Rise Of One Person Companies (OPCs) And Small Companies Post-2021 Amendments: Opportunities And Challenges In India
- IJLLR Journal
- Oct 9
- 1 min read
M Ruthraprakash, Surendran R & Dwarakesh K, KMC College of Law
ABSTRACT
The Companies Act, 2013 introduced One Person Companies (OPCs) and Small Companies to encourage entrepreneurship and promote formalization among micro-businesses. Initially, statutory restrictions limited their effectiveness. The Companies (Incorporation) Second Amendment Rules, 2021 removed many barriers, making OPCs and Small Companies more attractive to entrepreneurs by easing residency rules, allowing non-resident Indians (NRIs) to incorporate OPCs, eliminating capital and turnover thresholds, and simplifying conversion procedures. Small Companies also benefitted from increased capital and turnover limits and reduced compliance obligations.
This paper traces the evolution of OPCs and Small Companies after the 2021 reforms. Drawing from Ministry of Corporate Affairs (MCA) data and comparative legal analysis, it assesses their impact on Indian entrepreneurship, examines challenges in financing and governance, and situates Indian developments alongside the United States’ single-member limited liability company (LLC) model. The paper concludes with recommendations to strengthen the legal framework and argues that OPCs and Small Companies can become significant drivers of India’s start-up ecosystem if policy gaps are addressed.
Keywords: One Person Company, Small Company, Companies Act 2013, 2021 Amendments, MCA Data, Entrepreneurship
