Director of a Private Limited Company

Nov 27, 2024
Private Limited Company vs. Limited Liability Partnerships

A director in a private limited company plays a crucial role in steering the business towards success while ensuring it operates within legal and ethical boundaries. They’re not just figureheads—they are the driving force behind the company’s growth and stability. In India, the role of private limited company directors is both powerful and essential. 

Beyond just compliance, directors also inspire and lead the team. They set the tone for the company's culture and vision, fostering an environment where employees feel motivated and valued. Their decisions can drive innovation, enhance productivity and ultimately lead to the company's success.

Table of Contents

Meaning of Director in Private Limited Company

In a private limited company, a director is an individual appointed to the board of directors, responsible for managing the company's affairs. Directors act on behalf of the company, making high-level decisions to steer the company toward its goals.  For example, appointing key executives, such as a CEO or CFO or approving budgets to support growth initiatives.

Be it any type of company, their role includes overseeing corporate strategies, managing financial risks and ensuring compliance with relevant laws. 

Directors are entrusted with fiduciary duties and expected to act in the company's best interest, as well as that of shareholders and stakeholders. They are key decision-makers and hold significant power in shaping the company's direction, whether in operations, business expansions or financial management.

In short, directors form the backbone of a company’s governance structure and are accountable for its overall performance.

Becoming Director in a Private Limited Company

To become a director in a private limited company, follow these steps:

Step 1. Obtain a Director Identification Number (DIN):

  • Apply for a unique DIN via the Ministry of Corporate Affairs (MCA) portal.
  • This is a mandatory requirement for anyone seeking an appointment as a director.

Step 2. Prepare Necessary Documents:

  • Gather proof of identity (such as a PAN card) and address (such as an Aadhaar card or utility bill).
  • Ensure all documents are valid and up-to-date for smooth processing.

Step 3. Submit Documents During Incorporation:

  • Provide the required documents as part of the company incorporation or appointment process.

Step 4. Appointment by Shareholders:

  • The company's shareholders formally appoint the director during a board meeting.
  • Ensure the appointment is in compliance with the company's Articles of Association.

Step 5. Register Appointment with Registrar of Companies (RoC):

  • The appointment must be officially registered with the RoC to complete the process.

Step 6. Understand Director Responsibilities:

  • Recognise that being a director comes with significant legal, financial, and operational responsibilities.

Private Limited Company Directors Responsibilities

A director in pvt ltd company fulfils various duties and responsibilities that ensure the company’s smooth operation and compliance with laws. Here are some company director duties:

  • Act within Powers

Directors must act within the authority of the company's Memorandum and Articles of Association, ensuring all actions are legal and authorised.

Example: A director of a manufacturing firm must seek board approval before signing a contract for a new supplier, as stipulated in the company’s Articles of Association.

  • To Promote the Welfare of the Company

Directors must always prioritise the company’s success, avoiding decisions that might harm its operations or financial standing.

Example: A director of a retail chain may opt to delay expansion plans during an economic downturn to ensure the company’s financial stability.

  • Exercise Personal Discretion

Directors are expected to use their judgment and discretion in decision-making, ensuring they make independent choices that align with the company’s interests.

Example: A director in a tech startup may choose to invest in a high-potential but risky innovation project after independently analysing market trends, even if other board members are hesitant.

  • Avoid Conflict of Interest

Directors must avoid situations where their personal interests conflict with the interests of the company, such as taking part in business transactions that may benefit them personally.

Example: A director owning shares in a vendor company must disclose this relationship and recuse themselves from decisions involving contracts with that vendor.

  • Make Independent Decisions

As a director, it’s crucial to maintain the ability to make independent decisions that are in the best interest of the company’s growth and long-term success. 

Example: A director may support a merger proposal after conducting an unbiased evaluation of the deal’s benefits, even if opposed by some stakeholders.

  • Crisis Management

During challenging times, directors must manage crises effectively, keeping the company’s long-term goals in mind and navigating risks judiciously.

Example: A director in a logistics company might quickly implement contingency plans during a supply chain disruption, ensuring customer commitments are met while minimizing losses.

The role of a director in a company is a balance of leadership, responsibility and ethics. Every decision you make impacts the company, and you must ensure that the company thrives and adheres to the law.

Types of Directors in Company Law

Private limited companies can have different types of company directors, each with specific roles and responsibilities. Major types of directors in a private limited company include:

  • Managing Director(MD)

The Managing Director (MD) is the highest ranking director responsible for overseeing the company’s daily operations and ensuring its goals and strategies are successfully carried out.

As the MD, this director holds significant decision-making authority and is responsible for setting organisational policies, managing resources and leading the team. They work closely with the board to align the company’s strategic initiatives with long-term objectives. 

The MD bridges the board and the company's operational team, driving performance and growth.

  • Whole-Time Director

A Whole-Time Director is a full-time employee dedicated to specific operational responsibilities within the organisation. Unlike non-executive directors, they are involved in the company's daily operations, overseeing areas such as finance, HR or marketing. 

Their role is to ensure smooth operational performance and to support the MD and board by managing specific functions and executing company policies. Whole-Time Directors are vital in implementing the board’s strategic decisions on a day-to-day basis.

  • Ordinary Director

An Ordinary Director is a member of a company’s board of directors, serving in a non-executive capacity. Their primary role is to attend board meetings, contribute to discussions, and participate in decision-making processes that shape the company's strategy and policies. 

Unlike executive directors or managing directors, Ordinary Directors are not involved in the day-to-day management or operations of the business.

