{"id":1325,"date":"2019-11-23T13:26:15","date_gmt":"2019-11-23T13:26:15","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=1325"},"modified":"2022-09-10T14:56:07","modified_gmt":"2022-09-10T09:26:07","slug":"differences-between-opc-one-person-company-and-private-limited-company","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/differences-between-opc-one-person-company-and-private-limited-company\/","title":{"rendered":"Differences between OPC and Private Limited Company"},"content":{"rendered":"\n

Are you\nthinking of starting a venture, but you are not sure about your funding status\nthat whether you will be able to solely meet the initial financial requirements\nof your business or not. You might get muddle-headed whether to opt for OPC or\nprivate Limited Company. The answer is quite simple if you are looking for\npersonal independence of yours and wish to have sufficient control over the\nentire operations and administration of the business \u2013 then go for the OPC (One\nPerson Company). While if you are looking that your company is funded at the\nnascent stage of its operations, then go for the Private\nLimited Company<\/strong><\/a>. The choice\nis yours; you need to be clear in your decision. After all, you cannot get all\nthe benefits in a single package.<\/p>\n\n\n\n

Though One Person Company and Private Limited Company are entirely two different business entities, both of them are governed by the\u00a0Companies Act, 2013<\/strong>[1]<\/strong><\/a><\/sup> <\/strong>. Now, let\u2019s get in the in-depth view of the OPC versus Private Limited Company.<\/p>\n\n\n\n

OPC versus Private Limited Company<\/h2>\n\n\n\n

The difference between\nOPC and private limited Company is given as below:<\/p>\n\n\n\n

Shareholders in the company<\/h3>\n\n\n\n

In OPC, only one person and one\nshareholder is required to incorporate and run the company. Moreover, the\nDirector and the shareholder in the One Person Company is the same individual\nwho holds the 100% shares in the company.<\/p>\n\n\n\n

While in the Private Limited\nCompanies, a minimum of 2 shareholders and a maximum of 200 shareholders are\nrequired during the incorporation. Also, the shareholders of the private\nlimited company can be any entity.<\/p>\n\n\n\n

Funds Raising<\/h3>\n\n\n\n

Fundraising is quite an intricate\npart of an OPC as there is only one member who has the entire financial burden\non his\/her shoulder.<\/p>\n\n\n\n

Whereas in the private Limited\nCompany, they can get funding from various venture capitals, angel investments,\netc.<\/p>\n\n\n\n

Board of Directors<\/h3>\n\n\n\n

As per the name OPC (One Person\nCompany), we have only one member in the company that means there is no need to\nhold any such Annual General Meeting (AGM) or Board meetings.<\/p>\n\n\n\n

Contrary to this, in a private\nlimited company, there is a Board of Directors which consists of a minimum of 2\nDirectors and a maximum of seven directors at the time of incorporation. Also,\nit is mandatory to convene 4 Board meetings and 1 AGM in a financial year.<\/p>\n\n\n\n

Investment by the NRI (Non-Resident Indian) or Foreign National<\/h3>\n\n\n\n

One of the best advantages of having\na Private limited company is that foreign nationals and NRIs can quickly start\nthe PLC in India. Also, 100 percent FDI under the automatic approval route is\naccessible in the Private Limited Company.<\/p>\n\n\n\n

But in the OPC, only the citizens of India are allowed to commence the company. Henceforth, One Person Company is not eligible for Foreign Direct Investment.<\/p>\n\n\n\n

Business Activities<\/h3>\n\n\n\n

Certain activities like an investment in securities, non-banking financial activities are restricted in the OPC. However, a company registered as a Private Limited Company can engage in such activities taking the approval of the concerned authority.<\/p>\n\n\n\n

Compliance Requirements<\/h3>\n\n\n\n

There are certain similarities in\nthe Compliance requirements of both the OPC and The Private Limited\nCompany.  Both the OPC and the PLC need to file the annual returns with\nthe MCA (Ministry of Corporate Affairs) and Income Tax returns with the Income\nTax Department. Besides these similarities, both the entities need to get their\naccounts audited every year. Let\u2019s have a look at the few exemptions of the OPC\n\u2013<\/p>\n\n\n\n