One Person Company is a separate legal entity from its members, offering protection to its shareholders. Every One Person Company must nominate a member for the Directorial position in the MOA/AOA, in case of absence of the prime Director. One Person Company is a business entity in which there is one owner with limited liability who can act both as shareholder and Director .
A private limited company or a privately held company restricts shareholders from trading shares publicly. The private limited company requires minimum two and maximum 50 members. The minimum of 2 Directors are required as a prerequisite.
Separate Legal Entity
A Public limited company holds the privilege of being separate from its directors and shareholders. Member and directors cannot claim the property vested in company’s name. The members (i.e. Shareholders and Directors) have no personal liability towards creditors of the company debts.
Perpetual Succession :
A company incorporated under Companies act never dies. It has a separate legal entity and hence enjoys the never ending characteristic irrespective of change in shareholding of membership. The company can, only be closed with the consent of shareholders or through the process prescribed by Law.
Expansion :
The Private Limited Company has the tendency to expand the business layers as compared to One Person Company.
Funds Raising :
It is easy for a private company to raise funds for business due to paid up- capital and flexibility in doing business activities.
In case of Mandatory Conversion: The conversion of One Person Company to Private Limited Company becomes mandatory when:
The following documents are required for the conversion.
1. E-Form INC 5 – Copy of the Resolution is required to be filed with Registrar of Companies with the following attachments:
2. E-Form INC 6 – Application for the conversion of Private Limited Company to One Person Company with the following necessary attachments:
Voluntary Conversion : The conversion of One Person Company to Private Limited Company can be voluntarily done when the One Person Company completes two years from the date of incorporation.
The following documents are then required for the conversion.
1. E-Form MGT 14 – Copy of the Special Resolution is required to be filed with Registrar of Companies along with the following attachments:
2. E-Form INC 6 – Application for the conversion of Private Limited Company to One Person Company with the following necessary attachments:
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