Introduction
A One Person Company (OPC) is a unique type of company introduced by the Companies Act, 2013 to promote entrepreneurship and facilitate ease of doing business for solo entrepreneurs. An OPC enables a single individual to incorporate a company with limited liability and the benefits of a separate legal entity.
While an OPC may be formed and operated by a single person, the governance and legal framework of such companies are still governed by the broader provisions of the Companies Act, 2013, including those related to the appointment of directors.
Legal Framework for Appointment of Director in OPC
Relevant Provisions under the Companies Act, 2013
Section 152 – Appointment of Directors
Section 149 – Company to Have Board of Directors
Section 2(62) – Definition of One Person Company
Rule 3, Companies (Incorporation) Rules, 2014
Section 161 – Appointment of Additional Director, Alternate Director and Nominee Director
Section 170 – Register of Directors and Key Managerial Personnel
Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014
Minimum and Maximum Number of Directors in OPC
Minimum: One director
Maximum: 15 directors (can be increased by passing a special resolution)
This means an OPC must have at least one director at all times, who may also be the sole member of the company. However, more directors can be appointed if necessary, subject to legal compliance.
First Director of OPC
As per Section 152(1):
If the Articles of Association (AOA) of the company do not mention the names of the first directors, the subscriber to the Memorandum of Association (MOA) shall be deemed to be the first director until the directors are duly appointed.
In the case of an OPC, the sole member is typically also the first director of the company, unless otherwise provided.
Procedure for Appointment of Director in an OPC
The appointment of directors in an OPC follows a streamlined process due to its simplified structure:
1. Consent from the Proposed Director
As per Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the person proposed to be appointed must give their consent in Form DIR-2.
2. Digital Signature Certificate (DSC)
The director must obtain a Digital Signature Certificate to file with the Ministry of Corporate Affairs (MCA).
3. Director Identification Number (DIN)
If the proposed director does not already have a DIN, they must apply for it using Form DIR-3, along with identity and address proof.
If applying during incorporation, DIN can be allotted through SPICe+ Form.
4. Board Resolution
Though an OPC does not hold board meetings frequently due to its size, if there are more than one director, a Board Resolution may be passed to appoint the new director.
5. Filing with ROC
After appointment, the company must file Form DIR-12 with the Registrar of Companies (ROC) within 30 days of appointment, attaching:
Consent (DIR-2)
Appointment resolution (if applicable)
Proof of identity and address
Declaration of not being disqualified under Section 164
Tenure of Director in OPC
Directors in an OPC can be appointed for a period as defined in the Articles or as specified in the resolution passed at the time of appointment. A director can also be re-appointed after their term ends, subject to consent and compliance with the Act.
Duties and Responsibilities of a Director in OPC
The director of an OPC is subject to all general duties prescribed for directors under Section 166 of the Act:
Act in good faith to promote the objects of the company.
Exercise duties with due care, diligence, and skill.
Avoid conflict of interest.
Not achieve undue gain or advantage.
Not assign their office.
Non-compliance with these duties can attract penalties or disqualification.
Disqualification of Directors (Section 164)
A person shall not be eligible for appointment as a director if:
He is of unsound mind or an undischarged insolvent.
Has been convicted of an offense and sentenced to imprisonment for more than 6 months.
Has failed to file financial statements or annual returns for three consecutive years.
Has been disqualified by an order of a court or tribunal.
Resignation or Vacation of Office
A director may resign by giving notice in writing to the company, and the resignation must be filed by the company with ROC in Form DIR-12.
The director must also file Form DIR-11 with the ROC, though this is optional for OPCs.
The office of a director shall become vacant under circumstances such as disqualification, absence from board meetings, or violation of company law provisions.
Nominee in OPC
As per Rule 4 of the Companies (Incorporation) Rules, 2014:
An OPC must nominate another person as a Nominee Director, with prior written consent (Form INC-3).
The nominee will become the member in case of death/incapacity of the sole member.
The nominee must also satisfy the eligibility conditions for being a member of an OPC (e.g., must be a natural person and resident of India).
Key Points to Remember
The director of an OPC may be the same individual as the sole member.
An OPC cannot be incorporated or converted into a company under Section 8 (non-profit company).
Only a natural person who is an Indian citizen and resident in India can become a member and director of an OPC.
The resignation or death of the sole director/member must trigger immediate action to appoint a new one or convert the company.
Conclusion
The appointment of a director in a One Person Company (OPC) is relatively straightforward due to the nature of its structure. However, despite its simplicity, an OPC must still follow the procedural requirements under the Companies Act, 2013. From obtaining consent and DIN to filing the necessary forms with the Registrar of Companies, each step ensures transparency, legal compliance, and proper corporate governance.
The director in an OPC holds significant responsibilities, often managing both strategic and operational aspects of the company. Hence, it is crucial that the person appointed understands the duties, obligations, and implications of the role under Indian corporate law.
