Legal Status and Capacity

• An OPC is recognized as a separate legal entity under the Companies Act, 2013.
  
• It has the legal capacity to own assets, enter into contracts, and invest in shares of other companies.
  
• Being a private limited company (with a single member), an OPC can act like any other corporate body in terms of investments.
  
• This means it can hold equity or preference shares in other companies in its name.
  
• The law does not specifically prohibit an OPC from being a shareholder in another entity.
  

Type of Investments Allowed

• An OPC can invest in private limited companies, public limited companies, or listed companies, subject to compliance.
  
• It may hold minority or majority shares depending on its objectives and capital capacity.
  
• The investment must be aligned with its Memorandum of Association (MoA) objectives.
  
• It can also act as a subscriber or promoter of a new company if within legal scope.
  
• However, it must avoid financial sector investments that fall under restricted categories.
  

Restrictions and Limitations

• An OPC cannot be formed for carrying out Non-Banking Financial Investment activities such as trading in securities or acting as an NBFC.
  
• If the shareholding activity appears to be a primary business (investment business), it could violate this restriction.
  
• The intention behind the investment must be strategic or operational, not speculative or financial-only.
  
• Care must be taken to ensure that the OPC’s activities do not resemble those of a financial institution.
  
• Violating these limitations may lead to regulatory scrutiny or legal issues.
  

Shareholding Role and Rights

• As a shareholder, an OPC can receive dividends, vote in meetings, and enjoy ownership benefits like any other company.
  
• The shares held by the OPC are considered corporate investments, not personal holdings of the member.
  
• The single member or director does not personally control the shares; the control is exercised on behalf of the OPC.
  
• If the OPC holds significant shares, it can even nominate a director to the investee company’s board, if allowed.
  

Corporate Governance and Compliance

• All share acquisitions must be recorded in the financial statements and disclosed as per accounting standards.
  
• If the OPC invests in related parties or group companies, related party disclosures and board approvals may be required.
  
• The investment must not breach any provisions of the Companies Act or sector-specific regulations.
  
• The OPC must maintain transparency and report such investments in its annual filings.
  
• All documentation must clearly show that the investment is made by the company, not the individual member.