Salient
Features |
- Low compliance burden, owing to the numerous exceptions culled out, despite being within the scope of what is defined as a “Private Limited Company” under S. 2(68) of the Companies Act, 2013i.
- One Person Company (OPC) tends to bring the unorganized sector of proprietorship into the organized version of a private limited company. Proprietors, by default, have unlimited liability. However, if such a proprietor does business through an OPC, then the liability of the members is limited.
- OPC gives entrepreneurs the advantage of limited liability whereby their liability as members is limited to their unpaid subscription money.
- On the demise/disability of the original director, a nominee director is appointed who is required to managethe affairs of the company till the date
of transmission of shares to legal heirs
of the demised member (S. 4(1)(f),
CA, 2013).
- OPC's can appoint as many as 15
directors for administrative functions,
without giving any share to them.
- There is no requirement to hold
Annual or Extra Ordinary General
Meetings. Only a resolution is
required to be communicated by the
member of the company, and entered
into the minutes' book with the date
and signature. Such date is deemed to
be the date of meeting (S. 96 (1), CA,
2013).
- Provisions of S. 174 (Quorum for
meetings of Board) don't apply to a
One Person Company in which there
is only one director on its Board of
Directors.
- Where the OPC has only one director,
all the businesses to be at the
transacted meeting of the Board is
required to be entered into the
minutes' book maintained under S.
118 (S. 122(3), 122(4), CA, 2013). In
this case, there is no additional
requirement to hold Board Meetings
(S. 96(1)), CA, 2013).
- The cost for registration of an OPC is
lower and there are fewer filings with
the Registrar of Companies (ROC).
- The mandatory rotation of auditor
after expiry of the maximum term is not applicable.
- Provisions of S. 98 and S. 100-111,
relating to holding of general
meetings do not apply to a One Person
Company (S. 122 (1), CA, 2013).
- OPC is an artificial entity distinct
from its owner. Thus, the claims made
against the business cannot be pressed
against the owner and there is
perpetual succession.
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- No minimum capital requirement.
The contribution of a partner can
consist of tangible, movable or
immovable or intangible property or
other benefit to the Limited Liability
Partnership (LLP).
- An LLP requires a minimum of two
partners while there is no limit on the
maximum number of partners (S. 6,
Limited Liability Partnership Act,
2008ii).
- Lower cost for registration.
- The LLP, being a separate legal
entity, has the right to own, enjoy and
transfer property in its own name.
- The accounts are audited in
accordance with the LLP Rules, 2009
unless the turnover does not exceed
Rs. 40,00,000, in any financial year;
or the contribution does not exceed
Rs. 25,00,000 (Rule 24, LLP Rules,
2009).
- LLP is liable for payment of income
tax but the share of its partners in
LLP is not liable to tax. Thus, no
dividend distribution tax is payable.
Provision of 'deemed dividend'
under income tax law is not
applicable to LLP (S. 40(b), CA,
2013).
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- Most prevalent and popular type of
corporate legal entity in India.
- A Private Limited Company has
'perpetual succession', i.e.
continued or uninterrupted
existence until it is legally
dissolved. Being a separate legal
person, it is unaffected by the death
or other departure of any member
but continues to be in existence
irrespective of the changes in
membership.
- The liability of the members is
limited only to the extent of the face
value of shares taken up by them (S.
2(22), CA, 2013).
- Shares are transferable by a
shareholder to any other person.
The transfer is easier in comparison
to the transfer of interest in business
run as a proprietary concern or a
partnership.
- A company being a juristic person,
can acquire, own, enjoy and alienate
property in its own name.
- Being an independent legal entity, it
can sue and also be sued in its own
name.
- It can make a valid and effective
contract with any of its members. It
is also possible for a person to be in
control of the company and at the
same time be in its employment.
Thus, a person can at the same time
be a shareholder, creditor, director
and also an employee of the Private
Limited Company.
- It can issue debentures (secured as
well as unsecured) and can also
accept deposits from the public, etc.
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| Requirements |
- At least one shareholder;
- At least one director;
- The director and shareholder can be
the same person;
- At least one nominee director (cannot
be a minor);
- Only a natural person who is an Indian
Citizen and resident in India may form
an OPC;
- Share Capital of at least Rs. 1,00,000;
- 'OPC' to be suffixed with the name of
OPCs to distinguish it from the other
companies (S. 12(3), CA, 2013);
- At least one meeting of the Board of
Directors in each half of a calendar
year where the gap between the two
meetings shall not be less than 90 days
(unless there's only one director) (S.
173(5), CA, 2013); and
- Filing of the financial statements duly
adopted by its member, along with all
the documents which are required to
be attached to such financial
statements, within 180 days from the closure of the financial year (S. 137,
CA, 2013).
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- At least two partners (not cooperative
societies, minors) with at least one
partner being an Indian resident (S. 6,
LLP Act, 2008).
- The fee for registration of LLP
including conversion of a firm or a
private company or an unlisted
public company into LLP:
- LLP whose contribution is limited
to Rs 1,00,000: fee of Rs. 500.
- LLP whose contribution exceeds
Rs 1,00,000 but is limited to Rs
5,00,000: fee of Rs. 2,000.
- LLP whose contribution exceeds
Rs 5,00,000 but is limited to Rs
10,00,000: fee of Rs. 4,000.
- LLP whose contribution exceeds
Rs 10,00,000: fee of Rs. 5,000. (5,
Annexure A, LLP Rules, 2009)
- Name should not include something
prohibited under the Emblems and
Names Act, 1950 (Rule 18, LLP
Rules, 2009).
- Should not belong to the excluded list of names (Rule 18, LLP Rules,
2009).
- Minute book to be maintained to
record minutes of meetings of
partners. However, the LLP Act does
not prescribe compulsory meetings
of partners. Partners may be called
for events prescribed in the LLP
Agreement.
- Statement of account and solvency is
required to be filed annually.
- If the LLP has a turnover of less than
Rs. 40,00,000 and a capital
contribution of less than Rs.
25,00,000; there are no audit
requirements.
- FDI in LLP requires prior RBI
approval. (Annex I to A. P. (DIR
Series) Circular No. 123 dated April
16, 2014)
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- A minimum of two directors, and
maximum of 15 (One needs to be
Indian Resident and Indian
national) (S. 3(1)(b), 149(1)(b), CA,
2013).
- Two persons are also required to act
as shareholders of a company. The
shareholders can be natural persons
or an artificial legal entity
(Maximum 200) (S. 2(68)(ii), CA,
2013).
- Minimum capital contribution
required for a private limited
company is Rs. 1,00,000.
- An address in India where the
registered office of the Company
will be situated is required. The
premises can be a
commercial/industrial/residential
where communication from the
MCA will be received.
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