Different Compliance Requirements By One Person Company (OPC) in India

Different Compliance Requirements By One Person Company (OPC) in India. A Company is a legal body founded by an individual or a group of individuals to manage a commercial or industrial enterprise. It can be both private and public. A corporate body, such as a public corporation or a private company, requires two or more persons to participate, but a one-person company requires just one member to handle the business, making it a more realistic alternative for those searching for an unregistered proprietorship.
One Person Company, as the name implies, is a type of Private Company that can be founded solely by a Natural Person who is a resident of India. The Company's Director and Shareholder can be the same person. The concept of OPC is well-known and prevalent in other countries already and taking it further, India has also established a roadmap for Registration of OPCs in consideration of the ease of conducting business.
The Companies Act, 2013, has a significant impact on India's corporate law system by adding previously unknown concepts. One Person Company is a novel concept created by the Companies Act of 2003. It enables an individual to form a corporation, with one Director (can be more than one director) and one Shareholder. In this post, we will go over the various Compliances required for a One Person Company after formation, Regular Compliances, as well as the distinction between a Normal Company and a One Person Company.
Definition
Section 2 (62) of the Companies Act of 2013 explains one-person companies. It defines a "One Person Company" as "a company with only one member."
Any individual of majority age and a citizen of India, whether a resident or not, i.e. an NRI, is eligible to form a One Person Company in India.
A single person gets complete control of the corporation, limiting his obligation to their contributions to the enterprise. Note: Earlier, if a One Person Company made a turnover of 2 crores or more three times in a row or receives a paid-up fund of 50 lakh or more, it must be changed into a Private Limited Company or a Public Limited Company within 6 months. However, this compulsion of compulsory conversion has been done away.
Difference between a one person company and a normal company

The fundamental distinction between a One Person corporation and a normal company is the minimum and maximum number of members. A one-person corporation, as the name implies, has just one owner, whereas a normal company must have a least of 2 members in case of Private Limited and 7 members in case of a public company.

One Person has 100 percent of the share capital and share profit in a One Person corporation. In a normal company, the rights to share capital and profits are distributed among all shareholders in accordance with the articles of incorporation and are owned by one person.

Transfer of shares is not permitted in a one-person firm, but in a normal company, owners may transfer shares.

A One Person Company can have as few as one director and as many as fifteen, whereas a normal company can have as few as two directors (Private Limited) and three (Public Company) directors and as many as fifteen. The number of 15 can also be increased by passing special resolution.

A One Person Company's name must include "OPC," whereas a normal Company's name must include "Private Limited or Limited."

A one-person firm cannot raise cash by issuing shares of the company, but a normal company can issue its shares, making it easier for them to raise funds.

Different compliance criteria that a one-person company in India must fulfill
The fundamental reason for adopting this new idea of a One Person Company in the Companies Act, 2013 was to promote small businesses run by individuals.
Since the adoption of the new Companies Act 2013, One Person Companies have grown in popularity in India as a means for various entrepreneurs and inventive individuals to conduct business or provide services.
Business stationery

Name

All companies, including One Person Company (OPC) , must affix or paint the name of the company and the address of its registered office outside each branch where it conducts business.

Rubber Stamp

A company rubber stamp is necessary for the execution of numerous legal documents such as bank account opening, Board Resolutions, and so on. The company's name should appear on the stamp.

Letterhead

It is critical that the words "OPC" appear alongside the company's name wherever it is printed, attached, or engraved along with CIN, Registered Office Address, Email ID and Mobile Number.
PAN and TAN for One Person Company (OPC)
As per the latest changes made by MCA to bring about Ease of Doing Business in India, now with the Certificate of Incorporation, PAN & TAN are also issued simultaneously by the NSDL Office. The Soft copy of PAN and TAN are also received on the Company’s registered email address.  Account
Opening of Bank Account for OPC
Opening a bank account for an OPC is less difficult than for other corporate entities. According to RBI KYC guidelines, these documents necessitate the opening of a current account in the name of an OPC.

