As per Rule 3 of the Companies (Incorporation) Rules, 2014 which of the following is not true in respect of One Person Company (OPC)?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → It can carry out non-banking financial investment activities.
A One Person Company (OPC) is a company with only one person as its member. Rule 3 of the Companies (Incorporation) Rules, 2014 puts four conditions on it, and one of them is that it cannot carry out non-banking financial investment activities. The option turns this round into “can”, so it is the statement that is not true.
Option (1) Only a natural person being an Indian citizen and resident in India can form one person company — A true statement. A company or a foreigner cannot form an OPC; only an individual who is an Indian citizen and resident in India can.
Option (3) Its paid up share capital is not more than Rs. 50 Lakhs — A true statement. The OPC form is meant for a small business, so its paid up capital is capped at Rs. 50 lakhs.
Option (4) Its average annual turnover of three years does not exceed Rs. 2 Crores — A true statement. The second size limit is an average turnover of not more than Rs. 2 crores over three years.
Read every “can” and “cannot” in a statement question; one word decides the answer here.
NCERT (2026-27 edition):
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