—One Person Company
The Nominee in a One Person Company: Who Can Be One, Consent and Changing the Nominee
Every OPC must name a nominee who takes over if the sole member dies or can't continue. Who qualifies, how consent works, and how to change the nominee.
A One Person Company has a single member, which raises an obvious question: what happens to the company if that person dies or can no longer run it? The answer is the nominee. Every OPC has to name one at incorporation, and the nominee becomes the member if the original member can't continue. It's a small formality with big consequences, so it's worth getting right. This guide explains the rules.
What the Nominee Does
The nominee doesn't own shares or run the company while the member is in charge. Their role only takes effect if the member dies or becomes incapable of contracting. At that point, the nominee becomes the member of the company, so the company continues instead of being left without an owner.
Who Can Be a Nominee
The rules for nominees are the same as for the member:
- The nominee must be an individual, not a company or other entity.
- They must be an Indian citizen and resident in India, which for this purpose means they stayed in India for at least 120 days in the previous financial year.
- They can't be a minor.
- A person can be a nominee in only one OPC at a time, just as a person can be a member of only one OPC.
Most founders choose a spouse, parent, sibling or trusted business associate. Pick someone who is willing and able to take on the company if needed.
Consent at Incorporation
The nominee's written consent is filed with the incorporation application, in Form INC-3, and the nominee's name is included in the memorandum of association. Without the consent, the OPC can't be incorporated.
Changing the Nominee
The member can change the nominee at any time, for example after a marriage, a family change or simply a change of mind:
- Get the new nominee's written consent.
- The member tells the company of the change.
- The company records the change and files Form INC-4 with the ROC, with the new nominee's consent, within the time allowed.
The change takes effect once the company's records and the ROC filing are updated, so file it promptly.
When the Nominee Withdraws
A nominee can withdraw their consent by giving notice to the member and the company. The member must then nominate someone else, with their consent, and the company files the change with the ROC. Don't leave the OPC without a valid nominee.
When the Member Dies or Can't Continue
If the member dies or becomes incapable of contracting, the nominee becomes the member of the company. The company then files the change with the ROC, the share ownership is transferred, and the new member names their own nominee. The new member also usually becomes a director, if the company needs one, and updates the bank and other registrations.
When an OPC Has to Change
If the OPC converts into a private limited company, for example because the member wants to bring in other shareholders, the nominee requirement ends with the conversion. The converted company has at least two members and two directors instead.
Common Mistakes
- Naming someone who doesn't meet the residency rule.
- Naming someone who is already a nominee or member of another OPC.
- Changing the nominee informally without filing INC-4.
- Leaving the OPC without a nominee after the original one withdraws.
- Not telling the nominee what the role involves.
Getting Help
Think Filing sets up OPCs with valid nominee consents, files nominee changes on time, and handles the transition if the member can no longer run the company.
Sources
- Companies Act, 2013, section 3.
- Companies (Incorporation) Rules, 2014, rules 3 and 4, as amended in 2021.