  • Nominee Director

A Nominee Director is appointed to represent the interests of a particular stakeholder, often an investor or a lending institution. They serve on the board to ensure that the appointing party’s interests and concerns are considered in key company decisions. 

Nominee Directors may be particularly common in joint ventures or companies with external funding. Their responsibility is to maintain a balanced perspective in the boardroom, ensuring the investor or stakeholder’s views are addressed without compromising the company's broader interests.

  • Alternate Director

An Alternate Director is appointed temporarily to act in place of an absent director, usually one who is based abroad or unavailable for a period. The Alternate Director has the same powers and responsibilities as the original director and participates in board meetings and decision-making. 

This role ensures continuity in governance, allowing the company to maintain full functionality even when a permanent director is unavailable.

  • Professional Director

A Professional Director is an individual appointed to a company’s board based on their expertise, skills, and experience rather than their relationship with the company’s founders or shareholders. 

Typically, these directors bring specialised knowledge in areas such as finance, law, operations, marketing, or industry-specific expertise that adds value to the board’s decision-making process.

All the types of directors in a company bring specific expertise and focus, helping ensure a well-rounded leadership team.

Number of Directors in Private Limited Company

The number of directors in private limited company depends on the scale and needs of the business. The minimum directors in the private limited company can be 2. However, the maximum number of directors in a private company is 15. A smaller company may only need two or three directors.

It is important to balance the number of directors, as having too few can limit the diversity of opinions and skills, while too many can create inefficiencies in decision-making. 

When determining the optimal number of directors for a company, consider the following factors:

  • Company Size and Complexity

Larger or more complex companies benefit from more directors handling diverse functions and providing specialised knowledge in finance, operations and marketing.

  • Industry Requirements

Certain industries, especially those highly regulated (e.g., finance, healthcare), may require directors with specific expertise or certifications, potentially increasing the ideal board size.

  • Diversity of Skills and Perspectives

A well-rounded board should include directors with diverse skills, professional backgrounds and viewpoints, enhancing decision-making and innovation.

  • Corporate Governance Standards

For better governance and accountability, adding more independent or non-executive directors can help provide objective oversight and mitigate conflicts of interest.

  • Decision-Making Efficiency

Smaller boards may lead to quicker decision-making, while larger boards can become cumbersome; balance is key for smooth and effective operations.

  • Legal and Compliance Requirements 

Local law often sets minimum and maximum limits on the number of directors, so companies must adhere to these regulatory standards.

  • Cost Implications

Increasing the number of directors adds to costs (e.g., compensation, meeting expenses), so financial resources must be considered when expanding the board.

  • Growth Stage

Early-stage companies may need fewer directors, focusing on core founders, while scaling companies benefit from additional directors with strategic and operational experience.

So, the ideal number of directors depends on the company’s size, the industry and the areas of expertise required.

Company Director Residency Requirement

In India, one of the key legal director requirements for establishing a private limited company is that at least one director must be a resident of India. Under the Companies Act, a resident director is defined as someone who has spent at least 182 days in India during the preceding calendar year. 

This company director residency requirement serves multiple purposes:

  • To ensure local governance and effective leadership
  • As a safeguard against companies that may be established with little or no physical presence in the country, helping the government ensure that companies are genuinely rooted in the local economy. 
  • To enhance accountability and align the company’s operations with India’s regulatory framework, benefiting both the company and its stakeholders.

Conclusion

Directors in private limited companies play a critical role in steering the organisation toward growth and ensuring legal compliance. With increasing complexities in business operations, the responsibilities of directors are more significant than ever. 

As businesses grow and face new challenges, the role of directors will evolve, but one thing will remain constant: the need for both responsible and visionary leadership. Directors must continue to adapt, making informed decisions to lead their companies into the future.

FAQs on Directors in a Private Limited Company

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Private Limited Company
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1,499 + Govt. Fee
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  • Service-based businesses
  • Businesses looking to issue shares
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Limited Liability Partnership
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1,499 + Govt. Fee
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  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

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1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
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  • Freelancers, Small-scale businesses
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1,499 + Govt. Fee
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  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Can a person be a director in more than one company?

In India, under the Companies Act of 2013, a person can serve as a director in a maximum of 20 companies at once. However, there are limits within this cap—only 10 of these can be public companies. This rule aims to ensure that directors can effectively fulfil their responsibilities without being stretched too thin across multiple organisations.

Can a director be appointed without a DIN (Director Identification Number)?

No, a director in India cannot be appointed without a DIN. A DIN is mandatory under the Companies Act of 2013, as it uniquely identifies each director and is required for their appointment in any company. The DIN application is submitted to the Ministry of Corporate Affairs, and once obtained, it is used for all directorships and filings.

How does a director influence a company's culture?

A director plays a significant role in shaping a company’s culture by setting ethical standards, defining organisational values and leading by example. Directors influence company culture through the policies they approve, the leadership tone they set and their interactions with executives and employees. 

By encouraging open communication, promoting transparency and supporting employee development, directors can positively impact morale and align the company’s culture with its strategic goals.

Are company directors involved in day-to-day operations?

Generally, directors are not involved in a company's day-to-day operations; their role is more strategic and supervisory. They focus on high-level governance, setting long-term goals and ensuring that the company's management team is performing well. 

However, in smaller companies or startups, directors might take a more hands-on approach, becoming more involved in daily tasks and decisions due to limited resources or a smaller team.

Related Posts

Private Limited Company Vs. Limited Liability Partnerships (LLP): Key Differences

Private Limited Company Vs. Limited Liability Partnerships (LLP): Key Differences

Choosing the right business structure is one of the most critical decisions for entrepreneurs. It lays the foundation for how the business will operate, manage liabilities and raise funds, as well as how stakeholders will perceive it.

