One Man Company

one man company


The Companies Act, 2013 was passed in Lok Sabha on 18 December, 2012 and was passed in Rajya Sabha on 8 August 2013. It got the ascent all 29th August 2013 by the President.[1] This act includes 470 clauses in 7 schedules as against 658 sections and 15 schedules in the previous Companies Act, 1956.[2] This act includes 29 chapters. There were several concepts which were introduced under the Companies Act, 2013 for the very first time deleted the one person company.

One person company has been defined under Section 2 (62) of the Companies Act,[3] 2013 as a private company with only one director and one share holder. It can have up to 15 directors. The limited liability related to the individual entrepreneurs will be available as a sole proprietor and enjoy the benefits of the limited liability. According to a research paper drafted by Nishith Desai Associates on the New Companies Bill stated that “a one person company is a paradigm shift in the Indian corporate regime, bringing it at par with global standards”.[4]


 Under the Section 3 (1) (c) of the Companies Act, 2013[5], one person company can be formed for any lawful purpose by one person.[6] The Memorandum of Association of One Person Company shall indicate the name of another person prior to his consent that will be the subscriber after his death and will become a member of the company.[7] The consent in the written form of such person will be filed with the registrar of the companies at the time of incorporation of One Person Company along with the Memorandum of Articles.[8]

One person company comes under the Section 12 (3) of the Act. The page of capital of one person company cannot exceed 50 lakh and the annual average turnover cannot exceed 2 crore. As per rule 2.1(2), a person can incorporate a maximum of 5 one person companies.


 There has been number of functions that has been provided to the one person companies

Few of them are-

  1. It is not necessary for the one person company to prepare cash flow statement as a part of financial statement. This has been stated under section 2 (40) of the Companies Act, 2013.[9]
  2. Is there is no company secretary present under the one person company then the annual return can be signed by the director of the company this has been stated under Section 92 (1) of the Companies Act, 2013.[10]

It is not compulsory for One Person Company to hold an annual General Meeting. This has been saved under Section 96 one of the Companies Act, 2013.



As stated above one person company share capital should not exceed Rs. 50 lacks and average capital turn over should not exceed 2 crore. One Person Company must alter its memorandum and article by passing resolution under Section 122 (3) of Companies Act, 2013 to give the effect of conversation and necessary changes which has to be done.[11]

One Person Company within 60 days from the date of applicability of above provisions must give a notice to Registrar in form number INC.5.


 For converting into a private or public company one person company has to increase the number of members and directors up to 2 or minimum of 7 members and two or three directors as the case may be.[12]


 Under the One Person Company even a single person can start a business without fear of unlimited liability no matter how risky it is. He can independently carry out of business under the company structure. The greater flexibility will be provided to an individual or a professional to manage is business efficiently in enjoying the benefits of One Person Company. But From taxation point of view one person company may not a pill to swallow proprietor since the tax rate is approximately 30% and may result in the higher incidence of taxation for the Smaller Roll Ventures


[1] Admin, One Person Company Under New Companies Act,2013 (2014), (last visited Apr 17, 2017).

[2] Vivek Kumar Verma, ONE PERSON COMPANY UNDER COMPANIES ACT, 2013 (2015), (last visited Apr 17, 2017).

[3] Section 2 (62) of the Companies Act states that one Person Company” means a company which has only one person as a member;

[4] A N GAWADE & CO, One Person Company (OPC) under new Companies Act, 2013 (2014), (last visited Apr 17, 2017).

[5] Section 3 (1) (c) of the Companies Act, 2013 states that one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

[6] Id.

[7] Vatsala Singh, India: One Person Company- A Concept For New Age Business Ownership (2013), Commercial Law/One Person Company A Concept For New Age Business Ownership (last visited Apr 17, 2017).

[8] Companies Act, 2013, Complete Act – Bare Act, , (last visited Apr 17, 2017).

[9] “financial statement” in relation to a company, includes—

  1.         a balance sheet as at the end of the financial year;
  2.         a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

            iii.        cash flow statement for the financial year;

  1.         a statement of changes in equity, if applicable; and
  2.         any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv).

[10] Companies Act, 2013, ,,%202013&STitle=Annual%20return (last visited Apr 17, 2017).

[11] The Companies Act, 2013 & The Companies Rules, 2014, , (last visited Apr 17, 2017).

[12] Mansukhlal Hiralal & Company, India: One Person Company – Evolution Under New Companies Act (2015), Governance/One Person Company Evolution Under New Companies Act (last visited Apr 17, 2017).

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