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One Person Company Registration vs. Pvt Ltd Registration: Which One is better?

One Person Company Registration

Are you an aspiring Entrepreneur wanting to start a business in India but confused about right business structure? In order to start a business, the first & most crucial decision is to choose the right type of structure for your company. The two most popular choices of the entrepreneurs are One Person Company Registration & Pvt Ltd Registration. Both business structures have their own set of unique features. You have to choose the right one as per your business goals. You should make a right choice while considering various factors including size of your business, number of shareholders as well as future growth plans. Here, in this blog, we will do a detailed comparison between the two structures, OPC Registration & Pvt Ltd Registration. 

Before moving ahead with comparison, let’s have a look on OPC Registration online & Private Limited Company Registration-

One Person Company Registration

OPC registration is also known as Single Person Company Registration. It is best for the solo entrepreneurs. It has been established and managed by a single person. Basically, OPC is a type of Private Limited Company with same features. It has been registered under the Companies Act 2013. OPC Registration online combines the benefits of Private Limited company as well as the simplicity of sole proprietorship. OPC Registration includes the benefits of limited liability as well as separate legal entity.

Pvt Ltd Registration

A private limited company registration is a business entity that has been owned by its shareholders privately and also has limited liability. It has been registered under the Companies Act 2013 and govern under the MCA i.e. Ministry of Corporate Affairs. It has been considered as a separate legal entity from its owners. To form a private limited company there will be the requirements of atleast 2 shareholders & 2 directors. Additionally, general public can’t trade the shares of a Pvt Ltd Registration on any stock exchange.

Quick Comparison between One Person Company Registration & Pvt Ltd Registration

Particulars OPC Registration Pvt Ltd Registration
Suitable For Solo Entrepreneurs or Small Businesses Business, Trade, manufacturers, large industrial establishments
Law Applicable Companies Act, 2013 Companies Act, 2013
No. of Directors Only 1 Minimum: 2

Maximum: 15
No. of Shareholders/ Members Only 1 Member/ Shareholder Minimum: 2

Maximum: 200
Nominee 1 nominee director No nominee required
Shareholding  100% shares held by a single person One person can’t hold 100% shares. Minimum 2 shareholders required
Minimum Share Capital No minimum share capital required No minimum share capital required
Board Meetings At least 2 board meetings (one in each half year) with a minimum gap of 90 days At least 4 board meetings (in each year) with a maximum gap of 120 days
AGM (Annual General Meeting) Not Mandatory Mandatory 
Foreign Direct Investment (FDI) Not eligible for FDI Eligible via Automatic Route
Company Name Should ends with “(OPC) Private Limited” Should ends with “Private Limited”
Transferability of Shares Can be made by altering MOA (Memorandum of Association) Can be easily transferred
Annual Filing Financial Statements & Annual Return with ROC (Registrar of Companies) Annual Returns & Annual Accounts with ROC (Registrar of Companies)
Audit Requirements Mandatory auditing of Accounts Mandatory auditing of Accounts
Ownership & Control Complete ownership & controls over the company. Distribution of the ownership among shareholders
NRIs or Foreign Nationals Only Indian citizens & Indian Nationals are allowed to start NRIs or Foreign Nationals can also start & manage
Legal Entity Separate Legal Entity Separate Legal Entity 
Liability Owner’s liability limited to their investment in the company Shareholder’s liability is limited to the amount of their shareholding in the company
Existence  Continuous  Continuous 

 

Detailed Comparison between One Person Company Registration & Pvt Ltd Registration

If you are an aspiring entrepreneur and confused among the two most popular business structures, then you will get your answer here. You should understand the major difference between the different business structures specifically when you are going to start your entrepreneurial journey. Here in this section of blog we will tell you about the key differences between OPC Registration Online & Private Limited Registration. It will help you to enter into the competitive business world.

One Person Company Registration vs. Pvt Ltd Registration Members & Ownership

  • For OPC Registration in India, only one member/ shareholder & one director is required. In this the director can also be the shareholder/ member of an OPC. Whereas, for Private Limited Registration, there will be the requirement of at least two directors & a minimum number of two shareholders.
  • There will be the complete ownership & control of a single individual over an OPC Registration.  On the other hand, ownership of a Private Limited Registration will be distributed among the multiple shareholders (minimum 2 & maximum 200 shareholders/ members) of the company.

