Eligibility Criteria for One Person Company Registration in India

If you are a solo entrepreneur looking to start your own company, registering a One Person Company (OPC) can be a smart choice. Introduced under the Companies Act, 2013, the OPC structure allows a single person to enjoy the benefits of a private limited company, such as limited liability, legal recognition, and ease of doing business.

However, before you begin the registration process, it is important to understand the eligibility criteria. In this blog, we’ll explore who can register a One Person Company in India, what conditions must be met, and what restrictions apply to ensure compliance with the law.

What is a One Person Company?

A One Person Company is a private company that has only one shareholder and one director. The same person can act as both. This structure is ideal for sole proprietors and individuals who want a formal business identity without bringing in partners or co-founders.

Although it offers flexibility and protection, not everyone can register an OPC. The Companies Act, 2013, lays down specific eligibility rules that must be followed during One Person Company Registration,

Who Can Register an OPC in India?

To register a One Person Company, the following eligibility conditions must be met:

1. Natural Person

Only a natural person is allowed to incorporate an OPC. This means that companies, LLPs, and other legal entities cannot register an OPC. The applicant must be an individual acting in their personal capacity.

2. Indian Citizen

The person incorporating the OPC must be a citizen of India. Foreign nationals or non-Indian citizens are not permitted to form a One Person Company in India, although they may invest in or become directors of other company structures.

3. Resident in India

The individual must be a resident of India, which means they must have stayed in India for at least 120 days during the immediately preceding financial year. This requirement was relaxed from 182 days to 120 days under recent amendments to promote ease of business.

4. One OPC at a Time

A person is allowed to incorporate only one OPC at any given time. Additionally, they cannot be a nominee of more than one OPC. This rule helps prevent misuse of the OPC model and ensures accountability.

5. Appointment of Nominee

During incorporation, the sole member must nominate another person who would take over the company in case of their death or incapacity. The nominee must also be a natural person, Indian citizen, and resident of India. The nominee must provide written consent in Form INC-3, along with valid identity and address proof.

Who Cannot Register an OPC?

While the above conditions define who is eligible, the law also restricts certain individuals and entities from forming an OPC:

• Individuals who are already members of another OPC

• Non-resident Indians and foreign nationals

• Companies or LLPs

• Individuals below 18 years of age

• Persons declared incompetent under law

Restrictions on Business Activities

Even if you qualify as an eligible person, there are restrictions on the type of business an OPC can engage in. An OPC cannot:

• Carry out Non-Banking Financial Investment activities, including investment in securities of other companies

• Convert voluntarily into any other type of company before two years from its incorporation unless the turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh

• Be formed for charitable purposes (Section 8 companies are a better option for such purposes)

Capital and Turnover Limits

The Companies Act also specifies financial thresholds that apply to an OPC:

• The paid-up share capital must not exceed ₹50 lakh

• The annual turnover must not exceed ₹2 crore

If these limits are crossed, the OPC is required to convert itself into a private limited company or another appropriate business structure within a stipulated time.

Summary of Eligibility Criteria

Here is a quick checklist:

• Individual applicant must be a natural person

• Must be an Indian citizen

• Must have resided in India for at least 120 days in the past financial year

• Cannot incorporate more than one OPC

• Must appoint a nominee who also fulfills the above conditions

• Must not be engaged in restricted business activities

• Should stay within capital and turnover limits

Conclusion

Understanding the eligibility criteria for One Person Company Registration is the first step toward launching your business the right way. The OPC model is perfect for entrepreneurs who want full control over their venture while enjoying the protection and recognition of a registered company.

If you meet the above requirements, you can proceed to the next steps, including gathering documents, reserving a company name, and submitting your application online. With the right guidance, the process is simple, fast, and highly rewarding for individual business owners.

An independent legal content writer passionate about simplifying complex government registrations and compliance procedures for startups, entrepreneurs, and professionals in India. With hands-on research and experience in topics like GST, FSSAI, PSAR