Copy of Certificate of Incorporation

Memorandum of Association (MOA)

Articles of Association (AOA)

Copy of PAN

KYC of Promoter

BR to open current account

All of these documents must be self-certified and stamped with the firm stamp.
Note: MCA has brought Integrated SPICe + along with AGILE wherein during incorporation of OPC, there is an option to select the bank where the company wants to open its current account.
Appointment of First Auditor
Within the first 30 days of incorporation, all companies, including an OPC, must appoint the first Auditor, a practicing Chartered Accountant. His job is to audit the company's financial statements.
Issuance of Share Certificate
Following the establishment of the company, Share Certificates are issued as proof of ownership. Every certificate is signed and sealed with the company stamp by the director or another authorized person.
Mandatory OPC Compliances
Meetings
Under Section 173 of the Companies Act of 2013, every One Person Company is required to convene at least one board meeting in each half of the calendar year, with a minimum interval of 90 days between these two meetings. If a corporation only has one director, there is no need to hold these meetings; the owner can just pass the resolution and record it in the minutes' book, which is sufficient to meet the need.
Notice of Interest
Every fiscal year, the Company’s Director must disclose his stake in other Companies/LLPs at the first Board Meeting. He must notify the company of his change of interest. Form MBP-1 must be maintained for such notice.
Statements of Financial Position
One-person companies must prepare and file the following financial statements with the ROC in prescribed form AOC-4 within 180 days of the end of the fiscal year (September 27):

Financial statements

Profit and loss statement

Any explanatory remark that is part of a financial statement must be signed by the Director.

Filing of Annual Return
Every year, all One Person Companies are required to file an Annual Return containing particulars with the ROC on the stipulated form MGT-7A by September 27. It should be signed by the company secretary; if there is no CS, the document can be signed by the director.
Income Tax Return
A One Person Company must file income tax returns in form ITR-6 with the Income Tax Department.
Employees' registration for state insurance
According to the ESI legislation, 1948 (Employees State Insurance Registration Act), any business entity, including OPC, is required to register under the ESI act, 1948 if it employs more than ten people. It is now part of the Company Registration Process itself. The same is for EPF as weal.
GST Return
If a One Person Company has a GST registration, it must file all GST returns on time. The GST return filing due date varies by state, although reports are typically filed on a monthly basis.
Benefits of OPC
Legal status
The OPC is treated as a separate legal entity from the member. The OPC's unique legal entity protects the sole individual who has incorporated it. The member's liability is limited to his/her shares, and he/she is not personally accountable for the company's loss. As a result, creditors can sue the OPC rather than the member or director.
Easy to obtain funds
Because OPC is a private company, it is simple to raise funds from Banks. Later on if any venture capitalists, angel investors, incubators, and other sources want to invest in equity, the OPC can be converted to a Normal Private Limited Company. Banks and financial institutions prefer to lend to corporations rather than sole proprietorships. As a result, obtaining finances becomes simple.
Less compliances
The Companies Act of 2013 exempts the OPC from certain compliance requirements. The OPC is not required to prepare the cash flow statement. Further, there are various exemptions on meetings compliances.
Easy incorporation
It is simple to incorporate OPC because just one member and one nominee are necessary. The member can also be the director. To support the Startup Ecosystem, the minimum capital required to form a company has been removed. Now, one can register OPC with any capital they want to start with.
Simple to manage
Because the OPC can be established and controlled by a single person, it is simple to manage its affairs. Making decisions is simple, and the decision-making process is rapid. Ordinary and special resolutions can be readily passed by the member by inserting them into the minute book and signing them. As a result, running and managing the company is simple because there will be no disagreement or delays.
Indefinite succession
Even when there is only one member, the OPC has the feature of eternal succession. The single member must appoint a nominee while incorporating an OPC. When a member dies, the nominee takes over as Member of the OPC.
How CCL can help with One Person Company (OPC) Compliance?
Compliance Calendar LLP can assist your OPC company in annual compliance with the Ministry of Corporate Affairs. Not only this, but we also have dedicated team who can look after your books of account, taxation, audit and all other mandatory compliances. CCL compliance experts can also assist with yearly return preparation, verification, and submission under the GST Law.
Conclusion
Prior to the implementation of the Companies Act in 2013, a single individual could not form a business. With the introduction of OPC Registration, this aided many new aspiring entrepreneurs and individuals in forming their business enterprises and giving their ideas flight. It not only helps the country's economy, but it also raises the morale of young people. Previously, the sole proprietorship was an individual's only option for establishing his or her firm or business. A minimum of two directors and two members were necessary to form a Private Limited Company.
By passing a resolution and increasing the number of directors and members to two, an OPC can be changed voluntarily into a private limited company. Conversion also necessitates a no-objection certificate from the creditors. If you have any queries, we would love to answer them at info@ccoffice.in or connect wit us at 9988424211.

A Company is a legal body founded by an individual or a group of individuals to manage a commercial or industrial enterprise. It can be both private and public. A corporate body, such as a public corporation or a private company, requires two or more persons to participate, but a one-person company requires just one member to handle the business, making it a more realistic alternative for those searching for an unregistered proprietorship.

One Person Company, as the name implies, is a type of Private Company that can be founded solely by a Natural Person who is a resident of India. The Company's Director and Shareholder can be the same person. The concept of OPC is well-known and prevalent in other countries already and taking it further, India has also established a roadmap for Registration of OPCs in consideration of the ease of conducting business.

The Companies Act, 2013, has a significant impact on India's corporate law system by adding previously unknown concepts. One Person Company is a novel concept created by the Companies Act of 2003. It enables an individual to form a corporation, with one Director (can be more than one director) and one Shareholder. In this post, we will go over the various Compliances required for a One Person Company after formation, Regular Compliances, as well as the distinction between a Normal Company and a One Person Company.

Definition

Section 2 (62) of the Companies Act of 2013 explains one-person companies. It defines a "One Person Company" as "a company with only one member."

Any individual of majority age and a citizen of India, whether a resident or not, i.e. an NRI, is eligible to form a One Person Company in India.

A single person gets complete control of the corporation, limiting his obligation to their contributions to the enterprise.

Note: Earlier, if a One Person Company made a turnover of 2 crores or more three times in a row or receives a paid-up fund of 50 lakh or more, it must be changed into a Private Limited Company or a Public Limited Company within 6 months. However, this compulsion of compulsory conversion has been done away.

Difference between a one person company and a normal company

The fundamental distinction between a One Person corporation and a normal company is the minimum and maximum number of members. A one-person corporation, as the name implies, has just one owner, whereas a normal company must have a least of 2 members in case of Private Limited and 7 members in case of a public company.
One Person has 100 percent of the share capital and share profit in a One Person corporation. In a normal company, the rights to share capital and profits are distributed among all shareholders in accordance with the articles of incorporation and are owned by one person.
Transfer of shares is not permitted in a one-person firm, but in a normal company, owners may transfer shares.
A One Person Company can have as few as one director and as many as fifteen, whereas a normal company can have as few as two directors (Private Limited) and three (Public Company) directors and as many as fifteen. The number of 15 can also be increased by passing special resolution.
A One Person Company's name must include "OPC," whereas a normal Company's name must include "Private Limited or Limited."
A one-person firm cannot raise cash by issuing shares of the company, but a normal company can issue its shares, making it easier for them to raise funds.

Different compliance criteria that a one-person company in India must fulfill

The fundamental reason for adopting this new idea of a One Person Company in the Companies Act, 2013 was to promote small businesses run by individuals.

Since the adoption of the new Companies Act 2013, One Person Companies have grown in popularity in India as a means for various entrepreneurs and inventive individuals to conduct business or provide services.

Business stationery

Name

All companies, including One Person Company (OPC) , must affix or paint the name of the company and the address of its registered office outside each branch where it conducts business.

Rubber Stamp

A company rubber stamp is necessary for the execution of numerous legal documents such as bank account opening, Board Resolutions, and so on. The company's name should appear on the stamp.

Letterhead

It is critical that the words "OPC" appear alongside the company's name wherever it is printed, attached, or engraved along with CIN, Registered Office Address, Email ID and Mobile Number.

PAN and TAN for One Person Company (OPC)

As per the latest changes made by MCA to bring about Ease of Doing Business in India, now with the Certificate of Incorporation, PAN & TAN are also issued simultaneously by the NSDL Office. The Soft copy of PAN and TAN are also received on the Company’s registered email address. Account

Opening of Bank Account for OPC

Opening a bank account for an OPC is less difficult than for other corporate entities. According to RBI KYC guidelines, these documents necessitate the opening of a current account in the name of an OPC.

Copy of Certificate of Incorporation
Memorandum of Association (MOA)
Articles of Association (AOA)
Copy of PAN
KYC of Promoter
BR to open current account

All of these documents must be self-certified and stamped with the firm stamp.

Note: MCA has brought Integrated SPICe + along with AGILE wherein during incorporation of OPC, there is an option to select the bank where the company wants to open its current account.

Appointment of First Auditor

Within the first 30 days of incorporation, all companies, including an OPC, must appoint the first Auditor, a practicing Chartered Accountant. His job is to audit the company's financial statements.

