Question
Which of the following statements correctly describes
the concept of 'One Person Company' (OPC) under the Companies Act, 2013?Solution
As per Section 2(62) of the Companies Act, 2013, a One Person Company (OPC) is: • A company that has only one person as a member, and • Is typically incorporated as a private company. OPCs allow individuals to enjoy the benefits of limited liability while doing business alone. • An OPC may voluntarily convert into a private or public company once it meets certain thresholds (like paid-up share capital exceeding ₹50 lakh or average annual turnover exceeding ₹2 crore — as per Rule 6 of the Companies (Incorporation) Rules, 2014). • It is not allowed to raise funds from the public. This form is ideal for solo entrepreneurs who want to formalize their business with legal recognition and limited liability.
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