Among the many options available, Private Limited Companies (Pvt Ltd) and Limited Liability Partnerships (LLP) are two of India's most popular and widely adopted structures.

Both these structures offer the advantage of limited liability while being distinct in their governance, ownership, compliance requirements and suitability for different business types.

This blog provides an in-depth comparison of Pvt Ltd companies and LLPs, delving into their features, compliance requirements, taxation and funding options. By the end, you will have a clear understanding of which structure aligns best with your business goals and aspirations.

Table of Contents

Difference Between Limited Liability Partnership and Private Limited Company

The fundamental difference between a Pvt Ltd and an LLP lies in ownership and management. While a Pvt Ltd company is governed by shareholders (owners) and directors (managers), an LLP is managed by partners who own and operate the business. Additionally, compliance requirements, taxation and funding options differ significantly between the two.

Here is a table outlining the difference between LLP and a private limited Company:

Private Limited Company Limited Liability Partnership
Governing Act Governed by the Companies Act Governed by the Limited Liability Partnerships Act
Suitable For Financial Services, Tech Startups, Medium Enterprises Consultancy firms, Professional Services
Shareholders/ Partners Minimum– 2
Maximum– 200
Minimum– 2
Maximum– Unlimited
Minimum Capital Requirement No minimum capital requirement, but it is often advised to set the authorized capital at ₹1,00,000 (One Lakh) No minimum capital requirement, but it is often advisable to consider an initial capital of ₹10,000
Tax Rates The basic tax rate, excluding Surcharge and Cess – 25% The standard fixed rate – 30% on their generated earnings.
Fundraising Easier to raise funds from Investors Raising funds can be challenging
Transfer of Shares Shares can be easily transferred by amending AOA Transfer of partnership rights may require the consent of other partners and is generally more complex
ESOPs Can issue ESOPs to the Employees Unable to issue ESOPs to the Employees
Agreements Duties, Responsibilities, and other basic clauses outlined in MOA and AOA Duties, Responsibilities and other basic clauses outlined in the LLP Agreement
Compliances • More compliance costs
• Mandatory 4 Board Meetings
• Mandatory Statutory Audits
• Mandatory filings include Annual financial statements in form AOC–4 and annual returns in Form MGT–7, etc.
• Less Compliance Costs
• No mandatory Board Meetings
• Statutory Audits are not required if turnover is less than 40 Lakhs or capital contribution is less than 25 Lakhs.
• Mandatory filings include Annual financial statements in Form 8 and annual returns in Form 11.
Registration Company registration is done by SPICe+ form LLP registration is done by FiLLiP form
Name Reservation Company name reservation is made by SPICe+ Part A LLP name reservation is done by LLP–RUN
Dissolution More complex
Can be initiated by filing STK–2 form
Less Complex
Can be initiated by filing the Form 24

While the differences between LLPs and Private Limited Companies are numerous, they share similarities in key aspects:

  • Limited Liability
  • Separate Legal Identity
  • Registration Process with the MCA
  • Perpetual Succession

Let’s understand the key features and registration process in detail for both Private limited companies and LLPs.

What is a Private Limited Company?

A Private Limited Company (Pvt Ltd) is a privately held business entity that operates under the legal framework of the Companies Act of 2013 in India (or similar laws in other countries). It combines the benefits of limited liability protection for its shareholders with certain restrictions to maintain its private nature.

This structure is popular among startups and small to medium-sized enterprises due to its ability to attract investments while offering limited liability protection and operational flexibility.

Features of Pvt Ltd Company

Listing down some key advantages of a Private Limited Company below:

1. Limited Liability

The liability of Shareholders is limited. Personal assets are generally protected from business debts.

2. Separate Legal Entity

A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.

3. Ownership

Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.

4. Management

Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.

5. Number of Shareholders

Requires a minimum of two shareholders and can have a maximum of 200 shareholders.

6. Regulation and Compliance

Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings and maintaining statutory records.

7. Investment and Funding

Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

8. Perpetual Succession

The company continues to exist even if its shareholders or directors in private limited company change, retire, or pass away. Ownership can be transferred seamlessly through the sale of shares.

Private Limited Company Registration

The Ministry of Corporate Affairs (MCA) has introduced a streamlined process for incorporating companies called the Simplified Proforma for Incorporating Company Electronically Plus (SPICe+). It consists of two parts: Part A and Part B.

1. Step 1: Acquire a Digital Signature Certificate (DSC)

• A Digital Signature Certificate (DSC) is a digital method of verifying or attesting documents.
• It is typically issued with one or two-year validity and is mandatory for all witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).
• Class 2 or 3 DSCs can be obtained through listed Government Certifying Agencies (CAs).

2. Step 2: Apply for Name Approval using SPICe+ Part A

• Part A facilitates 'Name Reservation' with two proposed names and one re-submission (RSUB).
• In case of name rejection due to various reasons, a re-filing with the specified fee is required.

Note: Simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is possible, but only one name can be reserved.

3. Step 3: Apply for Company Registration using SPICe+ Part B

After name approval, Part B completes the registration process, including:

  • • Application for allotment of Director Identification Number (DIN)
    • Incorporation of the new company
    • Submission of e-MoA (INC-33) and e-AoA (INC-34)
    • Application for PAN and TAN (mandatory)
    • Application for EPFO registration (mandatory)
    • Application for ESIC registration (mandatory)
    • Application for Professional tax registration (only for Maharashtra)

The entered information in SPICe+ Parts A and B is automatically transferred to associated forms like AGILE-PRO, eAoA, eMoA, URC1, and INC-9, as applicable.

