Restriction on Ownership

• Only a natural person who is an Indian citizen and resident can incorporate an OPC.
  
• A person can form only one OPC at a time.
  
• Foreign nationals or non-resident Indians are not allowed to incorporate an OPC.
  
• Body corporates such as companies or LLPs cannot form an OPC.
  
• The same individual cannot be both a member and a nominee in different OPCs.
  

Limited Fund-Raising Options

• OPCs cannot issue equity shares to the public or list on stock exchanges.
  
• They are not permitted to raise capital from venture capitalists or angel investors.
  
• Investment opportunities are limited to loans or private placements.
  
• This limits expansion for capital-intensive businesses.
  
• It can impact the company’s ability to scale rapidly.
  

Restrictions on Business Activities

• OPCs are barred from engaging in Non-Banking Financial Investment activities.
  
• They cannot carry out investment in securities or financial services as their primary business.
  
• Certain regulated sectors do not allow OPC participation.
  
• Activities involving large-scale public interaction are often better suited for other company forms.
  
• Conversion is required if the company wishes to diversify into such restricted areas.
  

Compliance and Conversion Mandates

• OPCs must convert into a private or public company upon exceeding prescribed financial thresholds.
  
• Mandatory conversion is triggered if paid-up capital exceeds ₹50 lakh or turnover exceeds ₹2 crore for three consecutive years.
  
• The conversion process involves additional documentation and ROC approval.
  
• Continued operation beyond limits without conversion attracts penalties.
  
• It imposes a ceiling on long-term growth unless the company transitions.
  

Operational and Structural Constraints

• Only one member is allowed, limiting the scope for collaboration.
  
• Board-level diversity and strategic oversight are minimal.
  
• The nominee cannot be changed frequently without due procedures.
  
• OPCs are not ideal for businesses requiring multiple stakeholders.
  
• Dependence on a single individual increases operational risk in emergencies.