Issuance of Share Certificate

Following the establishment of the company, Share Certificates are issued as proof of ownership. Every certificate is signed and sealed with the company stamp by the director or another authorized person.

Mandatory OPC Compliances

Meetings

Under Section 173 of the Companies Act of 2013, every One Person Company is required to convene at least one board meeting in each half of the calendar year, with a minimum interval of 90 days between these two meetings. If a corporation only has one director, there is no need to hold these meetings; the owner can just pass the resolution and record it in the minutes' book, which is sufficient to meet the need.

Notice of Interest

Every fiscal year, the Company’s Director must disclose his stake in other Companies/LLPs at the first Board Meeting. He must notify the company of his change of interest. Form MBP-1 must be maintained for such notice.

Statements of Financial Position

One-person companies must prepare and file the following financial statements with the ROC in prescribed form AOC-4 within 180 days of the end of the fiscal year (September 27):

Financial statements
Profit and loss statement
Any explanatory remark that is part of a financial statement must be signed by the Director.

Filing of Annual Return

Every year, all One Person Companies are required to file an Annual Return containing particulars with the ROC on the stipulated form MGT-7A by September 27. It should be signed by the company secretary; if there is no CS, the document can be signed by the director.

Income Tax Return

A One Person Company must file income tax returns in form ITR-6 with the Income Tax Department.

Employees' registration for state insurance

According to the ESI legislation, 1948 (Employees State Insurance Registration Act), any business entity, including OPC, is required to register under the ESI act, 1948 if it employs more than ten people. It is now part of the Company Registration Process itself. The same is for EPF as weal.

GST Return

If a One Person Company has a GST registration, it must file all GST returns on time. The GST return filing due date varies by state, although reports are typically filed on a monthly basis.

Benefits of OPC

Legal status

The OPC is treated as a separate legal entity from the member. The OPC's unique legal entity protects the sole individual who has incorporated it. The member's liability is limited to his/her shares, and he/she is not personally accountable for the company's loss. As a result, creditors can sue the OPC rather than the member or director.

Easy to obtain funds

Because OPC is a private company, it is simple to raise funds from Banks. Later on if any venture capitalists, angel investors, incubators, and other sources want to invest in equity, the OPC can be converted to a Normal Private Limited Company. Banks and financial institutions prefer to lend to corporations rather than sole proprietorships. As a result, obtaining finances becomes simple.

Less compliances

The Companies Act of 2013 exempts the OPC from certain compliance requirements. The OPC is not required to prepare the cash flow statement. Further, there are various exemptions on meetings compliances.

Easy incorporation

It is simple to incorporate OPC because just one member and one nominee are necessary. The member can also be the director. To support the Startup Ecosystem, the minimum capital required to form a company has been removed. Now, one can register OPC with any capital they want to start with.

Simple to manage

Because the OPC can be established and controlled by a single person, it is simple to manage its affairs. Making decisions is simple, and the decision-making process is rapid. Ordinary and special resolutions can be readily passed by the member by inserting them into the minute book and signing them. As a result, running and managing the company is simple because there will be no disagreement or delays.

Indefinite succession

Even when there is only one member, the OPC has the feature of eternal succession. The single member must appoint a nominee while incorporating an OPC. When a member dies, the nominee takes over as Member of the OPC.

How CCL can help with One Person Company (OPC) Compliance?

Compliance Calendar LLP can assist your OPC company in annual compliance with the Ministry of Corporate Affairs. Not only this, but we also have dedicated team who can look after your books of account, taxation, audit and all other mandatory compliances. CCL compliance experts can also assist with yearly return preparation, verification, and submission under the GST Law.

Conclusion

Prior to the implementation of the Companies Act in 2013, a single individual could not form a business. With the introduction of OPC Registration, this aided many new aspiring entrepreneurs and individuals in forming their business enterprises and giving their ideas flight. It not only helps the country's economy, but it also raises the morale of young people. Previously, the sole proprietorship was an individual's only option for establishing his or her firm or business. A minimum of two directors and two members were necessary to form a Private Limited Company.

By passing a resolution and increasing the number of directors and members to two, an OPC can be changed voluntarily into a private limited company. Conversion also necessitates a no-objection certificate from the creditors. If you have any queries, we would love to answer them at info@ccoffice.in or connect wit us at 9988424211.

Different Compliance Requirements By One Person Company (OPC) in India

Share this article:

Search more articles:

You may also like