A One Person Company (OPC) is a unique business structure that allows an individual to incorporate a company independently. This was made possible by Section 2(62) of the Companies Act, 2013, which recognizes a company with a single member. Essentially, an OPC consists of one shareholder who subscribes to the company's memorandum of association (MOA). The compliance requirements for OPCs are notably less stringent than those for private companies.
Legal Framework
According to the Companies Act, 2013, a single individual can form a company with just one member and one director, allowing the member to also serve as the director. Despite having a single member, OPCs must comply with various regulatory requirements, including timely filing of returns, unless the necessary closure documentation has been submitted to the Registrar of Companies (ROC).
Reasons for Closure
There are several circumstances under which an OPC may be closed, particularly when the member wishes to cease fulfilling ongoing legal and compliance obligations. If the OPC has been inactive for over a year, the owner can apply for closure through either the standard procedure or the Fast Track Exit (FTE) scheme.
Methods of Closing an OPC
The closure process for an OPC follows guidelines laid out in the Companies Act, 2013. The main methods of closure are:
- Winding-Up
This method requires approval from most creditors during a general meeting. Following approval, the board must submit a written request along with a dissolution resolution. Winding-up is a more extended process that necessitates appointing a liquidator to oversee the company’s affairs.
- Striking Off
Striking off is a quicker and less complex method, allowing for the removal of an OPC through the Fast Track Exit scheme. When an OPC qualifies as dormant, it can apply for closure using Form STK-2. This method does not require the consent of any other party since the sole member owns all shares.
Documents Required for Closure of OPC
To close an OPC, the following documents must be submitted:
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Certificate of Incorporation and PAN card
- Latest financial statements prepared within 30 days of application
- Notarized indemnity bond (Form STK-3) by the director
- Statement of pending litigations, if any
- Audited statement of accounts detailing assets and liabilities
- Affidavit in Form STK-4 by the sole director
- Signed resolution from the sole member
- Bank account closure certificate and relevant details
- No Objection Certificate (NOC) from creditors, if applicable
- NOC from tax authorities, if necessary
How to Close OPC in India?
Following is the process to close an OPC in India:
Step 1: Arranging the Documents: First arrange all the documents as mentioned above.
Step 2: Bank Closure: Then, close the bank account and provide closure certificate.
Step 3: Documentation: Get Statement of accounts and prepare documents as required to be attached for filing.
Step 4: Form Filing: Filing of Form STK-2 with ROC (Registrar of Companies).
Notes: This is not the detailed process, to know more about how to close an OPC you can connect with us. Our team of professionals will explain you about the closure of OPC.
Advantages of Closing an OPC
Closing an OPC can provide several benefits, including:
- Elimination of compliance fees when the business is inactive.
- Relief from the burden of annual regulatory and legal obligations.
- Avoidance of unnecessary penalties.
- No requirement to maintain accounting records.
- Conservation of resources previously allocated to auditing and compliance.
Pre-Closure Conditions
Before applying for the striking off of an OPC, certain conditions must be met:
- The OPC should not have changed its name or relocated its registered office within three months prior to the application.
- The company must not have disposed of any property or rights within three months before ceasing operations.
- The OPC should not have engaged in any business activities outside its intended purpose during the same timeframe.
The strike-off process can be initiated by both active and dormant companies but is not applicable to Section 8 companies.
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