One Person Company (OPC): Definition, Features, Formation etc.

Dec 24, 2024
Private Limited Company vs. Limited Liability Partnerships

The concept of a One-Person Company (OPC) revolutionised business formation in India with its introduction under the Companies Act of 2013.

One person company registration bridged the gap between sole proprietorships and private limited companies, offering entrepreneurs the flexibility of running their business as a single member while enjoying the benefits of limited liability.

Before this change, solo entrepreneurs often operated under sole proprietorships, exposing their personal assets to business risks.

Table of Contents

Definition of One Person Company

The full form of OPC is One Person Company. An OPC, defined under Section 2(62) of the Companies Act of 2013, is a private company with just one member. Unlike sole proprietorships, OPCs are separate legal entities, meaning the company’s liabilities do not affect the personal assets of the member.

OPCs are an excellent option for solo entrepreneurs who wish to gain the benefits of a corporate structure without the need for additional shareholders. By combining limited liability protection with simplified compliance, OPCs have become attractive for those looking to establish a secure and scalable business.

Features of a One Person Company

From having a single member and a nominee to enjoying certain privileges under the Companies Act, OPCs stand out as a distinct entity. Here are some key features and advantages of an OPC:

  • Single Member Structure: OPCs allow a single individual to own and manage the company.
  • Nominee Requirement: A nominee must be appointed during registration to take over the business in case the member dies.
  • Private Entity: OPCs are classified as private limited companies.
  • Limited Liability: The member’s liability is limited to their investment in the company.
  • Exemptions: OPCs enjoy exemptions from several compliance obligations, such as annual general meetings.
  • No Perpetual Succession: The OPC’s existence is tied to its member and nominee.

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Example of One Person Company (OPC)

To better understand how a One Person Company (OPC) functions, let’s look at a hypothetical example:

Example: Elite Decor OPC Private Limitedv

Industry: Interior Design

Scenario:
Ravi Sharma is an interior designer with a growing client base. Initially, he operated as a sole proprietor, but he wanted to expand his business, protect his personal assets, and gain more credibility with clients.

Ravi decided to register his business as an OPC, Elite Decor OPC Private Limited, under the Companies Act, 2013. By doing so:

  1. He became the sole member of the OPC, retaining full ownership and control of the business.
  2. He appointed his spouse, Priya Sharma, as the nominee, ensuring continuity of the business in case of his death or incapacitation.
  3. His liability was limited to the amount he invested in the company, protecting his personal assets like his home and savings from business risks.

Benefits Ravi Experienced:

  • Limited Liability: Any debts or losses incurred by the company would not impact Ravi’s personal wealth.
  • Separate Legal Entity: Clients and vendors saw Elite Decor as a professional entity, improving trust and credibility.
  • Ease of Compliance: Ravi benefited from exemptions like not needing to hold annual general meetings (AGMs), saving time and effort.

Through this OPC model, Ravi successfully grew his business while enjoying the benefits of limited liability and a corporate structure.

Formation of One Person Companies

Forming a One Person Company (OPC) is a straightforward and streamlined process governed by the Companies Act, 2013. Here’s a step-by-step guide to help you navigate the formation of an OPC:

Step 1: Obtain a Digital Signature Certificate (DSC)

The first step in forming an OPC is obtaining a Digital Signature Certificate (DSC) for the sole member and the nominee. You can acquire a DSC from authorised certifying agencies.

Step 2: Reserve a Unique Name through SPICe+ Part A

Use the SPICe+ (Simplified Proforma for Incorporating Company Electronically) Part A form on the Ministry of Corporate Affairs (MCA) portal to reserve a unique and compliant name for the OPC. The name should adhere to the MCA guidelines and not conflict with existing company names.

Step 3: File Incorporation Forms

Prepare and file Form SPICe+ Part B, a consolidated form for company incorporation. Along with SPICe+, you need to submit the Memorandum of Association (MOA) and Articles of Association (AOA) to define the company’s objectives and internal management rules.

Step 4: Provide Nominee Details

As an OPC requires a nominee, you must submit Form INC-3, which includes the nominee's consent and their details, such as identity and address proofs. The nominee acts as a safeguard, taking over the OPC in case of the sole member's incapacity or demise.

