eMerg India

How to choose your legal avatar?

With the new Companies Act 2013 introducing One Person Company, we thought of doing a refresh of our earlier comparative chart.

FEATURES ONE PERSON COMPANY (OPC) PRIVATE LIMITED COMPANY LIMITED LIABILITY PARTNERSHIP (LLP) SOLE PROPRIETORY PARTNERSHIP FIRM
Legality It is a separate legal entity It is a separate legal entity It is a separate legal entity Not a separate legal entity Not a separate legal entity
Governed by Companies Act 2013 Companies Act 2013 Limited Liability Partnership Act 2008 NA Indian Partnership Act 1932
Registration Has to be registered with ROC. Certificate of Incorporation is issued by ROC Has to be registered with ROC. Certificate of Incorporation & Certificate of Commencement of Business is issued by ROC

 

Has to be registered with ROC. Certificate of Incorporation is issued by ROC There is no process of registration as it is not a separate legal entity Not mandatory. Unregistered Partnership Firm will not have the ability to sue.
Name “One Person Company” shall be mentioned in brackets below the name of such company Name of a private company to end with the words “Private Limited” Name to end with “LLP” Limited Liability Partnership” No guidelines No guidelines
Capital Contribution Minimum authorised and paid up capital is Rs. 1,00,000/- Minimum authorised and paid up capital is Rs. 1,00,000/-

 

No limit prescribed in the Act No guidelines No guidelines
Minimum number of Directors/Partners 1 Director who has to be a Resident of India 2 Directors out of which 1 director has to be a resident of India

 

Designated Partners out of which 1 director has to be a resident of India No guidelines 2 Partners
Minimum number of shareholders/members 1 shareholder who has to be a Resident of India. He has to appoint a Nominee in case of his death or incapacity to contract

 

Minimum 2 shareholders. Can be Body Corporates & foreign nationals also NA NA NA
Minimum number of Meetings including Board & General Meetings At least 1 Board meeting in each half year and the gap between 2 meetings should not be less than 90 days. However, no Board Meeting required, if there is only one director. No requirement of AGM.

 

At least 4 Board Meetings, one in each quarter & the gap between 2 meetings should not be more than 120 days. AGM to be held within 6 months from closure of Accounts. No specified limits NA NA
Annual Filings Financial Statements and Annual Return to be filed with ROC Annual Accounts and Annual Return to be filed with ROC Annual Statement Of Accounts And Solvency & Annual Return has to be filed with ROC NA NA
Audit Compulsory, irrespective of share capital and turnover Compulsory, irrespective of share capital and turnover Required, if the contribution is above Rs.25,00,000/- or if annual turnover is above Rs. 40,00,000/- NA Compulsory
Foreign Nationals as shareholders/ Partners NA – Has to be a Resident of India Foreign nationals can be shareholders, however there are separate RBI guidelines to be followed Foreign nationals can be partners, however there are separate RBI guidelines to be followed NA Foreign nationals cannot form partnership firm.
Taxability No amendment made in the Income Tax Act yet. But may be treated like pvt ltd. The income is taxed at 30% + surcharge + cess (Surcharge rates will vary) The income is taxed at 30% + surcharge+ cess (Surchage rates will vary) As per tax slabs applicable to personal income The income is taxed at 30% + surcharge+ cess (surcharge rates will vary)
Liability Limited Liability Limited liability Limited liability Unlimited Liability Unlimited, can extend to the personal assets of the partners
Conversion Can be converted into a public/private Company Can be converted into a Public Company/LLP Cannot be converted into a Private Company/Public company/OPC NA Can be converted to a Private Company
Dissolution Not prescribed – To follow the same as for Private Limited Company Very procedural & time consuming. Voluntary Winding up under FTE/ by Order of National Company Law Tribunal Less procedural compared to Company. Voluntary/ by Order of National Company Law Tribunal NA By agreement of the partners, insolvency or by Court Order

eMerge India
eMERG India