4. Step 4: Open a Bank Account

Open a current account for your company to facilitate seamless financial transactions and business operations, handling various aspects such as receiving payments, making supplier payments and managing payroll.

5. Step 5: File for the Commencement of Business Certificate

The Commencement of Business Certificate, filed through Form INC-20A within 180 days of incorporation, is a declaration by the Director of the Company submitted to the Registrar of Companies.

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After the SPICe+ Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

This certificate includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) is a business structure combining features of a traditional partnership and a limited company.

Limited Liability Partnerships are often chosen by professional services firms, small businesses and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Features of LLP

A Limited Liability Partnership (LLP) is a business structure that combines features of both a traditional partnership and a limited company. Limited Liability Partnerships are often chosen by professional services firms, small businesses, and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Some key characteristics of a Limited Liability Partnership are:

1. Limited Liability

Similar to a private limited company, partners in an LLP have limited liability.

2. Separate Legal Entity

An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.

3. Ownership

Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.

4. Management

Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.

5. Number of Partners

Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.

6. Regulation and Compliance

Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.

7. Flexibility

Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

Limited Liability Partnerships Registration

Here's a simplified guide on the steps for Limited Liability Partnership (LLP) registration:

1. Step 1: Apply for DSC

  • Obtain a Digital Signature Certificate (DSC) from Government Certifying Agencies with one or two-year validity.

2. Step 2: Name Reservation

  • Reserve the LLP's name using the LLP-RUN form.

3. Step 3: Apply for Registration through FiLLiP

  • Complete the FiLLiP (Form for Incorporation of Limited Liability Partnership) and submit it to the Registrar. Alongside FiLLiP, submit the Subscriber sheet and Partner's consent (Form 9) as additional documentation.

4. Step 4: File LLP Agreement

  • File the LLP Agreement using Form 3 on the MCA portal within 30 days of LLP registration.

After the FiLLiP Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, a crucial legal document confirming the successful registration of your company.

This certificate includes vital information such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and more.

Example of LLPIN: AAA-1234

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LLP vs Pvt Ltd Ownership

  • Shareholders vs. Partners
    • Pvt Ltd Ownership: Shareholders own the company but may not be involved in day-to-day management. Primarily managed by Directors.
    • LLP Ownership: Partners typically manage the business and have a direct role in decision-making.
  • Transfer of Ownership
    • Pvt Ltd: Shares can be easily transferred from private limited company members, making it simpler to onboard or exit shareholders.
    • LLP: Ownership transfer requires the consent of other partners, which can be complex.

LLP vs Pvt Ltd Compliance

  • Compliance for Private Limited Companies
    • Hold the First Meeting of the Board of Directors within 30 days of the Incorporation of the Company. It is compulsory to host four meetings in a year with a gap not more than 120 days.
    • Hold an Annual General Meeting every year, on or before September 30th, during business hours and in the registered office.
    • Appoint the company's first auditor within 30 days of incorporation, who will serve until the end of the first AGM.
    • File Form ADT 1 within 15 days of the appointment of the subsequent auditor.
    • File Annual Returns (AOC 4 and MGT 7) within 30 and 60 days of holding the AGM, respectively.
    • File Form ITR-6 for Income Tax Return annually.
    • File Form DIR-3 KYC to disclose details of the Directors.
  • Compliance for Limited Liability Partnerships
    • File an LLP agreement within 30 days of incorporation. The penalty of ₹100/day will be levied if an LLP fails to comply with this condition.
    • File the form DIR3 for the DIN allotment in case of an existing company.
    • File two annual statements for Annual Return and Statement of Accounts and Solvency using Forms 11 and 8, respectively.
    • Sign, verify and file the Income Tax Return (ITR) annually.
    • Depending on their shareholding capacity, you and your partner must deposit their contribution into the relevant bank account within the specified time frame.
    • Get a GST registration since it is a legal compulsion per the GST Act.
    • Audit your accounts through CAs if the company's annual turnover exceeds Rs 40 lakhs or the contribution surpasses ₹25 lakhs of the threshold limit.
    For businesses that prefer a simpler and cost-effective compliance framework, LLPs are the better option. With fewer regulatory requirements, LLPs reduce the administrative burden, making them ideal for small businesses, professional firms and startups not seeking external funding. However, for companies planning rapid growth, attracting investors or requiring a formal structure for credibility, Pvt Ltd companies are worth the added compliance effort.

LLP vs Pvt Ltd Funding

  • Equity Financing
    • Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
    • LLP funding: Equity financing is not possible since partners cannot issue shares.
  • Debt Financing
    • Both structures can access loans, but Pvt Ltd companies have additional options like issuing debentures or convertible notes.

LLP vs Pvt Ltd Foreign Direct Investment (FDI)

  • Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
  • LLP: FDI in LLP is allowed only in sectors where 100% FDI is permitted and is subject to approval in other cases, making it less flexible.

LLP vs Pvt Ltd Taxation

  • Taxation for Pvt Ltd CompaniesIncome tax for Pvt Ltd companies:
    • 25% if the turnover is up to ₹400 crore (as per recent provisions).
    • 30% for larger companies.
    A cess of 4% applies to the tax amount, along with surcharges for higher income levels.
  • Taxation for LLPsLLP taxation rate is 30% on their total income plus a surcharge (if applicable) and cess.Both LLPs and Pvt Ltd companies are treated equally under the GST regime:
    • GST registration is mandatory for businesses with annual turnover exceeding ₹20 lakhs (₹40 lakhs for goods in some states).
    • Compliance includes filing monthly or quarterly GST returns, depending on turnover.

