One Person Company: a Pvt Ltd with one shareholder — but with more restrictions than most founders expect.
An OPC is legally a Private Limited Company. It has all the compliance of a Pvt Ltd, but only one beneficial owner. Most solo founders should think twice before choosing it.
The four things that matter
Where this structure actually goes wrong.
Structure — s.2(62) Companies Act 2013
An OPC has exactly one shareholder — the "sole member." The sole member must also be a Director. A nominee must be named at incorporation — the nominee takes over as the new member on the death or incapacity of the sole member. The nominee cannot be a minor, a foreign national, or an existing OPC member. The OPC can have additional directors (up to 15). Only a natural person (individual) resident in India can be the sole member of an OPC — not a company, not an LLP.
s.2(62) · one shareholder · nominee mandatory · resident Indian only
Mandatory conversion thresholds
An OPC must mandatorily convert to a Private Limited Company if: (a) paid-up share capital exceeds ₹50 lakh, or (b) average annual turnover for 3 consecutive financial years exceeds ₹2 crore. Conversion is by choice (voluntary) if below these thresholds. Mandatory conversion requires a board resolution, shareholder resolution (by the sole member), amendment of MOA/AOA, and new incorporation certificate. Practically: most OPCs that grow past ₹2cr should consider conversion earlier — some bank facilities and corporate clients won't engage with OPCs.
Mandatory conversion above ₹50L capital or ₹2cr turnover · voluntary below thresholds
Compliance — same as Pvt Ltd
An OPC has the same annual compliance obligations as a Private Limited Company: 4 board meetings per year (or 1 per half-year if only one director), Annual Financial Statement (AOC-4) within 180 days of financial year end, Annual Return (MGT-7A — a simplified form for OPCs), statutory audit under s.139. There is no AGM requirement for OPCs (the sole member acts instead). The compliance cost is identical to a 2-person Pvt Ltd. This is frequently underestimated by founders who assume "one person = simpler."
MGT-7A (simplified) · no AGM requirement · statutory audit mandatory · 4 board meetings
Income tax — Pvt Ltd rates apply
An OPC is taxed at the same rates as a Private Limited Company: 22% u/s 115BAA (no exemptions) or 25% (turnover <₹400cr with standard deductions). Dividend paid to the sole member is taxable in their hands at their individual slab rate under the new dividend tax regime (post-Finance Act 2020 — DDT abolished). Unlike a partnership, there is no "profit share exempt u/s 10(2A)" — the shareholder receives dividends, not profit shares. This can result in effective double taxation (company pays 22%, then dividend taxed again) for high-income sole members.
22%/25% rate · DDT abolished (FA 2020) · dividend taxable in member's hands
Brutally honest
Where it wins. Where it hurts.
- ✓Limited liability. The sole member's personal assets are protected (like any Pvt Ltd).
- ✓A legal entity that can hold contracts, bank accounts, property, and sue/be sued in its own name.
- ✓Corporate tax rates (22%/25%) instead of individual slab rates for high earners.
- ✗Not investor-ready — an OPC cannot raise equity from external investors or issue ESOPs without converting to a Pvt Ltd first.
- ✗Not simpler — OPC filings are almost identical to Pvt Ltd. If simplicity is your goal, an LLP is cheaper to run.
- ✗Mandatory conversion at ₹50L paid-up or ₹2cr turnover — you will be forced to convert at exactly the moment growth gets interesting.
A solo founder who wants limited liability and a corporate entity, is bootstrapped, will not raise external equity soon, and has income high enough that 22% corporate tax beats individual slab rates.
Anyone who may bring in a co-founder, raise a seed round, or issue ESOPs in the next 3 years — incorporate a Pvt Ltd with a small nominal holding to a trusted person instead. Also not for low-revenue consultants where 44ADA presumptive tax beats the corporate rate.
What we actually do
Five tracks, start to finish.
- 01OPC incorporationOne-time
SPICe+ filing + nominee designation + MOA/AOA.
- 02Annual ROC complianceAnnual
MGT-7A + AOC-4 + DIR-3 KYC + board resolutions.
- 03Statutory auditAnnual
CA audit under Companies Act.
- 04OPC-to-Pvt-Ltd conversionOne-time
INC-6 filing + shareholder addition + MOA/AOA amendment.
- 05ITR + salary/dividend structuringAnnual
Director salary vs dividend optimisation + ITR-5.
Common questions
Statute-cited answers.
I am a freelance consultant earning ₹80L/year. Should I form an OPC?+
Consider the numbers. An OPC pays 22% corporate tax (s.115BAA, if no exemptions); you as an individual would pay 30% above ₹15L under the new regime. The 8% saving looks attractive. But: an OPC requires a statutory audit (₹30,000-₹80,000/year), annual ROC filings, and salary/dividend structuring. If your consultancy is a 44ADA-eligible profession (IT, legal, architecture, etc.) and turnover is below ₹75L, section 44ADA lets you declare 50% of turnover as profit with zero books — effectively a 50% deduction at individual slab rates. Run both calculations before incorporating an OPC.
What is the role of the Nominee in an OPC?+
The nominee is a safety net, not an owner. During the sole member's lifetime, the nominee has no rights, no profit sharing, no management role. On the death or permanent incapacity of the sole member, the nominee becomes the new member — not a beneficiary under the member's Will. This creates a legal complexity: the nominee holds the OPC membership, but the estate of the deceased member holds any economic value. The nominee is then responsible for ensuring the OPC is transferred to the legal heirs or wound up. The nominated person should be someone trusted and aware of their obligations — not a random friend named to fill the form.
My OPC turnover is crossing ₹2cr. What do I do?+
You must convert to a Private Limited Company. Under the Companies Act 2013 (Rule 6, Companies (Incorporation) Rules 2014), conversion is mandatory within 6 months of the financial year in which turnover crosses ₹2cr on a 3-year average. The conversion process: pass a resolution as sole member, amend MOA/AOA, add at least one more shareholder, file INC-6 on MCA21 for conversion certificate. The converted Pvt Ltd inherits all assets, liabilities, contracts, and GST registration of the OPC — no new GSTIN needed (amendment to existing registration suffices).
Can an OPC have employees?+
Yes — an OPC is a legal employer. It can have any number of employees, must register for EPFO (if 20+ employees), ESIC (if 10+ employees), and deduct TDS on salaries u/s 192. The sole member, if also a director drawing salary, is treated as an employee for TDS purposes — salary drawn by a director is taxable as salary income. PF/ESIC applies to employed staff; the director-member's contribution depends on whether they are categorised as an employee or a director receiving remuneration.
Is an OPC better than a Pvt Ltd for a solo founder building a SaaS product?+
For a solo-founder SaaS: depends entirely on your funding plan. If you are bootstrapped, will not bring in a co-founder, and don't plan external equity in the next 3 years: an OPC works — same compliance cost as Pvt Ltd, limited liability, corporate entity. The moment you want to bring in a co-founder, raise a seed round, or grant ESOPs to employees: convert to Pvt Ltd immediately. The conversion is not difficult but adds 60-90 days of effort. Many solo SaaS founders incorporate a Pvt Ltd with a small nominal shareholding to a friend or spouse from Day 1, to avoid the future conversion overhead.
Incorporate your OPC — or help you decide if you need one.
We run the numbers first: OPC vs LLP vs sole proprietorship for your actual income, then execute whichever is right.