What to choose: A one person company or a private limited company?

What to choose: A one person company or a private limited company?

As a fresh entrepreneur if you are lost and concerned about the early financial needs of your business, the following points might help you out.

 A one person company and a private limited company are both governed by the Companies Act of 2013.

  • There is no mandatory requirement for minimum paid up capital in an OPC. If the company’s paid-up capital exceeds 50 lacs, then the OPC shall automatically be converted into a Private Limited Company.              
  • If you wish to run the business with full control and independence, it is better to opt for an OPC as it requires a minimum and maximum of 1 member to run the business. However, if you want your company to be funded at the developing stage, then you may opt for a Private Limited Company as it requires a minimum of  2 members and can have a maximum of 200 members.     
  • After 2 years of incorporation of the OPC, it can get converted into Private Limited Company when its turnover exceeds the threshold limit.   
  • If you want your company to explore non-banking financial activities or securities investment, it is wise to know that an OPC doesn’t promote such activities. A Private Limited Company, however, can provide you with a platform to operate such activities with the permission of the concerned authorities.           

There should be no doubt regarding the annual filing of the company. Therefore, an OPC’s financial statement and annual report need to be filed with the registrar whereas in case of a Private Limited company the annual report needs to be filed with the ROC.

  • If you’re unclear about the transferability of shares in case of OPC, then the shares can be transferred only by altering the Memorandum of Association whereas if you’re looking for easy transferability then go for Private Limited Company as shares can easily be transferred in this case.                
  • When it comes to the compliance of both the companies, OPC cost is lesser as compared to a Private Limited Company.                   

Team Delfyle wishes you the very best of luck for your amazing journey ahead. In case of any further queries, feel free to get in touch with us at info@delfyle.com for a chat, absolutely free of

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