COMPARATIVE STUDY ON ONE PERSON COMPANY, PRIVATE LIMITED COMPANY & SOLE PROPRIETORSHIP CONCERN

The main feature of a “Company” is that it is an a “Artificial Person” - an entity separate than that of its owners and managers under the eyes of law. This special feature of “Company” acts as a shield to entrepreneurs to protect their personal assets in their quest to achieve business gains and fame. It is for this reason that many entrepreneurs choose “Company” form of an entity to carry their business.

While many Sole Proprietorship Firms wish to take shelter under the structure of “Company “ because of the protection it accords to the owners; they are quite concerned with the number of compliance they would need to deal with which is a recurring factor throughout the life-term of the entity.

The concept of “One Person Company” was mooted by the J.J Irani Committee to bring in the sole entrepreneurs of unorganised sector to organised sector and help them avail various benefits and schemes available for the organised sectors. It is with this intent that the provisions for creating and regulating OPCs was introduced under the Companies Act, 2013 to blend features of both Sole Proprietorship Concern and the Company.

Similarities & Differences between an OPC, Private Limited Company and Sole Proprietorship:

Sl. No.	Features	One Person Company	Private Limited Company	Sole Proprietorship
1.	Nature of Entity	Separate Legal Entity	Separate Legal Entity	No separate status
2.	Name requirements	Should have a suffix “One Person Company”	Should have a Suffix “Private Limited Company”	No such requirements
3.	Type of Entity	Can be limited by shares/ limited by Guarantee	Can be limited by shares/ limited by Guarantee	No shares/Guarantee
4.	Number of members	1 member + 1 Nominee	Min 2 members upto 200 members	1, more than 1 becomes a partnership firm
5.	Status of Member	Indian Citizen & Resident Indian (both Nominee & Member) "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding financial year	Can be any Individual Person (including NRI, foreign national) or an LLP or a Company	Any individual including an NRI or foreign national
6.	Distinction between Members & Management	Clear line of distinction between Company, member/owner & management	Clear line of distinction between Company, member/owner & management	No such distinction
7.	Restriction on No. of Entity an individual can be member	Can be member of only one OPC + nominee of one OPC	No restrictions	No restrictions
8.	No. of Directors on the Board	Minimum 1	Minimum 2	No such requirement
9.	No. of Meetings in a year	2 Board Meetings with a gap of more than 90 days between two such meetings. 1 Annual General Meeting within six months from the closure of Financial year	Small Companies can have 2 Board Meetings with a gap of more than 90 days between two such meetings. However, Companies other than small companies must have 4 Board meeting with not more than 120 days gap between two such meetings. 1 Annual General Meeting within six months from the closure of Financial year.	No such requirement
10.	Requirement of Notices, Quorum, explanatory statement, Proxy, Voting etc	Not Applicable	Applicable	Not Applicable
11.	Maintaining of Statutory Registers - like Minutes book, Director Details, etc	Applicable	Applicable	Not applicable
12.	Appointment of Statutory Auditor	First Auditor: Within 30 days from the date of Incorporation. Thereafter at an AGM for a period of five years	First Auditor: Within 30 days from the date of Incorporation. Thereafter at an AGM for a period of five years	Not applicable
13.	Conducting of Tax Audit	Compulsory irrespective of turnover/ capital	Compulsory irrespective of turnover/ capital	Compulsory only in case sales turnover of the business exceeds Rs 1 Core.
14.	Annual Filings	Financial Statements – 180 days from the end of financial year Annual report – 60 days from the date of AGM	Financial Statements – within 30 days from the date of Annual General Meeting. Annual report – 60 days from the date of AGM	Not Applicable
15.	Income Tax Act	Income comes under the purview of Company	Income comes under the purview of Company	Income is categorised as “Income from Business/Profession” of the Individual
16.	Transfer of shares	Has to transfer the whole of shares to a single person who is an Indian Citizen and resident of India	Can transfer part or whole of the shares to any person/entity or more up to maximum of 200 members	Can transfer the business to any other person/entity
17.	Fund raising options	Debts – Loans from Bank/ individuals or by issue of debt instruments	Equity – by way of issue of securities Debt - by way of issue securities or by way of loans	Debts – Loans from Bank or individuals
18.	Recognition under Start-up India	Can apply for recognition	Can apply for recognition	Cannot apply for recognition
19.	Conversion	Cannot opt for voluntary conversion until expiry of two years from the date of incorporation. Compulsory Conversion if: 1. Paid-up capital is increased beyond fifty lakh rupees or 2. its average annual turnover during the relevant period exceeds two crore rupees	Can apply for conversion to other companies during any period of time provided the requirements of such conversion are complied with	Cannot “convert” itself into any other form of entity.
20.	Registrations under various statutory laws	Applicable	Applicable	Applicable
21.	Cost of establishing entity (Government Fees)	Approx Rs. 5,000	Approx Rs. 5,000	NIL