Comparing OPC, LLP & Private Limited Company Which one to choose?

One Person Company (OPC); Limited Liability Partnership (LLP) and Private Limited Company Choice of Business- An Important Decision Selection of the form of business entity is one of the most important decisions before starting a business. This decision is required to be revisited periodically as the business develops. 

One Person Company (OPC) –

1. Introduction Section 2(62) of the Companies Act, 2013 define “one person company” as a company which has only one person as member.

2.    OPC is a type of Private Company as per Section 2(68) and Section 3(1) (c). Rule 3 of the Companies (Incorporation) Rules 2014 say, only a natural person who is an Indian citizen and resident in India:- shall be eligible to incorporate a One Person Company; Shall be a nominee for the sole member of a One Person Company. Resident in India means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year. A person can incorporate only one “One Person Company”, at any point of time and the said person shall not be a nominee of more than a One Person Company.

 Limited Liability Partnership (LLP) –

1.  Introduction LLP is an incorporated partnership formed and registered under the Limited Liability Partnership Act, 2008.

2.    LLP is an alternative business vehicle that gives the benefits of Limited Liability Company and flexibility of a partnership firm.

3. LLP contains elements of both ‘a corporate structure’ as well as ‘partnership firm structure’; it is many a times termed as a hybrid of a company and a partnership.

4. LLP is a separate legal entity which can continue its existence irrespective of changes in its partners.

5.    LLP is useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular, Owing to flexibility in its structure and operation.

6. LLP is also very suitable for professionals like company secretaries, chartered accountants, cost accountants, advocates etc. as it helps them to form multi-disciplinary limited liability partnership firms.

    Private Limited Company –

1.     Private Limited Company is a most popular option to start a business in India by startups and businesses with higher growth aspirations.

2. Private Limited Company is incorporated under the Companies Act, 2013 and governed by the Ministry of Corporate Affairs in India.

3.   It is a registered corporate structure that provides business a separate legal identity from its owners.

4. It can be registered with minimum of two directors and subscribers/shareholders. A person can be both a director and shareholder in a Private Limited Company.

5. The liability of the shareholders/members of a Private Limited Company is limited to the extent of unpaid amounts of shares held by them. 

6. DEFINITION OF PRIVATE COMPANY [SECTION 2(68)] “Private Company” means a company which by its articles: Restricts the right to transfer its shares; Limits the number of its members to 200; prohibits any invitation to the public to subscribe for any securities of the company.

Comparison between OPC, LLP  & Private Limited Company

We have given a comparison between all these three as below:-

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