ONE PERSON COMPANY(OPC) MEANS
Section 2(62) of the Companies Act, 2013 defines “One Person Company” as a company which has only one person as member. OPC is a type of Private Company as per Section 2(68) and Section 3(1)(c) of the Act.
Rule 3 of the Companies (Incorporation) Rules 2014 says, only a natural person who is an Indian citizen whether resident in India or otherwise: –
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company
PRIVATE LIMITED COMPANY MEANS
As per Section 2(68) of the Companies Act, 2013, “private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles:–
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that –
(a) persons who are in the employment of the company; and
(b) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company
1. Ownership Structure:
Private Limited Company: A Private Limited Company requires a minimum of two shareholders and can have a maximum of 200 shareholders. The ownership is distributed among these shareholders, who may be individuals or corporate entities.
One Person Company: As the name suggests, an OPC is owned by a single individual who acts as both the shareholder and the director. OPC allows a single promoter to establish and manage a company
2. Legal Requirements:
Private Limited Company: Pvt. Ltd. companies must comply with various legal requirements, such as maintaining statutory books, conducting annual general meetings, and filing annual financial statements with the registrar of companies. Additionally, the appointment of directors and auditors is subject to specific regulations.
One Person Company: OPCs have relaxed compliance requirements compared to Pvt. Ltd. companies. They are exempt from certain legal obligations, such as holding annual general meetings, and have simplified compliance procedures. However, OPCs still need to maintain proper financial records and file annual returns with the registrar of companies.
Private Limited Company: In a Pvt. Ltd. company, the liability of shareholders is limited to the extent of their shareholding. Their personal assets are generally protected, and they are not personally liable for the company’s debts and liabilities.
One Person Company: Similar to a Pvt. Ltd. company, the liability of the OPC’s sole shareholder is limited. The personal assets of the shareholder are separate from the company’s liabilities, providing a level of protection.
4. Conversion and Expansion
Private Limited Company: A Pvt. Ltd. company can be converted into a public limited company or listed on the stock exchange to raise capital from the public. It also has the flexibility to issue shares, attract more shareholders, and raise funds for expansion.
One Person Company: OPCs have limitations on expansion and raising funds. They cannot be converted directly into a public limited company or issue shares to the public. However, OPCs can convert into a Private Limited Company if their paid-up capital exceeds the prescribed threshold or if they wish to have more shareholders.
Comparison between an OPC and a Pvt Ltd
PRIVATE LIMITED COMPANY
1 Owner & 1 nominee
Board of directors
At least 1 director
At least 2 directors
100% of shares held by a single person
100% of shares cannot be held by a single person. Minimum of two shareholders required
Difficult to obtain
Annual return filing. No board meetings if only one director &no general meetings.
Annual return filing, board Meetings &general meetings
NRI or foreign nationals
Only Indian citizens and Indian nationals are allowed to start
NRIs or foreign nationals are also allowed to start and manage
If annual turnover exceeds Rs. 2 crores or paid-up capital exceeds Rs. 50 lakhs, then mandatory conversion into a private limited company
No mandatory conversion
Obtain DSC (digital signature certificate), obtain DIN (directors identification number), name approval, filing for incorporation &file nominee details
Obtain DSC (digital signature Certificate), Obtain DIN (directors’ identification Number), Name approval &filing for Incorporation
Companies Act 2013
Companies Act 2013
Minimum share capital
No minimum share capital is necessary. If capital exceeds 50 lakhs, OPC gets converted to a Pvt. Ltd.
No requirement for minimum share capital
One meeting in each half of the year. The gap between the two meetings must be at least 90 days.
One meeting in each quarter of the year. The maximum gap between the two meetings can be 120 days.
Financial statements and annual returns to be filed with registrar
Annual accounts and annual returns to be filed with RoC
Transferability of shares
Can be made by altering MOA
Can be easily transferred
Foreign direct investment
Not eligible for FDI
Eligible via automatic route
Suitable to which type
Individuals whose capital requirements are 50 lakhs and turnover is less than 2 crore
Business, trade, manufacturers, large industrial establishments
Should end with (OPC) Pvt. Ltd./(OPC) Ltd.
Should end with Pvt. Ltd.