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Minimum number of members to form a private company is _______.A
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Updated on : 2022-09-05
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The minimum number of members needed to form a private company is at least 2 members. The minimum number of members needed to form a Public Company is at least 7 members. The Maximum number of members in a Private Company is restricted to 200. The Public Company have no restriction on a maximum number of members.
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One Person Company Registration
OPC - One Person Company is a private company incorporated by one person. Learn about the steps & FAQs for OPC Registration in India.
One Person Company Registration – OPC Registration Procedure in India
Updated on : Feb 01, 2022 - 04:36:30 PM
19 min read.
A new concept has been introduced in the Company’s Act 2013, about the One Person Company (OPC). In a Private Company, a minimum of 2 Directors and 2 Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 members. A single person could not incorporate a Company previously.
One Person Company (OPC) is a company incorporated by a single person. Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company.
As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. It is a form of a company where the compliance requirements are lesser than that of a private company.
The Companies Act, 2013 provides that an individual can form a company with one single member and one director. The director and member can be the same person. Thus, one person company means one individual who may be a resident or NRI can incorporate his/her business that has the features of a company and the benefits of a sole proprietorship.
Advantages Of OPC
The OPC receives a separate legal entity status from the member. The separate legal entity of the OPC gives protection to the single individual who has incorporated it. The liability of the member is limited to his/her shares, and he/she is not personally liable for the loss of the company. Thus, the creditors can sue the OPC and not the member or director.
Easy to obtain funds
Since OPC is a private company, it is easy to go for fundraising through venture capitals, angel investors, incubators etc. The Banks and the Financial Institutions prefer to grant loans to a company rather than a proprietorship firm. Thus, it becomes easy to obtain funds.
The Companies Act, 2013 provides certain exemptions to the OPC with relation to compliances. The OPC need not prepare the cash flow statement. The company secretary need not sign the books of accounts and annual returns and be signed only by the director.
It is easy to incorporate OPC as only one member and one nominee is required for its incorporation. The member can be the director also. The minimum authorised capital for incorporating OPC is Rs.1 lakh but there is no minimum paid-up capital requirement. Thus, it is easy to incorporate as compared to the other forms of company.
Easy to manage
Since a single person can establish and run the OPC, it becomes easy to manage its affairs. It is easy to make decisions, and the decision-making process is quick. The ordinary and special resolutions can be passed by the member easily by entering them into the minute book and signed by the sole member. Thus, running and managing the company is easy as there won’t be any conflict or delay within the company.
The OPC has the feature of perpetual succession even when there is only one member. While incorporating the OPC, the single-member needs to appoint a nominee. Upon the member’s death, the nominee will run the company in the member’s place.
Disadvantages Of OPC
Suitable for only small business
OPC is suitable for small business structure. The maximum number of members the OPC can have is one at all times. More members or shareholders cannot be added to OPC to raise further capital. Thus, with the expansion and growth of the business, more members cannot be added.
Restriction of business activities
The OPC cannot carry out Non-Banking Financial Investment activities, including the investments in securities of anybody corporates. It cannot be converted to a company with charitable objects mentioned under Section 8 of the Companies Act, 2013.
Ownership and management
Since the sole member can also be the director of the company, there will not be a clear distinction between ownership and management. The sole member can take and approve all decisions. The line between ownership and control is blurred, which might result in unethical business practices.
One Person Company (OPC) Registration Process
Step 1: Apply for DSC
The first step is to obtain the Digital Signature Certificate (DSC) of the proposed Director which required the following documents:
Address proof Aadhaar card PAN card Photo Email Id Phone number
Step 2: Apply for DIN
Once the Digital Signature Certificate (DSC) is made, the next step is to apply for the Director Identification Number (DIN) of the proposed Director in SPICe Form along with the name and the address proof of the director. Form DIR-3 is the option only available for existing companies. It means with effect from January 2018, the applicant need not file Form DIR-3 separately. Now DIN can be applied within the SPICe form for up to three directors.
Step 3: Name Approval Application
The next step while incorporating an OPC is to decide on the name of the Company. The name of the Company will be in the form of “ABC (OPC) Private Limited”.
How many members are required to form a limited company?
Answer (1 of 8): There are 2 types of companies. One is private limited company and other is public limited company. Private limited company is required to have minimum 2 members or shareholders and maximum can be 200 members. Private limited companies are basically with family owned or with for...
How many members are required to form a limited company?
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Official Company Account at Www.businessguru.co.in (2017–present)Author has 289 answers and 938K answer views5y
Private Limited Company (Pvt. Ltd.) - Minimum members required: 2 & Maximum: 15.
A minimum of 2 Directors and 2 Shareholders and the same person can be the Shareholder and Director of the company.
A maximum of 200 shareholders are allowed. However, employees of the Company (past and present) who hold shares in the Company will not be considered in the count of 200.
And a maximum of 15 Directors are allowed. However, a Company can increase the number of Directors beyond 15 by passing a Resolution.
Public Limited Company (Ltd.) Minimum members required: 7 & No Maximum number.
How many people are required to incorporate a private limited company?
What is the limit on the maximum members of a private limited company?
What is the limit on the maximum members of a public limited company?
How many members does a private company have?
Who can register a private limited company, and how many members are allowed?
LL.B from Gauhati UniversityUpdated 4y
Under the Companies Act, 2013. Following are the minimum and maximum numbers of members required to form a company.
Private company: minimum of 2 members and maximum 200 members ( maximum number was 50 under the old act)
Public company: minimum 7 members and no maximum limit is prescribed for public company
One person company: one member
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Former Leading a Team of 15 in an early stage startup4y
How many members are required for a one-person company?
Just 1. Do you know why OPC is the preferred entity type for single entrepreneurs?
Studied at The Institute of Chartered Accountants of India (ICAI)Author has 263 answers and 474.8K answer views7y
Public limited company - 3
Private limited company -2
Companies act 2013 has introduced one person company meaning you can start with 1 person. Refer section 149 of companies act 2013.
Maximum is 15 however it can be increased by special resolution.
How many people are required to form a company?
What happens if the minimum number of directors decreases in a private limited company? What is that company required to do?
How many members are needed to register a company?
Why are 7 members/2 members needed to constitute a public/private limited company and not any other specific number?
In a private limited company, how many minimum or maximum members are required?
Small Business owner since 1994Author has 1.2K answers and 85.8M answer viewsUpdated 3y
What is the first step before starting a business?
Originally Answered: With no business experience or knowledge, what’s the very first thing to do if you want to start a business?
Any business needs to meet these two simple characteristics to get started:
You need to deliver something so valuable that a person (customer) will be willing to get their wallet out and give you some of their hard-earned money in exchange of whatever you’re giving them.