Under the old Companies Act 1956, it was required to have at least two people to form a private limited company and 7 people to form a public limited company. There was no concept of forming a company with a single shareholder as its member.
In Companies Act 2013, a new concept has been introduced known as One Person Company which gives an opportunity to Indian entrepreneurs to enter the corporate world. It’s popularly known as OPC i.e. One Person Company.
In this case, one individual can register a company in India by becoming a shareholder or member cum director of the same company. Liability of the member in this case is limited, which was not the case in Proprietorship business.
One Person Company can be formed by an individual by subscribing his or her name to the memorandum of association and complying with the other requirements of the Companies Act 2013 in respect of registration.
After registration, the words “one person company” shall be mentioned in brackets below the name of such a company, wherever its name is printed, affixed or engraved.
At the time of registration, the OPC should also indicate the name of another person as nominee, with his prior written consent in the prescribed form.
Such nominee shall become the member of the company in the event of the subscriber‘s or shareholder’s death.
A written consent of such person (nominee) shall also be filed with the registrar of companies at the time of incorporation along with its memorandum and articles of association.
OPC is a new concept for India but worldwide it’s used in countries like the US, and many countries of Europe, China and Singapore. The entrepreneurs in these countries have options to decide the constitution of company as per their need and the option of an OPC is available to them.