Step 5: Obtain the Certificate of Incorporation

Once all the forms are submitted and verified by the Registrar of Companies (ROC), the OPC will be officially registered. You will receive a Certificate of Incorporation, marking the legal formation of your company.

Membership in One Person Companies

Membership in a One Person Company (OPC) is governed by specific rules outlined in the Companies Act, 2013, ensuring that the structure remains unique to individual entrepreneurs. Here’s an overview of the eligibility and restrictions associated with OPC membership:

Who Can Be a Member?

  1. Indian Citizens Only:
    • Membership is restricted to natural persons who are Indian citizens and residents.
    • A resident is someone who stayed in India for at least 182 days in the preceding financial year.
  2. One OPC Per Individual:
    • A person can be a member or nominee in only one OPC at a time, ensuring exclusivity.
  3. Minors Are Not Allowed:
    • Minors are prohibited from becoming members or nominees of an OPC. This ensures that legally capable individuals bear the responsibilities and liabilities.

Role of a Nominee

Every OPC requires a nominee to take over the company in the event of the member's incapacity or demise. The nominee:

  • Must also be an Indian resident and citizen.
  • Can withdraw or cancel their nomination by notifying the member and the company through the prescribed forms.

Natural Persons vs. Corporate Entities

Only natural persons are eligible to become members or nominees of an OPC. Corporate bodies, LLPs, or partnerships cannot hold membership, emphasizing the personal ownership aspect of the OPC model.

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Difference Between OPCs and Sole Proprietorships

While both structures allow solo ownership, they differ significantly in terms of liability, legal status and compliance requirements.

An OPC provides the benefits of limited liability and a separate legal identity, ensuring personal assets are protected from business risks.

On the other hand, a sole proprietorship is simpler to set up but ties the owner's personal finances directly to the business, increasing financial vulnerability.

Here are some key differences between OPC and Sole Proprietorship:

Parameters One Person Company (OPC) Sole Proprietorship
Legal Entity Separate legal entity Not a separate entity; the owner and business are the same
Liability Limited to the member's contribution Unlimited liability; owner's personal assets are at risk
Regulation Governed by the Companies Act of 2013 Minimal regulations; governed by local laws
Registration Formal registration with RoC is required No formal registration is required
Compliance Moderate compliance (e.g., filing annual returns) Minimal compliance requirements
Business Continuity Exists independently of the owner Dissolves upon the owner's death or withdrawal

Conversion of OPCs into Other Companies

The conversion of a One Person Company (OPC) into other company types is governed by specific regulations under the Companies Act, 2013. This flexibility allows businesses to evolve their structure as they grow or to meet operational and strategic needs. Here’s an overview of the conversion process and rules:

Mandatory Conditions for Conversion

  1. Turnover Threshold:
    • An OPC must convert into a private or public limited company if its paid-up share capital exceeds ₹50 lakh or its average annual turnover exceeds ₹2 crore in the previous three financial years.
    • The conversion must be completed within six months from the date these thresholds are crossed.
  2. Prohibited Conversions:
    • Due to legal restrictions, an OPC cannot be converted into a Section 8 company (non-profit organisation).

Voluntary Conversion

  • Eligibility for Voluntary Conversion:
  • After two years from the date of incorporation, an OPC can voluntarily convert into a private or public limited company.

Steps for Conversion of OPC into a Private Limited Company

  1. Conduct a General Meeting:
  2. Pass a special resolution. Convene a meeting of the sole member (or board if applicable) to approve the conversion resolution.
  3. Amend MOA and AOA:
  4. Update the Memorandum of Association (MOA) and Articles of Association (AOA) to reflect the new structure.
  5. File Required Forms:
  6. Submit Form INC-6 to the ROC and supporting documents, such as the updated MOA, AOA, and resolution copy.
  7. Obtain Certificate of Conversion:
  8. Upon successful verification, the ROC will issue a certificate confirming the company’s new status.

Privileges of One Person Companies

Mandatory Conditions for Conversion

  1. No Annual General Meetings (AGMs): OPCs are exempt from holding AGMs.
  2. Simplified Reporting: Financial statements require less detailed disclosures.
  3. Director Remuneration: Increased flexibility in director remuneration.
  4. Minimal Board Meetings: A single meeting is sufficient for many decisions.
  5. Relaxed Governance: Compliance obligations are simplified, enabling easier operations.

These privileges of an OPC empower solo entrepreneurs with the freedom to focus on growing their businesses without being overburdened by compliance requirements.

Frequently Asked Questions

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Frequently Asked Questions

What is OPC and its Features?

An OPC (One Person Company) is a corporate entity introduced under Section 2(62) of the Companies Act, 2013. OPC registration allows a single individual to start a company while enjoying the benefits of limited liability and a separate legal entity, distinct from its owner.

Key Features of OPC:

  • Single Member Structure
  • Limited Liability
  • Nominee Requirement
  • Separate Legal Entity

What is the Formation of a One Person Company?

OPC registration online involves the following steps under the Companies Act of 2013:

  1. Obtain Digital Signature Certificate (DSC): Required for the sole member and nominee.
  2. Reserve Company Name: Use the SPICe+ Part A to secure the OPC’s name.
  3. File Incorporation Forms: Submit Form SPICe+ Part B with the MOA (Memorandum of Association) and AOA (Articles of Association).
  4. Nominee Details: Provide the nominee’s consent using Form INC-3.
  5. Certificate of Incorporation: The ROC issues this after verification to confirm the formation of the OPC.

What are the Types of OPC?

In India, One Person Companies (OPCs) are categorised based on their purpose and nature of business activities. While the Companies Act of 2013 does not explicitly define subcategories, OPCs are generally distinguished as follows:

  • OPC Limited by Shares
  • OPC Limited by Guarantee with Share Capital
  • OPC Limited by Guarantee without Share Capital
  • Unlimited OPC with Share Capital
  • Unlimited OPC without Share Capital

What is the Limit of OPC?

  • Turnover Limit: An OPC must convert into a private or public limited company if its average annual turnover exceeds ₹2 crore.
  • Paid-up Capital Limit: Conversion is also mandatory if paid-up share capital exceeds ₹50 lakh.

What are the Benefits of OPC?

  • Limited Liability: Protects the owner’s personal assets from business liabilities.
  • Separate Legal Entity: Provides credibility and allows the company to operate independently.
  • Ease of Formation: Requires fewer formalities compared to other companies.
  • Nominee Provision: Ensures continuity in the owner’s absence, even though it’s a single-person company.
  • Exemptions: OPCs are exempt from holding annual general meetings (AGMs) and other complex compliance requirements.
  • Tax Benefits: Treated as a private limited company for tax purposes, which is advantageous compared to sole proprietorships.

Can OPC Have Two Directors?

Yes, an OPC can have up to 15 directors, as per the Companies Act of 2013. However, it can only have one member or shareholder who owns the company. Directors can be appointed to assist in the company’s management but do not hold ownership.

Mukesh Goyal

Mukesh Goyal is a startup enthusiast and problem-solver, currently leading the Rize Company Registration Charter at Razorpay, where he’s helping simplify the way early-stage founders start and scale their businesses. With a deep understanding of the regulatory and operational hurdles that startups face, Mukesh is at the forefront of building founder-first experiences within India’s growing startup ecosystem.

An alumnus of FMS Delhi, Mukesh cracked CAT 2016 with a perfect 100 percentile- a milestone that opened new doors and laid the foundation for a career rooted in impact, scale, and community.

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Related Posts

Difference Between Trust, Society & Section 8 Company: Which One to Choose?

Difference Between Trust, Society & Section 8 Company: Which One to Choose?

When you're starting a non-profit organisation in India, one of the first and most important decisions you'll make is how to structure it. Should you register a Trust, a Society, or a Section 8 Company?

Each of these legal forms has its own advantages, legal requirements, and use cases. Choosing the right one depends on your objectives, the nature of your activities, the scale, and how you want to govern the organisation. 

In this guide, we’ll explain the key differences and help you decide which structure best suits your non-profit mission.

Table of Contents

What is a Society?

A society is a non-profit organisation formed by a group of individuals who come together for charitable, literary, scientific, cultural, or educational purposes. Societies in India are governed by the Societies Registration Act, 1860, although many states have their own versions of the Act (e.g., Maharashtra, Tamil Nadu, etc.).

A society must have:

  • A minimum of seven members to register at the state level
  • An elected governing body or managing committee
  • A constitution or memorandum outlining its objectives and rules

Societies are known for their democratic structure, where members have voting rights and leadership is elected periodically.

When to Consider Forming a Society?

Forming a society may be your best option if:

  • You prefer a democratically run organisation with an elected management committee
  • Members may change frequently or seek easy exit options
  • You want a relatively simple dissolution process
  • You're operating within a state jurisdiction (or planning to expand nationally with additional registrations)

Societies are particularly suited for community-driven or volunteer-based initiatives, like resident welfare associations, cultural organisations, and grassroots education or health programs.

Meaning of Trusts

A trust is a legal arrangement under the Indian Trusts Act, 1882 (or relevant state-specific Public Trusts Acts) in which a settlor (or author) transfers property or assets to one or more trustees, who hold and manage them for the benefit of specific beneficiaries.

Key roles in a trust:

  • Author of the trust: The person who creates the trust and donates property
  • Trustee: The person(s) responsible for managing the trust and fulfilling its objectives
  • Beneficiary: The individual(s) or group for whom the trust is created

The central concept is the "beneficial interest"- the trustee has legal control of the asset, but the benefit goes to the beneficiaries. Trusts are often used in both private and public charitable contexts.

Want to register your organisation? Get expert help with Company registration — start your journey today with Razorpay Rize.

When and Why You Might Need a Trust?

You might choose a trust if:

  • You want to retain long-term control without democratic elections or rotating leadership
  • Your non-profit involves family members or a small, stable group of trustees
  • You need privacy, minimal external regulation, or flexible distribution of benefits
  • You plan to manage property, assets, or legacy donations

Trusts are ideal for schools, hospitals, orphanages, and religious institutions, especially when the focus is on asset management and continuity over generations.

Meaning of Section 8 Companies

A Section 8 Company is a special form of non-profit company registered under the Companies Act, 2013. It is incorporated to promote commerce, art, science, research, education, social welfare, religion, or charity.

Key features:

  • It must apply for a license from the Central Government
  • Its profits or income cannot be distributed as dividends
  • All income must be used to promote the organisation’s objectives
  • The name does not include “Limited” or “Private Limited”

Section 8 Companies are highly structured, professionally governed, and seen as credible entities both by donors and government bodies.

Reasons for Forming a Section 8 Company

You should consider registering for Section 8 Company if:

  • You're looking for a formal and transparent governance model
  • You want to build long-term partnerships with government bodies, corporates, or international NGOs
  • You're applying for CSR funds, grants, or FCRA registration
  • You want to project credibility and professionalism in your operations

Section 8 Companies are ideal for large-scale non-profits, social enterprises, or organisations planning to operate across India or internationally.

Difference Between Society, Trust, and Section 8 Company

All three structures, Trusts, Societies, and Section 8 Companies, are eligible for tax exemptions under Section 12A and 80G of the Income Tax Act. They also meet the definition of "charitable purpose" under Section 2(15).

But beyond this, they vary significantly in formation, governance, compliance, and scalability. Here’s a comparison at a glance:

Feature Trust Society Section 8 Company
Governing Law Indian Trusts Act, 1882 or State Trusts Acts Societies Registration Act, 1860 Companies Act, 2013
Minimum members 2 Trustees 7 Members 2 Directors
Legal Status Not a separate legal entity Not a separate legal entity A separate legal entity
Management Trustees (no elections) Governing Body (elected) Board of Directors
Jurisdiction State-level State or national (dual registration needed) Nationwide
Compliance requirements Low Moderate High
Ease of Formation Easy Moderate Requires licensing
Ideal for Asset holding, religious charities, long-term control Community organisations, associations Large-scale NGOs, CSR projects, international collaborations

Each structure, Trust, Society, or Section 8 Company, has its own strengths. The right choice depends on your mission, governance preferences, funding goals, and long-term vision.

Frequently Asked Questions

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Frequently Asked Questions

Which one should you choose: a Society, a Trust, or a Section 8 Company?

Choose a Trust for simplicity and long-term control, a Society for community-driven work with flexible membership, and a Section 8 Company for structured governance, high credibility, and large-scale funding opportunities.

Can a Section 8 Company be a Trust?

No, a Section 8 Company cannot be a Trust, and vice versa—they are legally distinct entities governed by different acts:

  • A Trust is formed under the Indian Trusts Act, 1882 (or the relevant state act).
  • A Section 8 Company is registered under the Companies Act, 2013.

Is a Trust better than a Company?

A Trust is better for small, asset-focused initiatives that don’t require external validation or heavy fundraising.

A Section 8 Company is better if you want visibility, growth, funding, and governance discipline.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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Conversion of Private Limited Company to Public Limited Company: Step-by-Step Guide

Conversion of Private Limited Company to Public Limited Company: Step-by-Step Guide

For most growing businesses, starting out as a Private Limited Company (Pvt Ltd) feels like the natural choice- it offers the safety net of limited liability, manageable compliance requirements, and the flexibility to focus on building the business without too much red tape. But as the business scales, ambitions grow bigger. You might want to raise significant capital, bring in a larger investor base, or even dream of going public someday. That’s when converting into a Public Limited Company starts making real sense.

So, what changes when you move from private to public?

  • Access to Public Funds: Unlike a private company, a public limited company can tap into larger funding avenues through IPOs or private placements, opening doors to serious growth capital.

  • Ease of Share Transfer: In a public company, shares are freely transferable, making it easier for investors or shareholders to buy, sell, or exit, boosting liquidity and appeal.

  • No Member Cap: Private companies are capped at 200 shareholders, but public companies have no such limit, giving you the freedom to expand your ownership base.

In this guide, we’ll break down exactly what it takes to convert your private company into a public one under the Companies Act, 2013, and walk you through the compliance steps and practical things you need to be ready for once you’ve made the leap.

Table of Contents

Procedure for Conversion into a Public Limited Company

Converting a private limited company into a public limited company in India is governed by the Companies Act, 2013, and involves a formalised legal process. Here’s a step-by-step guide:

1. Convene a Board Meeting

2. Issue Notice for EGM

  • Send notices to all shareholders, directors, and auditors at least 21 days before the meeting.
  • The notice should include the agenda, draft resolutions, and explanatory statements.

3. Hold the Extraordinary General Meeting (EGM)

  • Pass a Special Resolution to approve the conversion from private to public.
  • Approve necessary alterations in the MoA (removal of “Private”) and AoA (removal of restrictive clauses on share transfer and member limits).

4. Filing with Registrar of Companies (RoC)

Submit the following forms with the Ministry of Corporate Affairs (MCA) portal:

  • MGT-14: Filing of special resolutions within 30 days of passing them.
  • INC-27: Application for conversion, along with certified copies of resolutions, amended MoA/AoA, and EGM minutes.

5. Scrutiny and Approval by RoC

The Registrar reviews the application and, upon satisfaction, issues a Fresh Certificate of Incorporation reflecting the change in company status from private to public.

Related Read: Private Company Vs Public Company: Key Differences Explained

Post-Conversion Requirements

Once the company has been converted into a public limited company, several post-conversion formalities must be completed to align with regulatory and operational standards:

1. Update Statutory Documents

  • Obtain a new PAN reflecting the updated company name.
  • Revise all statutory records, financial statements, and company stationery (letterheads, invoices, website, etc.).

2. Inform Bankers and Financial Institutions

  • Update your company’s status with existing banks and financial institutions.
  • Amend authorised signatories if required.

3. Intimate Regulatory Authorities

  • Notify relevant authorities such as tax departments, GST authorities, and regulatory bodies, if applicable.

4. Compliance with Public Company Norms

  • Increase the number of directors to a minimum of 3 (as required for a public company).
  • Appoint independent directors and comply with applicable listing regulations (if planning for a stock exchange listing).
  • Adhere to enhanced disclosure norms, audit requirements, and corporate governance standards.

5. Prepare for Capital Raising (Optional)

  • If planning an IPO, start preparing for SEBI compliance, drafting offer documents, and engaging with merchant bankers.

Frequently Asked Questions (FAQs)

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Private Limited Company
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1,499 + Govt. Fee
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  • Service-based businesses
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Limited Liability Partnership
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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
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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


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 Is the Form for Conversion of a Private Company into a Public Company?

The primary form used for the conversion of a private limited company into a public limited company in India is Form INC-27. It must be submitted along with supporting documents like the altered Memorandum of Association (MoA), Articles of Association (AoA), special resolution copy, and EGM minutes.Additionally, Form MGT-14 (for filing special resolutions) must also be filed within 30 days of passing the resolution at the EGM.

Can a Private Limited Company Go Public?

Yes, a Private Limited Company can go public by converting itself into a Public Limited Company.

After conversion, the company must comply with public company regulations under the Companies Act, 2013, including increased disclosure norms, appointment of independent directors (if applicable), and adherence to corporate governance standards.

What Section of the Companies Act, 2013 Governs Conversion of a Public Company into a Private Company?

The conversion of a Public Company into a Private Company is governed by Section 14 of the Companies Act, 2013.

  • Section 14(1) deals with altering the Articles of Association (AoA) to include provisions applicable to a private company.
  • Such a conversion requires passing a special resolution and obtaining approval from the Tribunal (NCLT) as mandated under Section 14(2).

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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Difference between Private Limited Company, OPC and LLP in India

Difference between Private Limited Company, OPC and LLP in India

Are you an aspiring entrepreneur ready to make your business official? If so, one of the critical decisions you'll need to make is choosing the right business structure. From Private Limited Companies (PLCs) to Limited Liability Partnerships (LLPs) to One Person Companies (OPCs), each structure offers its own set of advantages and considerations.

In this blog, we'll explore the nuances (features & differences) of these three popular business structures - Private Limited, LLP, and OPC—and provide insights to help you make an informed decision that aligns with your entrepreneurial goals.

Table of Contents

Difference between Private Limited, LLPs & OPCs

Private Limited Company Limited Liability Partnership One Person Company
Governing Act Governed by the Companies Act Governed by the Limited Liability Partnerships Act Governed by the Companies Act
Suitable For Financial Services, Tech Startups, Medium Enterprises Consultancy firms, Professional Services Franchises, Retail Stores, Small Businesses
Shareholders/Partners Minimum Shareholders - 2
Maximum Shareholders - 200
Minimum Partners - 2
Maximum Partners - Unlimited
Minimum Shareholders - 1
Maximum Shareholders - 1
(Maximum Directors can be 15)
Nominee Not required Not required One Nominee mandatory
Minimum Capital Requirement No minimum capital requirement, but it is often advised to set the authorized capital at INR 1,00,000 (One Lakh) No minimum capital requirement, but it is often advisable to consider an initial capital of INR 10,000 No minimum paid-up capital requirement exists. However, the minimum authorized capital required is INR 1,00,000 (One Lakh)
Tax Rates The basic tax rate, excluding Surcharge and Cess is 25% The standard fixed rate is 30% on their generated earnings. The applicable Tax rate would be 25%, excluding cess and surcharge
Fundraising Easier to raise funds from Investors Raising funds can be challenging Limited options for Fundraising
DPIIT Recognition Eligible for DPIIT recognition Eligible for DPIIT recognition Ineligible for DPIIT recognition
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 Transfer of shares isn't possible; it can only be done in case of transfer of ownership
ESOPs Can issue ESOPs to the Employees Unable to 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 Duties, Responsibilities, and other basic clauses outlined in MOA and AOA
Compliances
  • More compliance costs
  • Mandatory 4 Board Meetings
  • Mandatory Statutory Audits
  • Mandatory filings includes 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.
  • Less Compliance Costs
  • Minimum 2 Board Meetings
  • Mandatory Audits
Foreign Directors/Partners NRIs and Foreign Nationals can be Directors NRIs and Foreign Nationals can be Partners No foreign directors are allowed
Foreign Direct Investment Eligible through Automatic route Eligible through Automatic route Not eligible for FDI
Mandatory Conversion No 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

Now that we've introduced the differences between these three types, let's explore their features and registration processes more thoroughly. This will help you determine which one is the most suitable for your business needs.