Company Registration with Razorpay Rize

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Explore the diverse range of services tailored to suit the needs of both startups and established businesses.

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Our package includes:

  • Company Name Registration
  • 2 Digital Signature Certificates (DSCs)
  • 2 Directors’ Identification Numbers (DINs)
  • Certificate of Incorporation(COI)
  • MoA & AoA [Applicable for Private Limited Companies and OPCs]
  • LLP Agreement [Applicable for LLPs]
  • Company PAN & TAN

*Prices and documents can differ based on the company type.

Which Company Type Should You Register Your Business With?

Before proceeding with the registration of either an LLP or a company, it is crucial to evaluate the following factors carefully.

• Consider the nature and size of your business

  • If you operate a small business with a limited workforce, opting for LLP registration might be more favourable, given the relatively lighter compliance requirements compared to a company. On the other hand, for larger businesses with substantial employee numbers and capital needs, registering as a company provides greater flexibility in raising capital.

• Fundraising requirements

  • If your goal is to raise funds through equity, choosing a company structure is imperative. However, if your fundraising needs are more straightforward, the LLP structure may be a more suitable option.

• Tax rates

  • It's essential to compare the tax rates applicable to both company and LLP structures, as there can be significant differences. Opt for the structure that aligns with your financial goals based on total income or turnover.

Personal liability protection

  • While an LLP offers limited liability protection, a company structure treats the company as a distinct legal entity, safeguarding shareholders' personal assets.

Ultimately, the choice between a company structure and an LLP structure hinges on the unique characteristics of your business, including its nature, size, and capital requirements.

Find Your Ideal Company Type

If you still need more help deciding which company type to register with, don't worry! We’ve got you covered with our latest tool - "Know Your Company Type."

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For the first time in India, simply answer a quick set of questions about your startup, and this tool will leverage your responses to identify the ideal company registration type. Find your perfect fit with just one click!

Explore side-by-side comparisons of popular company types for added clarity and make informed choices effortlessly!

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Which is better, LLP or Pvt Ltd?

The choice between an LLP and a Pvt Ltd company depends on the nature and goals of the business:

  • LLP: Best for small businesses, professional services and firms looking for flexibility and cost-effective compliance. LLPs are ideal for businesses that do not need external investors or plan to scale aggressively.
  • Pvt Ltd: Suitable for businesses planning to raise funds, scale operations or build a more structured and credible entity. Pvt Ltd companies are preferred by startups seeking venture capital or private equity investments.

Refer to the detailed difference between LLP and Pvt ltd company for more context.

Does LLP need to file a tax return?

Yes, all LLPs must file an Income Tax Return annually, irrespective of whether they have generated income or incurred losses. Key requirements include:

  • ITR-5 Form: Used for filing LLP income tax returns.
  • Tax Audit: Mandatory if the annual turnover exceeds ₹1 crore.
  • LLPs must file tax returns by the end of the financial year.

How is the salary from LLP taxed?

  • Partners' Salary: Salaries or remuneration paid to partners of an LLP are treated as business expenses for the LLP and are deductible from its taxable income.
    • The salary received by partners is taxed as personal income under the Income Tax Act, based on their applicable income slab rates.
  • Employee Salary: Salaries paid to employees of an LLP are subject to TDS (Tax Deducted at Source) and standard income tax rules.

Can an LLP have employees?

Yes, an LLP can hire employees just like any other business entity.

  • Employees of an LLP are entitled to all statutory benefits, such as Provident Fund (PF), Employee State Insurance (ESI) and gratuity, if applicable.
  • Salaries paid to employees are subject to payroll taxes, such as TDS and GST compliance (for specific payments like consulting fees).

Why do people prefer LLP?

Many small businesses and professional firms prefer LLPs due to their unique advantages:

  1. Low Compliance
  2. Cost-Effective
  3. Limited Liability
  4. Tax Efficiency
  5. Flexibility in Management
  6. Separate Legal Entity

LLPs are especially favoured by professionals (like consultants, lawyers, or accountants) and small businesses that prioritise simplicity and operational control.

Procedure for Converting a Private Limited Company to an OPC

Procedure for Converting a Private Limited Company to an OPC

As startups evolve and founders reassess business needs, many look for simpler structures that offer flexibility without compromising legal benefits. One such move gaining traction is the conversion of a Private Limited Company (Pvt Ltd) into a One Person Company (OPC) — especially when a company reduces to a single shareholder or no longer requires multiple directors.

In this blog, we break down the process, eligibility, benefits, and post-conversion obligations involved in converting a Private Limited Company to an OPC in India.

Table of Contents

Private Limited Company

A Private Limited Company is a widely preferred structure for startups and growing businesses in India. It requires:

  • A minimum of 2 directors and 2 shareholders
  • Limited liability protection
  • Separate legal identity
  • Mandatory compliance with the Companies Act, 2013

This structure is ideal for businesses seeking external funding and operational scale. However, it can become administratively heavy for a solo founder or small team.

Related Read: Characteristics of Private Limited Company

One Person Company (OPC)

An OPC is a simplified structure designed for solo entrepreneurs who want the benefits of a corporate entity without the complexities of a Private Limited Company. Key features include:

  • Only one shareholder and one nominee required
  • Limited liability protection
  • Separate legal identity
  • Lesser compliance burden

An OPC is ideal for solo founders, consultants, and professionals transitioning from informal to formal business setups.

