The company is a broad term, having varied structures, restrictions, rules and liabilities. It can be public limited, private limited, nidhi company, one person company etc. Among all, one person company is the most unheard of. Comparatively, it is a newer concept in India, but more common in other countries.
It requires minimum two members or shareholders to incorporate. The restriction on a maximum number of shareholders is 200. The shareholders can be persons or companies, including foreign companies. They are further categorised as Private Limited Company – Limited by Shares and Private Limited Company – Limited by guarantee.
It is mainly a sole proprietorship, having advantages of limited liability and corporatization. It opportune individual entrepreneurs, since OPC can be formed with just one Director and one member.
Private Limited Company and One Person Company are closely similar to each other, in terms of their structure, minimum member requirement, suffix mandates etc.
Both are governed by the Companies Act 2013.
Both need to be registered under the Ministry of Corporate Affairs. In other words, ‘Certificate of Incorporation’ is a mandate to start a business.
Both types of companies are separate legal entities. The individual owners, shareholders or members are not liable to pay debts or losses of the business through personal assets.
Taxation rules on income generated from the business are same, as per the rates defined in the provisions of the Income Tax Act.
An auditor is obligatory to be appointed within 30 days from the date of incorporation. This condition is irrespective of share capital or turnover of the company.
Having a base understanding of both the forms, here’s a detailed list of differences between the two: