Difference between Public, Private and One Person Company

Companies can be divided into various kinds based on the number of members they have. Privately held companies are – nothing unexpected here – privately held. This implies that, as a rule, the organization is possessed by the organization’s authors, administration or a gathering of private financial specialists. An public company, then again, is an organization that has sold a segment of itself to the general population through a first sale of stock of some of its stock, significance shareholders have case to a piece of the organization’s advantages and benefits. A one person company is handled and headed by one person only. In this article, we will share the difference between public, private and one person company.

Public Company

A public company is an organization that is allowed to offer its enrolled securities to the overall population. It is an organization with securities (debt and equity) claimed and exchanged by the overall population through general society capital markets. Shares of company are straightforwardly exchanged and broadly conveyed.

Private Company

A privately owned company is not the same as a public company in that its stock is not traded as on public exchanges like the New York Stock Exchange, American Stock Exchange, and so forth. Rather, shares of privately owned company are offered, possessed and exchanged secretly among intrigued financial specialists.

One Person Company

One person company has only one person as its member. He is the only shareholder of the company. But his liabilities don’t include his personal belongings. OPC is counted as a separate legal entity with its own assets and liabilities. The shareholder is not under any legal obligation to repay debts of the company. Such kind of company is formed when there is only on founder or promoter of the business.

Public vs. Private vs. One Person Company

There are some differences which exist between these companies; so they are explained below:

Capital

In public company, the least amount of paid up capital must be Rs. 5, 00,000.

In private company, the amount of capital should be of Rs.1, 00,000.

There is no minimum paid-up share capital for OPC.

Minimum members

To set up a public company, the minimum requirement is of seven members.

However, in private company this requirement is of only two members.

OPC has only one member. He is the sole shareholder. He has to mention a nominee while registering the company.

Maximum members

In public company, there is no limitation about maximum amount of members in company.

Whereas in private company the limit exists about members and this is fifty.

OPC has only one member. It needs to have one director also. There can be maximum 15 directors in an OPC.

Transferring of shares

In public company, transferring of shares can be done without any limitation.

Moreover, transferring of shares is strictly prohibited according to its article of association.

Since there is only one member of an OPC, so the shares are transferred to nominee after his death. Nominee has a right to accept or reject the shares. Thus the concept of perpetual succession is not followed in OPC.

Prospectus

In public company, subscription of shares for public is available and they issue prospectus.

In private company, unavailability is there for subscription of shares for public and they do not issue prospectus.

In OPC, all shares are held by one member only.

Directors

In public company, there must be three directors to handle the dealings of company.

In private company, there should be two directors to deal the affairs.

OPC’s single member is the sole director of the company. However, the number of directors can reach upto 15.

Approval by directors

In public company, a file with registrar and to get approval is compulsory to work as director.

In private company, approval by registrar is not needed.

Qualification shares

In public company, it is compulsory to sign undertaking for directors to get qualification shares.

In private company, there is no need to sign undertaking for directors to get qualification shares.

Member of an OPC can’t transfer shares to anyone except the nominee.

Starting of business

In public company, business can’t be started until they get the certificate to start business.

In private company, business can be started after its incorporation.

Shares Warrants

Shares warrants can be issued by public company against the paid up shares.

A private company is unable to issue the share warrants against its shares.

Further issuing of shares

A public company, have to issue further shares to the existing share holders.

In private company, issuing of further shares to share holders is not needed.

Statutory meeting

It is compulsory to call a statutory meeting in public company.

There is no obligation for private company to call a statutory meeting.

OPC doesn’t have to hold any annual general meetings. The director can sign annual returns himself.

Quorum

In public company, there must be five members to represent quorum.

In private company, two members must be present personally to represent quorum.

OPC has one member and he is required to present the quorum.

Managerial remuneration

Total administrative compensation on account of a Public Company can’t surpass 11% of the net benefits, and if there should arise an occurrence of lacking benefits a most extreme of Rs. 87,500 can be paid.

While these limitations does not exists in case of a private company.

OPC can pay more remuneration to directors as compared to public and private companies.

Special privileges

In public company, no special privileges are given to its members.

In case of private company, some special privileges are there.

OPC enjoys several privileges and exemptions under the Companies Act.

Conclusion

This above article present the differences between the companies which explain that public company have some restrictions as compare to private companies. OPC is classified as a type of private company. It can be converted into a company with charitable objectives until the expiry of two years from the date of its incorporation.Which is better in your opinion?