Related Read: Advantages of One Person Company

Eligibility Criteria for Converting a Company into an OPC

As per Rule 7 of the Companies (Incorporation) Rules, 2014, a Private Limited Company can be converted into an OPC if:

  • The company has no more than one shareholder (at the time of conversion)
  • The shareholder is an Indian citizen and resident in India (staying in India for at least 120 days during the financial year)
  • The company has no outstanding liabilities or ongoing litigation
  • The company’s paid-up capital is less than ₹50 lakh, and its annual turnover is under ₹2 crore (as per past financials)

Note: These limits may be relaxed depending on MCA updates, so always check the latest provisions.

Benefits of Converting a Company to an OPC

  • Lower compliance requirements – Less paperwork, fewer meetings
  • Sole ownership with control – Ideal for solo founders
  • Limited liability – Personal assets remain protected
  • Separate legal entity – Recognised as a company under law
  • Brand credibility – Enjoys more trust than sole proprietorships

Process for Converting a Private Limited Company to an OPC

Here's a step-by-step breakdown:

1. Board Meeting

  • Pass a resolution to convert the Pvt Ltd company into an OPC
  • Approve a draft of the special resolution for shareholder approval

2. Shareholder Approval

  • Convene an Extraordinary General Meeting (EGM)
  • Pass a special resolution authorising conversion into an OPC

3. Filing with ROC (Registrar of Companies)

  • File Form MGT-14 within 30 days of passing the special resolution
  • File Form INC-6 with the following attachments:
    • Board & shareholder resolutions
    • Updated MOA & AOA (altered for OPC structure)
    • Declaration by directors and shareholders
    • Latest audited financial statements
    • Affidavit stating the company is free of debts and litigation

4. Scrutiny by ROC

  • The Registrar reviews all filings and may request clarifications

Issue of Certificate

Upon successful verification, the ROC issues a Certificate of Incorporation reflecting the conversion from Private Limited to OPC. This certificate carries the same company registration number (CIN), but the company name is updated to include “(OPC) Private Limited.”

Post-Conversion Requirements by the OPC

After conversion, the newly formed OPC must:

  • Update PAN, TAN, GST registrations, bank accounts, contracts, etc.
  • Use the new name with “(OPC) Private Limited” on all communications
  • Maintain books of accounts and comply with annual filing requirements (though fewer compared to a Pvt Ltd)
  • Inform all stakeholders, vendors, and customers about the structural change

Final Thoughts

If you're a solo founder managing a Private Limited Company and want to streamline operations while retaining limited liability, converting to an OPC could be a strategic move. With reduced compliance and full control, you get the best of both worlds- formal recognition with solo flexibility.

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are the turnover and capital limits for conversion?

To convert a Private Limited Company into an OPC, the following financial thresholds must be met:

  • Paid-up capital must be less than ₹50 lakhs
  • Annual turnover must be less than ₹2 crores (as per the latest profit and loss statement)

These limits are prescribed under Rule 7 of the Companies (Incorporation) Rules, 2014. If your company exceeds these limits, conversion may not be permitted.

How long does it take to convert a private limited company into an OPC?

The conversion process typically takes 3 to 4 weeks, depending on:

  • Accuracy of documentation
  • Timely approval from shareholders
  • Workload at the concerned Registrar of Companies (ROC)
  • Any queries or objections raised by the authorities

Filing forms like MGT-14 and INC-6 correctly the first time helps avoid delays.

Is shareholder approval required for conversion?

Yes, shareholder approval is mandatory. A special resolution must be passed in a duly held Extraordinary General Meeting (EGM). The resolution, along with supporting documents, is then filed with the ROC via Form MGT-14.

Can a foreign national form or be part of an OPC?

No, a foreign national cannot incorporate or be a member/nominee of an OPC in India. Only a natural person who is a citizen of India and a Resident in India (i.e., stayed in India for at least 120 days during the previous financial year) is eligible to form an OPC or be appointed as its nominee.

Private Limited Company vs. One Person Company (OPC)

Private Limited Company vs. One Person Company (OPC)

Choosing the right business structure is a crucial decision for any entrepreneur. In India, two popular options are the Private Limited Company (Pvt Ltd) and the One Person Company (OPC). While Pvt Ltd companies suit growth-oriented startups with aspirations to scale, OPCs cater to solo entrepreneurs seeking simplicity with limited liability.

This blog explores the key features, benefits, and differences between these structures to help you decide what’s best for your business.

Table of Contents

Difference between Private Limited and One Person Companies

Although we will explore each legal structure in the upcoming sections, let's currently delve into a comparative analysis between these two entities.

Private Limited Company One Person Company
Suitable For Financial Services, Tech Startups, Medium Enterprises Franchises, Retail Stores, Small Businesses
Shareholders/ Partners Minimum – 2
Maximum – 200
Minimum – 1
Maximum – 1
Nominee Not required One Nominee mandatory
Minimum Capital Requirement No minimum capital requirement No minimum paid-up capital requirement exists. However, the minimum authorized capital required is Rs. 1,00,000 (One Lakh)
Tax Rates The basic tax rate, excluding Surcharge and Cess, is 25% The applicable Tax rate to the OPC would be 25%, excluding cess and surcharge
Fundraising Multiple options for Fundraising Limited options for Fundraising
ESOPs Can issue ESOPs to the Employees Unable to issue ESOPs to the Employees
DPIIT Recognition Eligible for DPIIT recognition Ineligible for DPIIT recognition
Transfer of Shares Shares can be easily transferred by amending AOA Transfer of shares isn’t possible; it can only be done in case of transfer of ownership
Agreements Duties, Responsibilities, and other basic clauses outlined in MOA and AOA Duties, Responsibilities, and other basic clauses outlined in MOA and AOA
Compliances • More compliance costs
• Mandatory 4 Board Meetings
• No mandatory audits till a specified threshold limit
Less Compliance Costs
Minimum 2 Board Meetings
Mandatory Audits
Foreign Directors NRIs and Foreign Nationals can be Directors No foreign directors are allowed
Foreign Direct Investment Eligible through Automatic route Not eligible for FDI
Mandatory Conversion No mandatory conversion If annual turnover exceeds Rs. 2 Crores or paid-up capital exceeds Rs. 50 lakhs, then mandatory conversion into a private limited company

While we have provided some context on the differences between a private limited company and an OPC, let's break down their features and registration process in detail. This will help you figure out which one suits your business needs best.

