Question

How is one person company different from a private company?

Answer 1

1. An one person company has only one member (owner), whereas a private company requires at least two members.
2. An one person company must add “One person company private limited” in its name, whereas a private company can use “private limited”.
3. Both types limit liability to the unpaid amount on shares, but under a one person company, this only applies to the sole member.
4. An one person company is generally exempt from holding an Annual General Meeting, while a private company must hold an AGM as per the Act.
5. An one person company cannot raise equity from multiple shareholders and usually depends on the owner’s funds and borrowings, whereas a private company can privately issue shares to multiple investors.
6. Both enjoy perpetual succession, but in a one person company it operates through the nominee mechanism; in a private company it operates through changes in shareholding.