Every company with share capital cannot start its business unless that company has subscribed for at least the minimum required share capital for itself.
It may be noted that every private company should have a paid-up share capital of at least one lakh or more of the prescribed amount. The public company should have a paid-up share capital of at least ₹ 5 lakh or more of the prescribed amount. Any public company can adopt any or both of the following means for obtaining share capital:
(i) by issuing private placement offer letters on a private basis.
(ii) by issuing a prospectus.
But any private company can subscribe to the share capital only by issuing offer letter of securities on private basis. But in the case of a one person company, the entire share capital has to be subscribed only by its sole member. Therefore, such a company can issue offer of securities on private basis only to him and not to anyone else.