What is a Private Limited Company?

A Private Limited Company (Pvt Ltd) is one of the most sought-after business structures in India. It combines the benefits of limited liability, a separate legal identity, and scalability.

It’s a privately held entity governed by the Companies Act of 2013 and is often chosen for its ability to combine the flexibility of partnerships with the advantages of corporate status.

In a Private Limited Company, shareholders' liability is limited to the extent of their shareholding, which means personal assets are protected in case the company incurs losses or debts. This makes it an attractive option for entrepreneurs looking to build a scalable business while minimising financial risks.

In short, a Private Limited Company is ideal for entrepreneurs with big ambitions, as it provides:

  • A formal structure for business operations.
  • Easier access to funding through equity or debt.
  • A professional image that boosts credibility with investors and customers.

Private Limited Company Registration

Registering a Private Limited Company involves a detailed process governed by the Companies Act, 2013.

Step-by-Step Guide to Registration

  1. Document Requirements:
    • PAN and Aadhaar of all directors.
    • Proof of address for both directors and the company (rental agreement, utility bills, etc.).
    • Digital Signature Certificate (DSC) for directors.
  2. Name Reservation:
    • Apply to the Ministry of Corporate Affairs to reserve a unique company name. This is done using the SPICe+ (Simplified Proforma for Incorporating Companies Electronically) Part A.
  3. Drafting MOA and AOA:
    • Memorandum of Association (MOA): Outlines the company’s objectives and scope of operations.
    • Articles of Association (AOA): Governs the company’s internal management.
  4. Filing Incorporation Application:
    • Submit the SPICe+ Part B form along with MOA and AOA to the ROC.
    • Articles of Association (AOA): Governs the company’s internal management.
  5. Certificate of Incorporation:
    • Upon approval, the ROC issues a Certificate of Incorporation, officially recognising the company.

The process usually takes 10–15 working days, provided all documents are in order.

{{pvt-cta}}

Key Features of Private Limited Company

Here are some Private limited company features:

  • Ownership Structure: Owned by shareholders, managed by directors (who can also be shareholders).
  • Liability of Shareholders: Limited to the amount of unpaid shares they hold.
  • Capital Requirements: There is no minimum capital requirement; businesses can start with as little as ₹1 lakh authorised capital.
  • Perpetual Succession: The company exists independently of its owners' or directors' status.
  • Limited Liability: Shareholders’ liability is restricted to the amount invested.
  • Ease of Fundraising: Can raise capital from angel investors, venture capitalists, or private equity.
  • Tax Implications: Subject to corporate tax rates, including additional surcharges and cess, based on annual income.

What is a One Person Company?

Introduced under the Companies Act of 2013, a One Person Company (OPC) is a simplified corporate structure designed for solo entrepreneurs.

As the name suggests, it allows a single individual to own and operate a business while enjoying the benefits of limited liability and corporate status. OPCs are particularly suited for small businesses, consultants, and freelancers who want to step up from a sole proprietorship and gain a formal business identity.

The OPC structure is a bridge between sole proprietorship and private limited companies. It combines the flexibility of running a solo business with the legal and financial protections of a company, making it a popular choice for first-time entrepreneurs.

One Person Company Registration

The process is designed to be straightforward and entrepreneur-friendly, ensuring that individuals can easily transition from a sole proprietorship or informal business setup to a legally recognised company.

Step-by-Step Guide to Registration

  1. Document Requirements:
    • PAN, Aadhaar, and proof of address of the sole shareholder/director.
    • Nominee details.
    • Digital Signature Certificate (DSC).
  2. Name Reservation:
    • Reserve a unique name for the OPC via the MCA portal through SPICe+ Part A.
  3. Filing Application:
    • Submit the incorporation form, i.e. SPICe+ Part B with MOA and AOA, to the ROC.
  4. Certificate of Incorporation:
    • Receive the Certificate of Incorporation after approval.

{{opc-cta}}

Key Features of OPC

Here are some One person company features:

  • Ownership Structure: The ownership is held by one individual, with the provision to nominate another person as a successor in case of the owner’s demise.
  • Liability of the Shareholder: The shareholder’s liability is limited to the unpaid value of their subscribed capital.
  • Capital Requirements: There is no minimum capital requirement, making it easier for individuals to start with minimal resources.
  • Ease of Formation: Streamlined setup and management processes.
  • Lower Compliance Costs: Fewer filings and regulatory requirements.
  • Limited Liability: Protects personal assets.
  • Tax Implications: OPCs are subject to the same corporate tax rates as Private Limited Companies. However, they enjoy lower compliance costs and simplified tax filings.

Similarities between OPC and Private Limited Company

  1. Limited Liability Protection: Both structures ensure the owner’s liability is restricted to their investment.
  2. Legal Entity: Both are considered separate legal entities distinct from their owners.
  3. Compliance with ROC: Both require periodic filings with the Registrar of Companies.
  4. Taxation: Both are subject to corporate tax rates.