Private Limited Company: Features

In India, the Private Limited Company stands as the predominant choice for company registration, governed by the Companies Act of 2013 under the jurisdiction of the Ministry of Corporate Affairs (MCA). This structure is favoured by startups and businesses aspiring for growth and stability, owing to its adaptable ownership model and efficient management practices.

Outlined below are some key characteristics of a Private Limited Company:

1. Limited Liability

  • Shareholders enjoy limited liability, safeguarding personal assets from business debts.

2. Separate Legal Entity

  • Regarded as a distinct legal entity from its shareholders, allowing it to engage in contracts, own assets, and litigate under its name.

3. Ownership

  • Owned by shareholders who possess shares in the company, with ownership transfer facilitated through share transactions.

4. Management

  • Managed by appointed Directors, while day-to-day operations are overseen by management, with significant decisions often requiring shareholder approval.

5. Shareholders

  • Requires a minimum of two shareholders and can accommodate a maximum of 200.

6. Regulation and Compliance

  • Governed by the Companies Act and regulated by the Ministry of Corporate Affairs, mandating compliance with annual financial filings, general meetings, and statutory record maintenance.

7. Investment and Funding

  • Attracts investment and funding relatively easily due to its defined ownership structure and limited liability feature.

Private Limited Company: Registration in India

The Ministry of Corporate Affairs (MCA) has introduced a streamlined and online process for company incorporation known as Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), comprising two parts: Part A and Part B.

The steps are as follows:

1. Step 1: Apply for DSC

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

2. Step 2: Apply for Name Approval

  • Apply for name using SPICe+ Part A which facilitates 'Name Reservation' with the provision for two proposed names and one re-submission (RSUB).

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

3. Step 3: Apply for Company Registration & Other Applications

  • Following name approval, apply for Company Registration using SPICe+ Part B, which also includes the application for allotment of Director Identification Number (DIN), Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), etc.

4. Step 4: Apply for a Bank Account

  • Open a current account for your company to facilitate seamless financial transactions and business operations.

5. Step 5: File the Commencement of Business Certificate

  • Within 180 days of incorporation, file the Commencement of Business Certificate through Form INC-20A, which is a declaration submitted by the Director of the Company to the Registrar of Companies.

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

The Certificate of Incorporation 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.

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Limited Liability Partnerships: Features

A Limited Liability Partnership (LLP) is a business structure that combines features from both traditional partnerships and limited companies. And, LLPs are often favoured by professional services firms, small businesses, and ventures seeking the blend of partnership flexibility and limited liability protection.

Key characteristics of an LLP include:

1. Limited Liability

  • Partners in an LLP benefit from limited liability akin to private limited companies.

2. Separate Legal Entity

  • An LLP exists as a distinct legal entity from its partners, capable of owning assets, entering contracts, and engaging in legal proceedings independently.

3. Ownership

  • Partners own the LLP, with the ownership structure outlined in the LLP agreement. Ownership transfer typically requires consent from other partners.

4. Management

  • Managed by partners or a designated management team as specified in the LLP agreement. Decision-making is often collaborative, with each partner having an equal say.

5. Number of Partners

  • Requires a minimum of two partners, with no maximum limit.

6. Regulation and Compliance

  • Governed by the Limited Liability Partnership Act in India, featuring less stringent regulatory requirements compared to private limited companies. Compliance entails filing annual returns and maintaining statutory records.

7. Flexibility

  • Offers enhanced flexibility in internal management and decision-making processes compared to private limited companies.

Limited Liability Partnerships: Registration in India

Establishing a Limited Liability Partnership (LLP) as a legally recognized business structure involves several crucial steps. Here is a brief and comprehensive outline of the LLP registration process.

1. Step 1: Obtain a DSC

  • Obtain a Digital Signature Certificate (DSC) from Certifying agencies. To know more about the process, click here.

2. Step 2: Apply for Name Reservation

  • Reserve an LLP's name via the LLP-RUN form, overseen by the Central Registration Centre. Up to two names can be proposed.

3. Submit the FiLLiP Form

  • Fill out the FiLLiP form and submit it to the Registrar along with the Subscriber sheet and Director's consent (Form DIR-9).

4. Draft & File the LLP Agreement

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

Upon approval of the FiLLiP Form by the Registrar of Companies (ROC), you will receive the Certificate of Incorporation, which has important details such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and so on.

