In the corporate world, different types of companies exist, each with its unique characteristics and legal requirements. This article aims to highlight the differences between Private Companies, Public Companies, and One Person Companies (OPCs) based on various aspects such as applicable sections, capital requirements, number of members and directors, transferability of shares, public issue provisions, and filing requirements.
The comparison between Private Companies, Public Companies, and One Person Companies (OPCs) reveals the distinctions in their legal structure, governance, and compliance obligations. For instance, Private Companies restrict the transfer of shares and have a maximum of 200 members, while Public Companies allow the free transfer of shares and have no such membership limit. On the other hand, OPCs can have only one member and do not have any minimum capital requirement.
Additionally, the number of directors and quorum for board meetings and annual general meetings vary between the three types of companies. Private and Public Companies have specific requirements for holding board meetings and AGMs, whereas OPCs have more flexibility in this regard.
Furthermore, the filing requirements for financial statements and annual returns differ based on the company type, with specific forms and deadlines to be adhered to.
Difference between Private Company, Public Company & One Person Company (OPC)
| SR. NO | PRIVATE COMPANY | PUBLIC COMPANY | ONE PERSON COMPANY | ||||||||
| Applicable Section | |||||||||||
| 1 | Section 2(68) of Companies Act, 2013 | Section 2(71) of Companies Act, 2013 | Section 2(62) of Companies Act, 2013 | ||||||||
| Definitions | |||||||||||
| 2 | “Private company” means as may be prescribed, and which by its articles,
(i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred: |
“Public company” means a company which is not a private company | One Person Company means a company which has only one person as a member; | ||||||||
| Minimum Capital Requirement | |||||||||||
| 3 | The Minimum capital requirement is omitted | The Minimum capital requirement is omitted | There is no such requirement | ||||||||
| Number of members | |||||||||||
| 4 | Minimum:
2 or more persons Maximum: 200 |
Minimum: 7 or more persons
Maximum: Unlimited |
Minimum 1 person | ||||||||
| Number of Directors | |||||||||||
| 5 | Minimum: 2 directors
Maximum: 15 directors |
Minimum: 3 directors
Maximum: 15 directors |
Minimum: 1 director
Maximum:15 directors |
||||||||
| Public deposits | |||||||||||
| 6 | Can accept deposits only from its members, directors, and its relatives | Free to accept public deposits | No such requirement | ||||||||
| Transferability of shares | |||||||||||
| 7 | Restricted but not prohibited | Freely transferable | No such requirement | ||||||||
| Public Issue | |||||||||||
| 8 | Cannot issue prospectus | Can issue prospectus to invite general public to subscribe to its shares, debentures and deposits | No such requirement | ||||||||
| Company name should end with | |||||||||||
| 9 | The name of company should end with “private Limited” or “Pvt Ltd” | The name of company should end with “Limited” or “Ltd” | The name of company should end with “(OPC) private Limited” | ||||||||
| Minimum Number of Board Meetings | |||||||||||
| 10 | Minimum Number of four board meetings and a gap between two consecutive meetings shall not be more than 120 days | At least One Board meeting in each half of the calendar year and a gap between the two meetings is not less than 90 days | |||||||||
| Quorum for Board Meeting | |||||||||||
| 11 | a) 1/3rd of its total strength or
b) Two directors |
No such requirement | |||||||||
| Annual General Meeting (AGM) | |||||||||||
| 12 | The Annual General Meeting is to be held within 6 months from the end of financial year and not more than fifteen months shall elapse between two meetings | Not required to held AGM | |||||||||
| Quorum for Annual General Meeting (AGM) | |||||||||||
| 13 | Two members personally present shall constitute quorum |
|
No such requirement | ||||||||
| Filing Financial Statement and Other documents | |||||||||||
| 14 | Form AOC-4 to be filed within 30 days of the Annual General Meeting
* An OPC is exempted from preparation of Cash Flow Statement. |
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| Filing of Annual Return | |||||||||||
| 15 | Form MGT-7 to be filed within 60 days from the date of Annual General Meeting | Form MGT-7A to be filed within 60 days from the due date of AGM i.e 30th September | |||||||||
Conclusion: Understanding the differences between Private, Public, and One Person Companies is crucial for entrepreneurs and business owners as it impacts their choice of legal structure and compliance obligations. Each type of company has its advantages and limitations, and the decision should be based on the specific needs and objectives of the business. By having clarity on these differences, businesses can ensure legal compliance and make informed decisions to achieve their goals.
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