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Our package includes:

  • Company Name Registration
  • 2 Digital Signature Certificates (DSCs)
  • 2 Directors’ Identification Numbers (DINs)
  • Certificate of Incorporation(COI)
  • MoA & AoA [Applicable for Private Limited Companies and OPCs]
  • LLP Agreement [Applicable for LLPs]
  • Company PAN & TAN

*Prices and documents can differ based on the company type.

Which company type to register your business with?

Before commencing the registration process for either a OPC or a Private Limited company, it is essential to carefully assess the following factors.

1. Consider the Nature and Size of Your Business

  • Evaluate the nature and size of your business. If your operations are on a smaller scale and you are a single operator, opting for OPC registration may be advantageous. Conversely, for larger businesses with substantial employee numbers and capital needs, registering as a Private Limited Company offers greater flexibility in capital raising.

2. Fundraising Requirements

  • Assess your fundraising requirements. If your objective is to raise funds through equity, opting for a company structure is essential. However, if you can fundraise through debt options, the OPC structure may work.

3. Compliance Requirements

  • Generally, OPCs have fewer compliance requirements compared to Private Limited Companies, making them more suitable for small businesses. Nonetheless, ensure that you are aware of several post-incorporation compliances that come along with each business structure and choose accordingly.

Know Your Ideal Company Type

For the first time in India, answer a brief set of questions about your startup, and our tool "Know Your Company Type" will utilize your responses to pinpoint the ideal company registration type.

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{{know-your-company}}

Explore side-by-side comparisons of popular company types with prices to help you give a clear picture of the nuances involved with different legal structures.

Conclusion

Choosing between a Private Limited Company and a One Person Company depends on your business needs.

If you’re a solo entrepreneur who clearly focuses on managing things independently and prefers minimal compliance requirements, an OPC can be a great option. It’s a straightforward structure, perfect for freelancers, consultants, or small-scale businesses who want the advantages of limited liability while keeping things simple.

However, if you’re building a business with big dreams, such as attracting investors, scaling operations, or entering international markets, a Private Limited Company might be a better fit.

When making this decision, it’s essential to consider not only where your business is today but also where you want it to be in the future. Think about:

  • Your business goals: Are you aiming for steady income or scaling into new markets?
  • Your growth plans: Will you need external funding or partners?
  • Your resources and bandwidth: Can you manage the compliance requirements of a Private Limited Company, or is a simpler structure better suited for now?

Explore side-by-side comparisons of popular company types with prices to help you give a clear picture of the nuances involved with different legal structures.

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are the documents required for Private Limited Company Registration

To register a Private Limited Company (PVT Ltd) in India, the following documents are typically required:

  1. For Directors and Shareholders:
    • PAN Card: Mandatory for all Indian citizens involved in the company.
    • Identity Proof: Passport, Aadhaar card, voter ID, or driving license.
    • Address Proof: Bank statement, electricity bill, or any government-issued document not older than two months.
  2. For Registered Office Address:
    • Rent/Lease Agreement: If the office is rented.
    • NOC (No Objection Certificate): From the property owner.
    • Utility Bills: Electricity or water bill (not older than two months).
  3. Photographs:
    • Passport-sized photos of directors and shareholders.
  4. Digital Signature Certificate (DSC):
    • Required for all directors to file forms online.

Can an Indian citizen living abroad from a One Person Company (OPC)?

Yes, an Indian citizen living abroad can form a One Person Company (OPC) in India, but with certain conditions:

  • The person must be an Indian citizen and a Resident of India, as per the Companies Act, 2013.
  • Resident of India means the individual has stayed in India for at least 120 days in the preceding financial year.

If an Indian citizen living abroad doesn’t meet this residency requirement, they cannot form an OPC but may explore alternative structures like a Private Limited Company, which allows for non-resident directors and shareholders.

Is Foreign Direct Investment (FDI) allowed for a One Person Company?

No, Foreign Direct Investment (FDI) is not allowed in a One Person Company (OPC) under the automatic route. OPCs are restricted to Indian citizens and residents, and allowing FDI would contradict this principle.

For businesses looking to attract foreign investment, registering as a Private Limited Company is the better option.

What is the process of converting a Private Limited Company to an OPC?

Currently, the Companies Act of 2013 does not allow the conversion of a Private Limited Company into a One Person Company (OPC). However, if the business scale reduces and fewer directors/shareholders are required, the owners may dissolve the Private Limited Company and incorporate an OPC.

When to convert an OPC to a Private Limited Company?

As per the Companies Act of 2013, a One Person Company (OPC) must be converted into a Private Limited Company (PVT Ltd) in the following scenarios:

  1. When the Paid-Up Capital Exceeds ₹50 Lakhs:
    • If the capital crosses ₹50 lakhs, the OPC must be converted into a PVT Ltd company within six months.
  2. When the Annual Turnover Exceeds ₹2 Crores:
    • If the turnover of the OPC exceeds ₹2 crores in the previous three consecutive financial years, conversion is mandatory.

Steps for Conversion:

  • Pass a special resolution in the OPC for conversion.
  • File necessary forms with the Ministry of Corporate Affairs (MCA), such as INC-5 and INC-6.
  • Update the Memorandum of Association (MoA) and Articles of Association (AoA) to align with the requirements of a Private Limited Company.

Voluntary Conversion:

If the OPC owner wishes to scale the business, raise funds, or bring in multiple shareholders, they can also opt for voluntary conversion without waiting for mandatory thresholds.

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Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
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foxsell.app
We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

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TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
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