Example of LLPIN: AAA-1234

{{llp-cta}}

One Person Companies: Features

One Person Companies (OPCs) present a unique business structure where a single individual can establish and manage a company. Combining aspects of a Private Limited Company and the advantages of Sole Proprietorship, OPCs cater to entrepreneurs and business owners who handle all ownership, operation, and management duties themselves.

1. Sole Ownership

  • An OPC is solely owned and managed by a single individual, referred to as the sole shareholder or member.

2. Limited Liability

  • Like other corporate structures, OPCs offer limited liability protection to the sole owner.

3. Separate Legal Entity

  • OPCs are recognized as separate legal entities independent of the sole owner. This legal distinction enables you to enter contracts, own assets, and participate in legal proceedings under your company’s name.

4. Perpetual Succession

  • Despite having only one member, OPCs feature perpetual succession. A nominee appointed during incorporation typically assumes control in the absence of the sole member.

By combining limited liability, separate legal entity status, and simplified operations, OPCs emerge as an appealing choice for small businesses and startups led by single entrepreneurs.

One Person Company: Registration in India

Due to their similarities with private limited companies, OPCs also employ SPICe+ for their company registration process.

SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a comprehensive online form introduced by the Ministry of Corporate Affairs (MCA) in India to streamline and simplify the company registration process.

1. Step 1: Apply for DSC

  • Obtain a Digital Signature Certificate (DSC) from any Certifying Agencies in India.

2. Step 2: Submit Part A of SPICe+ Form (If filled separately)

  • Apply for name approval using Part A of the SPICe+ form, allowing for submission of up to two proposed names and one re-submission.

3. Step 3: Draft the MoA & AoA

  • Draft the Memorandum of Association (MoA) and Articles of Association (AoA) detailing the company's objectives and rules.

4. Step 4: Submit Part B of SPICe+ Form

  • Submit Part B of the SPICe+ form along with necessary documents, including DSC, MoA, AoA, and declarations. Pay the prescribed fee for registration.

5. Step 5: Appoint a Nominee

  • Appoint a nominee director as required by OPC regulations.

6. Step 6: File for the Commencement of Business Certificate

  • Within 180 days of incorporation, file for the Commencement of Business Certificate (Form INC-20A) with the Registrar of Companies.

Upon successful approval of the SPICe+ Form, you’ll receive an email notification from the MCA containing the Certificate of Incorporation (COI) and PAN and TAN details of the Company.

The certificate of Incorporation (COI) includes crucial details such as the Company Name, Registration Number (CIN), Date of Incorporation, Registered Office Address, Company Structure, and more.

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For added clarity, check out our curated collection of sample templates, where you can download and customize most of these above-mentioned templates, as required.

Company Registration with Razorpay Rize

Razorpay Rize provides a wide array of services to facilitate an end-to-end streamlined company registration process, all at the lowest fees and without any hidden charges. Explore the different legal structures below to find the one that’s best for your business.

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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.

Find Out Which Company Type to Register

If you operate a small business with limited resources, opting for LLP or OPC registration might be more favourable due to lighter compliance requirements. However, for larger businesses with substantial capital needs, registering as a Private Limited Company provides greater flexibility in raising funds. So, before proceeding with the registration of either a Private Limited Company, LLP, or OPC, it is essential to carefully evaluate the following factors.

  • Business Nature and Size
  • Fundraising Requirements
  • Tax Implications
  • Personal Liability Protection

Ultimately, the choice between a Private Limited Company, LLP, or OPC structure depends on the unique characteristics of your business, including its nature, size, fundraising requirements, tax implications, and personal liability protection.

Still confused about which company type to register with? We’ve got you covered! Introducing our latest tool - "Know Your Company Type."

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

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In summary, choosing between Private Limited Companies, OPCs, and LLPs depends on your business goals and preferences. Each structure offers unique benefits, whether it's scalability with Private Limited Companies, convenience with OPCs, or simplicity with LLPs. If you have any unanswered questions or want to get started with the company registration process, feel free to get in touch with us!

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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

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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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.
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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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It was a wonderful experience.
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Nayan Mishra
https://zillout.com/
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
Prakhar Shrivastava
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.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/