Difference between One Person Company and Private Company

Difference between One Person Company and Public Company

The basic difference between One Person Company and a Private Company is the limits of minimum and the 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

  1. The person must be a natural person being an Indian Citizen and resident in India can incorporate One person Company.
  2.  One person can create only one such company or become a nominee of one such company.
  3. The purpose for which it is formed, should not be charitable.
  4. It must not include Non-Banking Financial Investment activities including investments in Securities of any body corporate.
  5. The paid-up share capital must not be more than Rs. 50 Lakhs.
  6. The average annual turnover of three years should not exceed Rs.2 crores.
  7. It must have at least one director but not more than 15 directors.

Some of the examples of One Person Company  :

  1. Durga Cotton Private Limited(OPC), Mumbai
  2. Rash Farm (OPC) Private Limited, Chhatisgarh
  3. 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: 

  1. Article of Association doesn’t allow the transfer of shares.
  2. It requires at least two members to incorporate a company.
  3. It limits the number of its members to 200, excluding its present or past employees.
  4. The shares held by two or more persons would be treated as single-member.
  5. As per Section 2(68) of the Companies Act, It cannot invite the public to subscribe to the share capital in the company.
  6. There should be at least 2 directors but not more than 15 directors.
  7. Shares may be allotted as per the decisions of Directors.
  8. It cannot invite and accept public deposits.
  9. The name of the company must end with ‘Private Limited’.

Some of the examples of Private Companies are:

  1. American Express (India) Private Limited
  2. Lifestyle International Private Limited
  3. Microsoft Corporation Private Limited
  4. 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 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  Prospectus not need to be issued.
Number of Directors It must have at least 1 Directors 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 on one owner so it is not possible to raise funds by issuing shared 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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Chart of Difference Between One Person Company and Private Company
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Difference between Partnership and Company

 

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 maximum of 200 and another type i.e. The one-person company has only one owner.

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