All about One Person Company

All About One Person Company


The one person company was introduced in the Companies Act in 2013 and before that the concept of a one person company did not exist as of on paper. A one person company comes under the umbrella of the private limited companies. A private limited company is called a one person company when it has only one person at its core. This means that a one person company can have one director or member. The only shareholder of a one person company is its sole member. One person companies have certain advantages over the sole proprietorship firm and that is why, individuals with an unshared purpose and vision tend to start-up their business organisation by founding a one person company.


1. Member :

A one person company need not have a board of directors or an elaborate group of shareholders. As the name suggests, it just means that a one person company only has one core member. He/she is the sole shareholder as well as the director of the company. This gives the power to a single person to go on and register for a company single handedly.

2. Private Company :

A one Person Company is a subtype of the private limited companies. According to the companies act, 2013, one person  company is a private limited company for all lawful purposes and legal proceedings.

3. Nominee :

The most distinguished characteristics of a one person company lies in the fact that it is only kind of company which needs a nominee before it comes into operation. The sole member or director of the company is asked by the concerned government agencies to nominate a nominee for the one person company he/she is going to register for. The registration of a one person company is incomplete without the nomination of a person by the only member of the company.

4. Succession :

Another important characteristics of this type of company is nomination of a person second in charge under some circumstances. The nominee is selected by the director of the one person company in order to keep a person second in charge in case of any misfortunes like the sole director’s death. In such a case, the power of choosing to be the sole member of the company or letting the position go is given in the hands of that very nominee. He/she may or may not choose to take the position of the former director and this is what puts a one person company in a lot of complications. There can be no succession to the one person company given these circumstances.

5. Capital :

The Companies Act of 2013 made it very easy for young entrepreneurs to go on and start-up their own business firms and Companies without much complications and legal formalities. So, there has been no set minimum paid up capital  for a one person company. An individual can invest as much money as he/she pleases as the initial investment for the registration of a one person company which is one of it’s important characteristics.


1. The individual who is interested in registering for a one person company can do so by following a simple procedure prescribed by the Companies Act, 2013. The first step in this process is to submit a digital signature certificate to the concerned register office. If a person does not have a Digital signature certificate, he/she needs to first get one and then apply for the registration process of a one person company along with submitting a digital signature certificate.

2. After this step is taken forward, the individual who has applied for a one person company registration is provided with a Director Identification Number. The Director Identification Number ( DIN ) helps is legally announcing the rights of the concerned individual in the one person company. This document is an important step towards getting any form of business company or firm to register legally.

3. The next most important step is to choose an appropriate name for the one person company you intend to register. For getting your company successfully registered, you need to choose a name for your company and send this proposal to the Ministry of Corporate Office. The Ministry of Corporate Office then check the proposed name of the one person company for availability after verifying from their existing data of one person companies. If your proposed name is approved, you can go ahead to the next step in the procedure. But if your proposed name is rejected by the Ministry of Corporate Office, then you are notified to pick another name and repeat the process to check it’s availability. The Ministry also sometimes suggests an alternative name for the one person company.

4. A Memorandum of Association ( MOA )and Article of Association ( AOA ) along with other important documents. The proposed director of the one person company has to provide these documents while registering for the set-up of his/her one person company.

5. A minimal fee also needs to be deposited by the proposed director of the one person company after depositing the MOA, AOA and the digital signature certificate. After the fee has been successfully submitted, all the deposited documents are verified by the Registrar of Companies. It takes around 15-30 days for the process to be completed.

6. If all the steps in the procedure are followed and the documents are also verified, then the proposed director of the One Person company receives the certificate of registration from the concerned government agencies.


1. Application of reservation of type INC-1

2. Digital Signature Certificate ( DSC )

3. Director Identification Number ( DIN )

4. Memorandum Of Association ( MOA )

5. Article Of Association ( AOA )

6. Identity proof of the proposed director – PAN, Aadhar Card or Passport.

7. Written Consent Declaration by the Nominee of type INC-3.

8. Address proof of the registered office and in case of a rented place, a No Objection Certificate ( NOC ) by the landlord.


1. Lesser Compliance Related Burden :

The one person Companies come under the umbrella of private limited companies and therefore, enjoy certain privileges of being a private limited company in legal terms. The Companies Act, 2013 has however exempted the One Person Companies from various provinces and hence this results in very few compliance related burdens for the company.

2. Organised Sector :

Many sole proprietorship firms are now opting for converting to one person company because of its various benefits. The one person Companies, under the private limited companies bracket, are more organised and structured than the proprietorship firms. Many small scale business organisations can now enter and benefit from the corporate world because of the easy setting up of the one person company.

3. Limited Liability Protection :

Unlike in the sole proprietorship firms, the director of the one person Company is not responsible for any debts or financial problems of the company. The director of the one person company has a limited liability whatsoever and his/her personal assets are not affected by the financial strains suffered by the one person company. This feature offering limited liability to the director of a one person company is quite advantageous in protecting one’s personal assets and that is why there is a movement from the sole proprietorship firms to the setting up of one person companies.

4. Easy to Manage and Get loans :

There is no official requirement of annual board meetings in a one person company. With only one director, it makes it very easy for him/her to manage the company and take it through his vision for the company’s success. Many banking firms are more inclined towards giving out loans to the one person companies more easily than to other firms like the sole proprietorship firms.


1. Restrictions related to the member :

As the name suggests, one person company needs to have only one member to be it’s sole shareholder, member as well as the director. One of the drawbacks of this rule is that only Indian citizens and people with Indian residential address proof can apply for registering a one person company in their name. Even the nominee for the one person company needs to be a permanent Indian resident.

2. Small Business Companies :

The business structure of a one person company is only suitable for small business firms. Small enterprises with lower capital investments and profits. The limit for the maximum paid up share capital is ₹50 lakhs for a one person company. So, it is not suitable for a company with a big turnover to apply for a one person company registration.

3. Business Restraints :

A one person company has been forbidden to be incorporated in any other company or for that matter, to be made into a company of some other legal structure. Also, all the non-banking financial investments can never be carried out in the name of a one person company.