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Starting a private limited company or business is an ambitious yet daunting possibility and there are major decisi ons to be made for this prospect. The biggest decision of all is the kind of business structure to be selected, namely, One Person Company(, Private Limited Company(, Limited Liability Partnership(, Public Company, etc. All these structures have their advantages and limitations and these need to be examined carefully.
A One Person Company and Private Limited Company have many similarities and differences which make the choice even more difficult.
Both these forms of business are governed by the Companies Act, 2013 and have no minimum capital requirement for incorporation.
Both these companies require minimum two persons, in the case of a private limited company two members and for a one person company, one Director and one Nominee Director.
Both these company have mandatory name requirements like a private limited company must end with the words private limited and with one person company the name should carry “one person company” in brackets below it.
A private limited company requires filing annual accounts as well as annual returns with the Registrar of Companies and for a one person company financial statements and annual return need to be filed.
A private limited company requires two directors however a one person company needs only one director who can have complete shareholding.
A private limited company has more procedural requirements of 4 Board Meetings, with one taking place every quarter and a compulsion of not having more than 120 days between each board meeting. An Annual General Meeting needs to be held with six month of the closure of accounts on 31st March of each year.
One Person Company is a fairly new but fast emerging concept in India and a great option in terms of small entrepreneurs starting a business and can be converted to a private limited company as it expands.
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