Most of the businesses won’t survive for long if you are not choosing the right form of business. But when you are doing the right things which mean choosing the right business structure then you are probably doing the right things in other aspects of business too.
More choices are available to pick the best form of business entity for your business. But the availability of business venture depends on the number of owners. An individual owner may operate as One Person Company and if there are two or more owners of the business then other options are available to form.
OPC popularly known as One Person Company incorporated as a private limited company. Like in a sole proprietorship, OPC restricts to have more than one shareholder and an invitation to the public. This hybrid form of business entity facilitates with the advantages of the sole proprietorship and limited company.
A public company is the most common form of a business entity whose shares are publicly traded on the stock exchange. A public company can issue shares through an IPO (Initial Public Offering).
Comparative analysis of One Person Company and Public Company:
Particulars
One Person Company
Public Company
Governing Body
OPC (One Person Company) is governed by the Companies Act, 2013.
Public companies are also governed by the Companies Act, 2013.
Name of the entity
A One Person Company must have the word ‘OPC’ in brackets at the end of the name of the company.
In public company the word ‘limited’ must be used as a suffix with the name of the company.
IPO
OPC restricts to issue its shares publicly.
A public company permits to issue share to the general public through an IPO (Initial Public Offer).
Number of members
An OPC can be incorporated with one person and restrict to have more than one shareholder.
Minimum- 7 members
Maximum- unlimited
Number of directors
Minimum one director should be appointed at the time of incorporation.
Minimum- 3 directors
Maximum- 15 directors
Number of directors can be further increased by passing the special resolution.
Transferable shares
Shares can be transferred only by way of altering the MOA (Memorandum of Association).
Shares can be freely transferable which means shares are bought and sold in stock exchange market.
Concept of nominee
It is compulsory to appoint a nominee whose name must be mentioned in MOA.
No such concept of nominee is there in a public company.
Auditor
The provision of mandatory rotation of auditor after the expiry of term is not applicable on OPC.
In public company the provision of mandatory rotation of auditor after the expiry of maximum term is applicable.
Control and management
The sole owner of the company has the complete control over the company.
But in case of a public company the directors don’t have the complete ownership of the company.
Foreign ownership
In OPC every owner/ director/ nominee should be a resident of India. Hence, no NRI or foreigner is allowed to invest in OPC.
In case of public company FDI (Foreign Direct Investment) is allowed.