One Person Company and Its Compliance

Define:

OPC has been defined under Section 2(62) of the Companies Act 2013. One Person Company can be defined as a company which has only one person as it member.

The concept of OPC was introduced to support single person enterprises that are having small businesses with a sales turnover of fewer than 200 lakhs. It was introduced to enable a lone Entrepreneur to start and manage a limited liability entity.

Nature of Business:

OPC can be only registered as a private company, thus all the provisions of a private company are applicable to OPC unless otherwise expressly excluded in the Act or rules made thereunder.

OPC can be converted into Public or Private Company and vice versa in certain cases.

It is mandatory to add the word “One Person Company” after the name of the company.

Who can incorporate OPC?

One Person Company can be incorporated by any person who is resident in India i.e. he has stayed in India for more than 182 days during the immediately previous financial year. One Person can form only one OPC or be a nominee for one such company.

Features of OPC:

• OPCs have a separate legal entity just like any other registered company.

• It may have only one member and a single director.

• All the member and nominee should be a natural person who is Indian Citizens plus resident in India.

· No minor shall be allowed to become a member or the nominee or hold any share with a beneficial interest of the One Person Company.

· Post incorporation OPC cannot be converted into a Section 8 as registered under the Companies Act, 2013.

Restriction on the incorporation of OPC:

Conversion or incorporation of OPC into section 8 company is not possible. It cannot carry out non-banking activity, including investment in securities of any body corporate.

How many types of OPC can be incorporated under the Act?

      ·         A company limited by shares or;

      ·         A company limited by guarantee or;

      ·         An unlimited company

Privileges available to OPC

They are as follows:

• OPC provides new business ideas to the new start-up business
• The most important advantage is the limited liability which attracts many people to start up OPC
• OPC need not bother too much about compliance unlike Companies
• OPC requires minimal capital, to begin with. It can also raise capital from others like venture capital, other financial institution etc.
• Compulsory rotation of auditor so appointed after maximum term is not applicable 

One Person Company Compliance

As it was introduced to enable a lone entrepreneur so, the compliance requirements for OPC are also limited when compared to a private limited company. Following are the compliance requirement of an OPC Company:

    1.   Meeting of Board:

OPC is required to conduct at least one meeting of Board of Directors in each half calendar year. So at least two such meetings shall be held in a year.

 

The gap between two Board Meetings cannot be less than ninety days.

Exemption: If the company is having only one director then there is no requirement to hold Board Meeting.

    2.   OPC Annual General Meeting:

All companies apart from the OPC are required to hold an annual general meeting in each financial year, but there should be not more than fifteen months elapsing between the date of one annual general meeting of a company and that of the next. However, in case of an OPC where there is only one director on the Board of Directors, then it is sufficient for the resolution by one Director be passed and entered in the minutes-book. The signed and dated resolution by Director of an OPC is deemed to be the meeting of the Board of Directors for all the purposes under the Companies Act. Also, provisions relating to quorum for meetings of Board does not apply to an OPC where there is only one Director on its Board of Directors.

    3.   OPC Financial Statements

All companies are required to prepare and file with the ROC, the following financial statements:

Balance sheet as at the end of the financial year;

Profit and loss account;

Cash flow statement for the financial year;

Statement of changes in equity, if applicable;

Explanatory note forming part of any document.

·         In case of a One Person Company (OPC) the requirement for cash flow statement has been removed. So, an OPC does not need to prepare or submit a cash flow statement as a part of its financial statements.

    4.   Filling of Annual Forms with ROC:

S.No.	Type of E-Form	Due Dates	Forms	Mandatory Attachment.
1.	Financial Statement, Profit & Loss Statement	29TH September 2017	E-Form AOC 4	Copy of Financial Statement
2.	Annual Return	29TH September,2017	MGT-7	Copy of Annual Return (MGT-4)

    5.   Compliance under Income Tax Act, 1961:

One Person Company is required to file its Income Tax Return in Form ITR-6 for the financial year on or before 30^th September of the following fiscal year with the tax department.

Apart from annual tax return filling every company whose turnover exceeds ₹ 2Crore has to get there accounts audited under Income Tax. One Person Company may also be required to comply with the TDS Regulations, GST Regulations, PF Regulations based on the requirement.