Pvt Ltd Registration vs. One Person Company Registration Compliance Requirements

An OPC has lesser compliance requirements as compare to a Pvt Ltd Company-

  • An OPC Registration must have to conduct at least two board meetings (one in each half year) with a minimum gap of 90 days but conducting AGM i.e. Annual General Meeting is not mandatory for an OPC. The One Person Company also needs to file the financial statements & annual returns with ROC (Registrar of Companies).
  •  A Private Limited Registration must have to conduct at least four board meetings (in each year) with a maximum gap of 120 days between two meetings and conducting AGM (Annual General Meeting) is also mandatory for a Private Limited Company. The Private Limited also needs to file the annual accounts & annual returns with ROC i.e. Registrar of Companies.
  • The OPC Registration in India needs to audit its account in all cases, it is mandatory. and also for Pvt Ltd Registration, auditing is mandatory regardless of its turnover.

One Person Company Registration vs. Pvt Ltd Registration Nominee

  • During OPC Registration, the sole director must have to nominate an individual who will take his responsibility in case of his inability (death or any other unavoidable circumstances). However, there is no need of nominee for a Private Limited Registration.

Pvt Ltd Registration vs. One Person Company Registration Company Name

  • For an OPC Registration online, it is mandatory to add suffix of “(OPC) Private Limited Company” in the name of the company. Whereas, for Private Limited Registration online, you need to add “Private Limited Company” at the end of the name of your company.

Key Features of One Person Company Registration & Pvt Ltd Registration

Let’s discuss about the key features of OPC Registration as well as Private Limited Registration respectively-

Features of One Person Company Registration

  • Single Owner: An OPC has only one member who will be the sole owner as well as the director of the company.
  • Less Compliance: An OPC has lesser compliance requirements as compare to a Pvt Ltd Company. So, it will be easier to manage it.
  • Separate Legal Entity: An OPC is a legal entity separate from its owner. It implies that the company can own property, incur debts, and sue or be sued in its own name.
  • Limited Liability: The liability of the owner of an OPC will be limited to the amount he invested in the company. 

Key Features of Pvt Ltd Registration

  • Limited Liability: The liability of the shareholders of the Pvt Ltd will be limited to the amount they invested in the company.
  • More Compliance: As compare to an OPC, a Pvt Ltd Company has more compliance requirements including filing of annual accounts, holding Annual General Meetings, as well as maintaining the statutory registers.
  • Multiple Owners: A Pvt Ltd Company has a minimum number of two and a maximum number of 200 shareholders. It will distribute its ownership.
  • Separate Legal Entity: A Pvt Ltd company is also a legal entity separate from its owner. It means that the company can own property, incur debts, and sue or be sued in its own name.

Which one is Better Among One Person Company Registration & Pvt Ltd Registration?

We know that it will be little confusing to choose among the two most popular business structures in order to commence your entrepreneurial journey. However, the accurate choice will be made on the basis of different factors that include the nature of business, growth aspirations, and also the number of shareholders involved. In this section we will tell you which one is better-

When to Choose One Person Company Registration

  • Solo Entrepreneur: If you are a solo entrepreneur and want to start a small business & have a full control over decision making, then OPC is best for you. It offers the benefits of a Pvt Ltd Company including separate legal entity & limited liability without its complications.
  • Limited Capital Requirement: When your business does not need any external funding and your limited capital is enough then OPC is beneficial for you.
  • Simple Compliance: If you want simple & stress free compliance framework and does not need any administrative burden, then it will be easy to manage an OPC.

When to Choose Pvt Ltd Registration

  • Higher Credibility: A Pvt Ltd Company seems to be more established & reliable. So, if you want that your business will get higher market credibility & recognition, then Pvt is best for you.
  • Multiple Shareholders: When you want to start a business with multiple shareholders and find the need of co-founders, partners, or investors, then a Pvt Ltd Company is better for you.
  • Fundraising & Expansion: A Pvt Ltd Company helps in raising the more capital & attracting investors. So, if your business has high growth potential and you want external funding, then Pvt Ltd is a better business structure for you. 

Conclusion

Both OPC Registration Online as well as Private Limited Company have its own set of unique features and are suitable for different business needs. An OPC registration in India is best for solo entrepreneurs who want to enjoy the benefits of a Pvt Ltd Company Registration and the simplicity of sole proprietorship. It is suitable for those who want simpler compliance requirements. And if we talk about the Pvt Ltd Company, it will be suitable for the businesses having multiple stakeholders, higher growth aspirations and the need of external funding as well as market credibility. It can be confusing to choose among them but this blog will help you. For an appropriate selection, you can also seek the expert guidance of professionals like Legal Pillers.

Legal Pillers has the dedicated team of professional experts having experience in the selection of the right business structure as per your business needs. We will help you to select among the two popular business structures which are a Pvt Ltd Company and an OPC. So, what are you waiting for? Choose Legal Pillers as your trusted partner for a successful entrepreneurial journey.

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