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One Person Company vs Private Limited company

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One Person company and Private Limited Company falls under the same category as per Companies Act 2013. But both company forms have their unique advantages and differences. Some major difference between the two type of entities are as follows:

 Sl. No One Person Company Private Limited Company
1Number of Share Holders – OPC has only one Share HolderNumber of Share Holders – Private Limited Company should have minimum 2 share holders
2Number of Directors – Minimum 1 Director is requiredNumber of Directors – Minimum 2 Directors are required
4  Conversion of companyThe One Person Company is mandatorily required to convert itself into a Private Limited Company, if: The annual sales turnover of the company exceeds Rs. 2 crores; orThe paid-up capital of the company surpasses Rs. 50 lakhs. Conversion of company- There is no such requirement for a Private limited Company  
5  Raising Funds Since there is only one member of the company, therefore, raising funds in an OPC is quite difficult.    Raising FundsRaising of funds through equity is possible in the Private Limited Company in several ways including private placement, right issues, through Venture Capital, Angel investment, etc.  
6  Investment by NRI or Foreign Nationals – In the case of  One Person Company, only Indian citizens and Indian Nationals are permitted to register it. Therefore, OPCs are not eligible for Foreign Direct InvestmentInvestment by NRI or Foreign NationalsNRIs and Foreign Nationals can easily start and manage a private limited company in India. Additionally, in some areas 100%  Foreign-Direct Investment under Automatic approval Route is available for several sectors.
7  Business activitiesAn OPC is not permitted to carry out certain activities. Those activities include investment in securities, non-banking financial activities, etc.Business activitiesThere is no limitation for a private limited company regarding the type of business. However in some cases like Nidhi Companies, It should be registered as a public company
8  Control and ownership of the company In the case of One Person Company, the complete ownership is in the hands of the single promoter and doesn’t divide with any other person. The owner of an OPC enjoys the freedom to work and operate subject to applicable laws and provisions. No one will influence or interfere in his decisions. He has the ultimate control over the affairs of the companyControl and ownership of the company – In a private limited company, the ownership is divided into at least two members. Therefore, the freedom of taking decisions is restricted. All the managerial decisions need to be taken by the directors appointed by the shareholders. Moreover, voting power is based on the ratio of shares held by each member.  


Gayatri Dhote

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