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DAILY NEWS ANALYSIS

  • 07 February, 2021

  • 5 Min Read

Budget Announcement for One Person Companies

Budget Announcement for One Person Companies

Finance Minister Nirmala Sitharaman announced measures to ease norms on setting up one-person companies (OPCs).

What is a one-person company?

  • A one-person company is a company that can be formed by just one person as a shareholder

How are they different from other companies?

  • These companies are different to private companies which require a minimum of two members to establish.
  • the person and the company are considered separate legal entities. In sole proprietorship, the owner and the business are considered the same.
  • In a one-person company, the sole owner’s liability is limited to that person’s investment whereas in a sole proprietorship the owner has unlimited liability as they are not considered different legal entities.
  • OPCs do not need to conduct an annual general meeting, which is a requirement for other companies.
  • A one-person company also does not require the signatures of both its company secretary and director on its annual returns. One is enough.

The concept was introduced in the Companies Act of 2013 based on the suggestions of the J.J. Irani Committee Report.

What has been proposed in the budget for OPCs?

  • An earlier rule that a one-person company would cease to have that status once its paid-up share capital exceeds 50 lakh or its average turnover for the preceding three years exceeds 2 crores, has been lifted.
  • The residency limit for an Indian citizen to set up an OPC has been reduced from 182 days to 120 days.
  • Non-Resident Indians (NRIs) are allowed to incorporate OPCs in India.

Source: TH


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05 Apr,2026

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