One Person Company
Limited Liability Partnership
Private Limited Company
- 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, 20131.
- 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
- On the demise/disability of the original director, a nominee
director is appointed who is required to manage the 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),
- 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.
- 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
- 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, 20082).
- 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).
- Most prevalent and popular type of corporate legal entity in
- 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
- 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,
- 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.
- 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).
- At least two partners (not cooperative societies, minors) with
at least one partner being an Indian resident (S. 6, LLP Act,
- 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.
- 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
- 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
- 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
- FDI in LLP requires prior RBI approval. (
Annex I to A. P. (DIR Series) Circular No. 123 dated April 16,
- 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,
- 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.
Cannot be done as at least two members are required to be
partners in LLP (Section 6, LLP Act, 2008).
To OPC: Cannot be done as LLP requires at least
- A Board Meeting must be conducted to get in-principal approval
of the Directors and fix date, time and place for conducting EGM to
obtain the approval of the shareholders of the private limited
company by means of a special resolution.
- Hence, at the Board Meeting, a support notice of EGM along with
Agenda and Explanatory Statement should be annexed to the notice of
General Meeting according to the Companies Act, 2013. Further, a
Director or Company Secretary should issue Notice of the
Extra-ordinary General meeting (EGM) as permitted by the Board. The
Notice of the Extra-ordinary General Meeting (EGM) should be issued
to all Members, Directors and the Auditors of the company.
- Form MGT-14 to be filed within a period of 30 days of passing
of special resolution with the relevant ROC, with approved fees and
along with subsequent attachments (Rule 7, LLP Rules, 2009).
To Pvt. Ltd. Co.:
An OPC may convert to a Pvt. Ltd. Co. in two ways:
1. Voluntary Conversion:
If the paid up share capital is more than Rs. 50,00,000 or if
the average turnover is more than Rs. 2,00,00,000, the
conversion is permitted within two months; else an OPC may only
convert upon the completion of two years from its date of
incorporation. The procedure is as follows:
- Issue notice in accordance with S. 173(3), CA, 2013 for
convening a meeting of the Board of Directors to pass resolutions
to increase the number of Directors (minimum of two directors) and
increase in shareholders of company (minimum of two shareholders).
A resolution would also need to be passed to get
shareholders' approval for the alteration of the AOA and
- A signed and dated resolution is communicated by the member of
the company and entered into the minutes' books (S. 122(1),
CA, 2013); and
- Form INC-6 is filed within 30 days of passing of special
resolution with necessary attachments (S. 18, CA, 2013).
2. Mandatory Conversion:
The mandatory conversion of an OPC to private (or public)
company takes place when its paid up share capital exceeds Rs.
50,00,000; or when its average annual turnover during the relevant
period exceeds Rs. 2,00,00,000. This conversion is mandatory within
a period of six months.
After the meetings are conducted and the necessary entry is made
into the minutes' books in the manner similar to what is
prescribed for voluntary conversion, Form INC-5 is required to be
filed within 60 days from the date that the criteria for mandatory
conversion begin to apply (Rule 6, Companies (Incorporation) Rules,
To Pvt. Ltd. Co.:
Prior to the incorporation process of the Pvt. Ltd. Co., the LLP
must fulfil the following:
- Must have at least seven partners;
- Must obtain approval of all the partners;
- Advertisement to be done in a local and national newspaper;
- No Objection Certificate (NOC) to be obtained from the ROC
where the LLP is registered.
The incorporation process includes:
- Having the name approved by the ROC by submitting an
application in e-format. Items mentioned in INC-1 to be chosen. (An
accepted name would be valid for 60 days)
- Application must be filed on the MCA portal for all future
directors of the company to obtain a Digital Signature Certificate
(DSC) and a Director Identification Number (DIN).
- Upon having the name approved by the ROC, form URC-1 ought to
be filed with accompanying documents within 20 days.
- Upon sanction of form URC-1, Memorandum of Association (MoA)
and Articles of Association (AoA) to be formulated and filed with
(S. 366, CA, 2013 & Company (Authorized to Register) Rules,
To LLP: A Private Limited Company can be
converted into an LLP as per S. 56 and Schedule III of the
act under the following circumstances:
- There is no security interest in its assets subsisting or in
force at the time of application; and
- The partners of the limited liability partnership to which it
converts comprise all the shareholders of the company and no one
else. (S. 2, Schedule III, LLP Act, 2008)
- An application has to be filed with the Registrar which
includes a statement by all its shareholders in such form and
manner to be accompanied by fees containing particulars, along with
incorporation document and statement referred to in S. 11 (S. 3,
Schedule III, LLP Act, 2008).
- Within 15 days of the date of registration, LLP must inform the
ROC about the conversion and of the particulars of the limited
liability partnership (S. 4, Schedule III, LLP Act, 2008).f