Ownership Restrictions

• Only one person is allowed to form and own an OPC, limiting collaborative opportunities.
  
• A person can incorporate only one OPC and cannot be a nominee in another.
  
• Foreign citizens, non-resident Indians, and legal entities cannot form an OPC.
  
• The structure is not suitable for businesses requiring co-founders or joint ownership.
  
• Succession planning is restricted to a single nominee, with no shared decision-making.
  

Limited Business Scalability

• OPCs are not allowed to raise equity capital from the public or list on stock exchanges.
  
• Venture capitalists and institutional investors typically avoid investing in OPCs.
  
• Growth opportunities may be restricted in capital-intensive sectors.
  
• OPCs are often seen as small-scale operations, affecting large business contracts.
  
• Expansion may require conversion to a private or public limited company.
  

Conversion Requirements

• Mandatory conversion is required if turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh.
  
• Conversion involves additional documentation, compliance, and ROC approval.
  
• The process adds to the cost and administrative burden as the business grows.
  
• Businesses may face compliance issues if thresholds are crossed unknowingly.
  
• Planning for long-term growth requires early consideration of future conversion.
  

Compliance Responsibilities

• OPCs must maintain statutory registers, file annual returns, and conduct board meetings.
  
• The compliance burden is higher than sole proprietorships or partnerships.
  
• Non-compliance may lead to penalties or loss of legal protection.
  
• Regulatory oversight under the Companies Act adds reporting obligations.
  
• It requires professional support, such as company secretaries or legal advisors.
  

Operational Dependency

• The business relies entirely on a single individual for operations and decisions.
  
• Absence or incapacity of the owner may affect business continuity until the nominee acts.
  
• Limited perspective in decision-making due to a lack of board or partners.
  
• The structure does not accommodate growth in team leadership or ownership roles.
  
• Delegation and succession are limited in comparison to multi-member entities.