when the paid-up share capital exceeds Rs. 50 lakhs, whichever is earlier. The conversion process must comply with the Companies Act, 2013.

6. Compliance

An OPC must comply with all the statutory requirements of the Companies Act, 2013, such as maintaining proper books of accounts, conducting annual general meetings, filing annual financial statements and annual returns with the Registrar of Companies (ROC).

7. Taxation

An OPC is subject to income tax as per the Income Tax Act, 1961. The owner of the OPC is required to file income tax returns and pay income tax on the profits earned by the company.

8. Dormant Status

If an OPC is not carrying on any business operations for a period of one year or more, it can apply for the status of a dormant company. This allows the OPC to maintain its corporate status without any significant compliance requirements.

Starting an OPC in India can be a good option for individuals who want to start a business on their own with limited liability protection. It provides a simple and hassle-free way to establish a corporate entity and conduct business operations. However, it is essential to meet the eligibility criteria and comply with all the legal requirements to ensure the smooth functioning of the OPC.