Overview of Annual Compliances of One Person Company
A One-person Company is a company that is wholly managed and controlled by a single person and also the management of OPC comprises only one person which consists of 100% of shares in that company. Section 2(62) of Companies Act 2013, defines OPC as a company which has only one person as a member. In India, OPC can be registered only as a Private Limited Company that is why all the legal provisions which apply o Private Limited Company are also applicable to OPC. Certain provisions for Annual Compliance for OPC need to comply every year. Before going through Annual Compliances of One Person Company, let us know about what is OPC?
What is One Person Company?
A One-Person company is a company having one person as its member. A member of a company is a shareholder of the company. OPC Registration is done when there is only 1 member or promoter for the business. Initially, Businessman prefers OPC registration instead of sole proprietorship business because of the several advantages that OPCs offer.
Why it is Essential to Comply with Annual Compliance in OPC?
Running a One-Person Company is not that easy. Often, the persons thinking to start a company are unaware of the important compliances that are mandatorily required to be performed, failing to comply with the same, can lead the company to pay hefty penalties. Apart from penalties, the company and its directors may also be required to face undertaking and further investigation.
Thus, it is worth mentioning that a One-Person Company becomes eligible for performing the annual compliances right from the time of its incorporation. Non-compliances create various hindrances for the company in the form of penalties and fines. To prevent such situations, it is of utmost importance to be aware and comply with the applicable compliances. For One-Person Company, it is required to publish its accurate financial status to the Shareholders and investors.
Annual Compliances of One Person Company
What are the Benefits of One-Person Company Compliances?
There are various benefits of a One Person Company such as-
- Limited liability protection,
- Increase the opportunity to get the fund from financial sponsors and,
- Continuous existence
To enhance the confidence of the investor, the member of the OPC must comply with-
- Companies Act,
- Income tax and GST.
From the year 2018, the annual compliance requirement has been increased now for OPC. Notwithstanding the ROC compliances, Companies need to submit annual filing forms each year by 30th September. From the year 2018, the regular fundamental has been expanded now for OPC Companies. Below mentioned are the advantages of performing annual compliances of One Person Company.
- Simple to raise support from financial speculator-
Proper annual compliances of a company including OPC, enhances the confidence of Financial Speculator and makes it simple to raise support from a financial speculator.
- Provides Active Status-
Proper and timely compliances helps in maintaining the active status of the company.
- Ensures that the data collected are accurate-
Annual Compliances by the One-Person Company, ensures the data collected for the compliances are accurate and true.
- Avoids hefty penalties-
Non compliances often result in hefty penalties and Fine. Proper annual compliances help in avoiding the hefty penalties.
Elucidate the Procedure for Annual Compliances of One-Person Company
The Annual Compliances for One Person Company are-
Conducting the Board Meeting
As per Section 173 of the Companies Act, 2013 at least 1 meeting of the Board of Directors shall be conducted every 6 months, and the gap between 2 meetings is not less than 90 days. Consequently, a One Person Company should conduct a minimum of 2 board meetings every year.
NOTE-Section 173 and 174 (Quorum of Meeting of Board of Directors) will not apply to an OPC in which there is only one director on its Board.
Penalty:Company shall be levied with a penalty of Rs 25,000/- and Officer in default shall be levied with a penalty of Rs 5,000/-
Appointment of Auditor
Under Section 139 of the Companies Act, Auditor Appointment is compulsory for One Person Company. It shall get its accounts audited by Chartered Accountant firm, where the Auditor shall verify books of account and issue an Audit report.
Note-Provision relating to rotation of auditor does not apply to OPC.
Filing the Annual Return
Every One Person Company must file the Annual Return within 180 days from the end of the Financial Year. The particulars of the Annual Return shall include the information about-
- The company’s Member/shareholder and
The Below-mentioned forms are required to be submitted while filing the Annual Return.
Form MGT-7 (Annual Return)- Every OPC shall file its Annual Return within 180 days from the end of the financial year.
The Company must also file the Financial Statements that relate to the finances of the company and includes-
- The Balance Sheet,
- Statement of Profit and Loss Account, and
- Director Report.
Form AOC-4 (Financial Statements)-Everyone Person Company shall file its Balance Sheet together with a statement of Profit and Loss Account and Director Report within 180 days from the end of the financial year.
Disclosure of Interest in Other Entities
In every financial year, the directors of the OPC in its 1st meeting of the Board of directors need to disclose his interest in other entities in form MBP-1.
Penalty: The Director in default shall be punishable with imprisonment which may extend up to 1 year
KYC of Director of the company
Every individual who holds DIN as of 31st March of the financial year is required has to submit Form DIR-3-KYC for the respective financial year on or before 30th September of the immediate next financial year.
Filing the Form DPT-3
DPT-3 to be filed every year on or before 30 June in respect of return of Deposit and particulars not considered Deposits as on 31st March.
Preparing the Statutory register
As per Section 88 of the Companies Act, 2013, One Person Company shall also maintain the statutory registers.There are also certain Event-based compliances, that are required to be followed by OPC.
- Transfer of Share.
- Appointment or Resignation of Director.
- Change in Nominee or Bank Signatories.
- Change in Auditor.
What Documents are required for the Annual Compliance of One Person Company?
The Below-mentioned documents are required for Annual Compliances of One Person Company-
- Receipts of Purchases and Sales and invoices of expenses incurred during the year
- Particulars of Bank Statements from 1 April to 31 March for all bank accounts in the name of the Company.
- Particulars of GST returns filed (If Any)
- Particulars of TDS Challans Deposited and TDS Return filed (If Any).
- Balance sheet and P&L Account
- Financial statements
- Directors report
- Details of the Member
- Details of Directors
How Corpbiz can assist clients in Annual Compliance process of the One-Person Company?
We at Corpbiz have trained experts to help you throughout the Annual Compliance process of the one-person company. Our Experts will guide and assist you in the compliance process and also ensures the timely and effective completion of your work. For any queries related to Annual Compliance and related services, feel free to contact our experienced and trained professionals at Corpbiz. Contact Corpbiz and our team of experienced professionals and provides timely updates about the process and get your job completed.Package Inclusion
- Incorporation of OPC Company.
- Provides proper guidance and assistance in the execution of Annual compliance.
- Arranging the requisite Documents.
- Providing expert advice on event-based compliances.
Frequently Asked Questions
The Annual Return must be signed by 1 of the directors of the company.
The annual return is a return filed every year along with-The Balance Sheet, & P&L Account and other documents. It is governed by the Ministry of Corporate Affairs.
Section 173 and 174 of the Companies Act, 2013 will not apply to an OPC in which there is only 1 director on its Board. Additionally, an OPC is not required to conduct an Annual General Meeting.
One-person company is not required to prepare a Cash Flow Statement that conclusively means financial statements should cover-Balance sheet and P&L account, & Auditor’s report and notes to accounts.
Yes, in case of non-compliances the authority has the power to issue a legal notice and in initiating of legal proceedings.
All companies i.e. Public Limited Company Private limited company, One-person company, and section 8 company, etc.) are required to file an annual return with the MCA every year.
OPC is compulsorily required to get its accounts audited from a Chartered Accountant, as applicable to any other type of company. However, the provision relating to rotation of auditor does not apply to OPC.
The companies other than OPC are required to get their Form MGT 7 to be signed by the director and the company secretary of the company, if there is no whole-time company secretary then the signature is required by the PCS of the company
- Enhances the confidence of the Financial Sponsor.
- Provides active status.
- Enhances transparency and creditability.
INC-5 shall be filed within 60 days of exceeding the threshold limit.