Commencing a private limited company or business is an energetic yet daunting possibility and there are major decisions to be done for this prospect. The most important decision of all is the sort of business structure to be selected- One Person Company, Private Limited Company, LLP, Public Company, etc.
Do you want to begin a new business but have trouble as to what form of the company you must choose? This article might help you to ease your choice.
Meaning of OPC Company and Pvt Ltd Company?
OPC is a new composite kind of business entity that requires only one member to form who can be considered the first director as well. The single owner has the advantage of limited liability. One Person Company proposes a Company that has only one person as to its member.
A private Limited Company is the kind of a company where a minimum of 2 members are needed and the highest number of members can be 200. The liability of the members of a Private Limited Company is restricted to the number of shares held by them. It is one of the popular kinds of business entities that give legal security to the shareholders by way of limited liability. Minimum 2 members are required to form a private limited company.
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Difference between OPC Company and Private Company
Differentiate Between Private Limited Company and One Person Company:
Particulars | One Person Company | Private Limited Company |
Name of the entity | The name of the OPC must be finished with the Suffix ‘OPC’ in the brackets. | The name of the company must have suffix ‘PVT LTD'. |
Number of shareholders | Only Single-member needs to incorporate One Person Company. | Minimum- 2 members and Maximum-200 members |
Number of directors | Minimum 1 director is needed that can be the extent to a maximum of 15 without any special resolution. | The minimum 2 directors are needed to form a private company that can also be the extent to a maximum of 15. |
Transferability | Minimum to an in OPC shares can be transferred only by altering the MOA (Memorandum of Association).of 15 | In private company shares can be transferred easily. |
Board meeting | One board meeting needs to be held in each half of the calendar year and the gap among the meetings must be at least 90 days. In the case of one director, no requirement to hold a board meeting. | One board meeting must behold in every quarter of the calendar year and the maximum gap among two meetings can be 120 days. |
Appointment of nominee | Appointing a nominee is important by the sole member of the company who must be a resident of India. | No such need in the case of a private company. |
Annual General Meeting (AGM) | In case of OPC no requirement to hold an AGM. | In a private company, an AGM is required to conduct within 180 days from the end of the financial year. |
NRIs or foreign nationals as a shareholder | Hig NRI or foreign nationals cannot be a member of the OPC because a natural person who is a resident of India can be a member or nominee of the company. | There is no such restriction in private companies. NRI can be a shareholder in a private company. |
Conversion | OPC can be converted into a private company after 2 years of incorporation or by crossing the threshold limit. | Private company can be converted into One Person Company. But, the threshold method is not applied to the private company. |
Annual Filings | Financial statements (excluding cash flow statement) and annual return required to be filed with the registrar. | In the case of private company annual accounts and annual returns are required to be filed with the ROC. |
Points of Differentiation:
The Difference are:
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1.Shareholders and shares of the company
In a One Person Company, only one member is just to incorporate and run the firm. And because of the same, there is only 1 shareholder in the company. Therefore, a single person operates the 100% shares of an OPC. Moreover, in OPC, the director and shareholder are deemed to be the same individual.
Indifference, in a private limited company, there is a necessity of a minimum of 2 shareholders at the time of incorporation. But, the highest count of shareholders is 200. Accordingly, s single person can never continue the 100% of shares of the company. Additionally, shareholders of the private limited company can be any entity, involving a corporate firm as well.
2. Raising Funds
Since there is only 1 member of the company, hence, raising funds in an OPC is very hard.
However, raising funds by equity is probable in the Private Limited Company in various methods including private placement, right issues by Venture Capital, Angel investment, etc.
3.Board of Directors
As we have seen, there is only 1 member in an OPC. Hence, in One Person Company, the idea of the Board of Directors doesn’t appear. Whether it’s Annual General Meeting or Board Meetings, zero applies to an OPC.
On the other hand, a private limited company involves a board of directors that includes a minimum of 2 directors at the time of formation of the company and a maximum of 7 directors. Also, the private company must meet the necessary 4 board meetings in a fiscal year and 1 AGM is necessary.
4.Costs involved in the company’s establishment
Although the formation cost of both companies is the same, the cost connected with compliances is minor in the case of One Person Company because it has only one person as a director. It is so because documentation of the private limited company is more as linked with One Person Company.
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Conclusion
A one-person company is a unique concept that has been introduced in India. Still, there are a lot of Developments having to be known, and a lot more study for the growth of OPC Company is needed. Forming private limited Companies issues in the protection of personal assets, access to more resources, financial assistance, and greater. So, if you want to form and make private limited company registration or OPC registration. Legalpillers is here to give you complete guidance on it. Contact Today only and get the best and affordable services.
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