The Paradox of Limited Liability: Structural Barriers to One Person Company Adoption in India

The One Person Company (OPC) was introduced under Section 2(62) of India’s Companies Act, 2013, to provide solo entrepreneurs with a separate corporate identity and limited liability without requiring a second shareholder. Despite this objective, the OPC structure remains a minor segment of India’s corporate landscape compared to conventional private limited companies. This paper examines the structural, financial, and operational barriers limiting OPC adoption: corporate taxation and profit extraction costs, recurring statutory compliance, mandatory nominee requirements, credit and personal guarantee practices, restrictions on outside equity and employee stock options, and market perceptions surrounding the “(OPC)” suffix. It also contrasts India’s framework with single-member business structures in the United States and the United Kingdom, and proposes a three-tier policy reform agenda featuring optional pass-through taxation for micro-entities, proportionate audit waivers, and streamlined conversion and naming rules.