One Person Company vs Limited Liability Partnership

Narendra Kumar

06 Sep, 2022

One Person Company

Define:

OPC vs Limited Liability Partnership as a company is defined as per Companies act 2013^[1] under Section 2(62) (OPC) which has only one person as a member. This article describes the One Person Company OPC vs Limited Liability Partnership

Nature of Business:

OPC has to be registered as a private company, thus all the provisions of a private company are applicable to OPC unless otherwise expressly excluded thereunder.

OPC can be converted into Public or Private Company and vice versa if it fulfills certain criteria.

The word ‘One person Company’ must be mentioned along with the name of the company.

Who can incorporate OPC?

A person who is resident of India i.e. the stayed in India during the immediately previous fiscal year must be for 182 days. However, the person who has formed OPC cannot be a member or nominee of other OPC.

Features of OPC:

• OPCs have a separate legal entity similar to that of any registered entity though it is managed by Individual.
• There is only one member and one director in an OPC.
• The member and nominee have to be the natural person who is an Indian Resident.
• Minor is not allowed to be a member or nominee of the One Person Company or hold a share with beneficial interest.
• One person Company can’t be incorporated or converted into a company of section 8 of the Companies Act, 2013, etc

The process of Incorporation of OPC

1. Obtain DSC of proposed Director
2. Then apply and obtain DIN number for the Director (DIR-3)
3. Name application to ROC for the availability of name (INC-1)
4. Draft MOA and AOA for incorporation purpose
5. File various forms along with required documents and fees electronically ie. Spice form
6. Pay requisite fees and stamp duty wherever applicable
7. Scrutiny of forms filed for purpose of incorporation at ROC
8. Certificate of incorporation is issued by Registrar of Company

Limited Liability Partnership

The Limited Liability Partnership can be said to be the upgraded version of the Partnership. The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 7 January 2009 and has been notified with effect from 31 March 2009

A limited liability partnership (LLP) can be defined as the partnership in which some or all partners are having limited liabilities and they carry on the business for a common objective.

LLP is mainly suitable for all those who are engaged in providing consultancy service. Partnerships (LLP), along with private and public limited corporations.

Formation of LLP Process:

Partners:

1. A minimum of two partners will be required for LLP Registration (one of them must be a resident of India).
2. There is no restriction on the maximum number of partners
3. Any Individual or Body Corporate may be a partner of Limited Liability Partnership.
4. Every Partner of the LLP is, for the purpose of the business of LLP, the agent of the LLP, but not of the other partner

Registered Office:

Each limited liability partnership (LLP) shall have a registered office where all communication or circular must be sent by the authorities.

Simplified Procedure:

1. Obtain DIN (If already there then Ignore)
2. Obtain DSC (If already there then Ignore)
3. Search for Name Availability for LLP formation name.
4. File Form 1 – Rule 18(5): Reservation of name:

Reservation of name shall be filed. Partners shall have to select the name of the proposed LLP (up

5. File Form 2 for incorporation and subscription Document has to be filed with ROC after the name is reserved for LLP by Registrar.
6. File Form 3 for LLP Agreement: It is not compulsory to file LLP agreement at the time of registration of the LLP but the LLP agreement it is to be mandatorily filed within 30 days of Incorporation of LLP in Form -3.

List of Forms for Incorporation

Note: Stamp Duty need to be paid where necessary as per stamp Act.

Penalty: For non-Compliance, the penalty charged to LLP is 100 Rs. Per day.