The basic difference between One Person Company and a Private Company is the limits of the minimum and maximum number of owners/members in the company. In the type of One person company, there is always only one owner but the private company has a minimum of 2 and a maximum of 200 owners or members.
To know the difference between these two, we must clear the meaning of these terms and explained as follows: –
Meaning of One Person Company:
It refers to the form of a company in which the only single person is the owner/ member of the company.
Section 2(62) of the Companies Act, 2013 defines One Person Company as,
“One person Company means a company which has only one person as a member.”
Characteristics of One person Company as per Rule 3 of Companies (Incorporation) Rules, 2014 :
- The person must be a natural person being an Indian Citizen and a resident in India can incorporate One person Company.
- One person can create only one such company or become a nominee of one such company.
- The purpose for which it is formed, should not be charitable.
- It must not include Non-Banking Financial Investment activities including investments in Securities of any body corporate.
- The paid-up share capital must not be more than Rs. 50 Lakhs.
- The average annual turnover of three years should not exceed Rs.2 crores.
- It must have at least one director but not more than 15 directors.
Some of the examples of Person Company :
- Durga Cotton Private Limited(OPC), Mumbai
- Rash Farm (OPC) Private Limited, Chhatisgarh
- Nature’s Nectar Wellness (OPC) Private Limited, Chennai.
Meaning of Private Company:
A private company is the one that has the minimum paid-up share capital as prescribed in the Articles of Association.
Characteristics of a Private Company:
- Article of Association doesn’t allow the transfer of shares.
- It requires at least two members to incorporate a company.
- It limits the number of its members to 200, excluding its present or past employees.
- The shares held by two or more persons would be treated as single-member.
- As per Section 2(68) of the Companies Act, It cannot invite the public to subscribe to the share capital in the company.
- There should be at least 2 directors but not more than 15 directors.
- Shares may be allotted as per the decisions of the Directors.
- It cannot invite and accept public deposits.
- The name of the company must end with ‘Private Limited’.
Some of the examples of Private Companies are:
- American Express (India) Private Limited
- Lifestyle International Private Limited
- Microsoft Corporation Private Limited
- PayPal Payments Private Limited
Chart of Difference Between One Person Company and Private Company: –
Basis of Difference |
One Person Company |
Private Company |
| Meaning | It refers to the form of a company in which the only single person is the owner/ member of the company. | A private company is the one that has the minimum paid-up share capital as prescribed in the Articles of Association. |
| Number of Owner/ Members | It has only 1 owner. | It has a minimum of 2 and a maximum of 200 owners/ members. |
| Share Capital | 100% right is held by one person on the share capital and share of profit. | Rights of share capital and profits are distributed among all owners/members are as per the article of association. |
| Transfer of Share | Not Applicable | As per the terms and conditions decided in the article of association. many types of restrictions are imposed by the AOA. |
| Share Prospectus | Not Applicable | The prospectus does not need to be issued. |
| Number of Directors | It must have at least 1 Director and it can have a maximum of 15 Numbers of Directors. | It must have at least 2 Directors and it can have a maximum of 15 Numbers of Directors. |
| Name of Company | The word ‘OPC’ is used as part of the name of the company. | The word ‘Private Limited’ is used as part of the name of the company. |
| Funds Raising |
It has one owner so it is not possible to raise funds by issuing shares of the company. | Possible to raise funds by issuing shares of the company with the mutual consent of all members of the company. |
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Conclusion:
Thus, both types of businesses are very different from each other one type i.e. The private company has a limited number of owners, a maximum of 200 and another type i.e. The one-person company has only one owner.
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