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OPC Compliance Requirements


OPC Compliance Requirements

One Person Companies (OPCs) have gained popularity recently as a good business structure for solo entrepreneurs. As OPCs operate with a single member, they enjoy certain benefits, such as limited liability and a separate legal entity. However, like any other business entity, OPCs are subject to compliance requirements that ensure adherence to legal and regulatory standards. This article will deal with what are the compliances for an OPCs that need to fulfil. Understanding these obligations is crucial for OPC owners to maintain transparency, accountability, and legal compliance of OPC company. By meeting these requirements, OPCs can mitigate potential risks, operate smoothly, and establish a credible business presence.

Introduction to One Person Company (OPC):

The concept of a One Person Company (OPC) introduced by the Companies Act of 2013 revolutionized corporate laws by allowing the formation of a company with a single individual as its Director and shareholder. This marked a departure from the previous requirement under the Companies Act of 1956, where a minimum of two directors and shareholders were mandatory for company incorporation. The introduction of OPCs provides a unique opportunity for entrepreneurs and small businesses to establish a separate legal entity with limited liability, even with just one person at the helm.

Importance of Annual Compliance in One-Person Companies

  • Complying with one person company compliances annually is crucial to avoid penalties and fines.
  • Non-compliance can lead to legal consequences, investigations, and negative implications for the Company and its directors.OPCs should be aware of and fulfill mandatory compliances from incorporation.
  • Adhering to annual compliance requirements demonstrates transparency and accountability to shareholders and investors.
  • Accurate financial reporting is necessary to provide stakeholders with reliable information.
  • Fulfilling annual one person company compliances obligations fosters trust, helps make informed decisions, and protects the Company’s reputation.
  • Staying informed about applicable regulations and fulfilling obligations promptly ensures the smooth functioning of the OPC.
  • Annual compliance is vital for maintaining credibility, protecting the interests, and upholding the legal obligations of the OPC.

Advantages of Annual Compliance of OPC Company:

  • Easier to Raise Financial Support: Proper annual compliances instill confidence in financial investors, making raising support for the Company easier.
  • Maintaining Active Status: Timely and proper compliance of OPC company help keep the Company’s status active and in good standing.
  • Avoids Penalties: Non-compliance can lead to heavy penalties and fines. Adhering to annual compliances helps in preventing such penalties.

OPC Compliance Requirements

OPC Compliance Requirements are tabulated here for ready reference

No. Compliance Requirements Timeline
1 File INC-20A form for commencement of business Within 180 days of incorporation
2 Payment of stamp duty on share certificates Within 30 days of the issue of share certificates
3 Conduct a minimum of two board meetings At least one board meeting in each half of the calendar year and a gap of not less than 90 days
4 OPCs are exempted from holding an Annual General Meeting (AGM) No requirement to hold AGM
5 Directors must disclose their interests In the first board meeting or whenever there is a change
6 Directors need to provide a declaration in Form DIR-8 Annually confirming they are not disqualified
7 Maintain mandatory statutory registers, minutes book, and other secretarial records Ongoing maintenance required
8 File Form AOC-4 (Financial Statements) Within 180 days from the end of the financial year (March 31)
9 File Form MGT-7 (Annual Return) Within 180 days from the end of the financial year (March 31)
10 Submit the Company’s Income Tax Return By September 30 of each financial year
11 Complete DIR-3 KYC (Directors KYC) By September 30 of the next financial year
12 Appoint an auditor through ADT-1 For five years
13 File E-Form MSME-I (Half-Yearly Return) For April to September by October 31 and for October to March by April 30
14 File E-Form DPT-3 (Return of Deposits) By June 30 for companies with outstanding loans/amounts as of March 31, regardless of deposit definition

Corporate Stationery

After a Person Company (OPC) is registered, purchasing the following stationery for One person company compliances matters is advisable.

  • Name Board: All companies, including an OPC, are required to paint or affix the name of the Company and the address of its registered office outside every office or place in which it carries on business.
  • Company Rubber Stamp: A round rubber stamp bearing the name of the Company and a straight rubber stamp bearing the name of the Company, along with the designation of the authorized signatory, can be purchased. Company rubber stamp is required for executing various legal documents like Board Resolutions, bank account opening forms, cheques, etc.,
  • Letterhead: The name and registered office address of the OPC must be printed on all letterhead, invoices, notices, and other official documents of the Company.

Note: For an OPC, it’s essential that the words “One Person Company” be mentioned in brackets below the name of the Company, wherever its name is printed, affixed, or engraved.

OPC PAN Application

The first step after incorporating any corporate legal entity is obtaining an OPC PAN card. PAN can be applied online after incorporation to receive the PAN allotment letter. The OPC Director must then sign the letter, sealed with a company rubber stamp, and the courier to the NSDL office. PAN Card will be issued in about 15 days after receipt of the hard copy PAN application from the applicant.

Opening OPC Bank Account

Opening a Person Company bank account is more straightforward than opening a proprietorship bank account. As an OPC is a corporate entity, no other additional tax registrations or documents are required to open a bank account for an OPC. As per the Reserve Bank of India’s KYC norms, the following are the documents needed to open a current account in the name of an OPC:

  • Self-attested copies of the OPC Certificate of Incorporation
  • Memorandum of Association of OPC
  • Articles of Association of OPC
  • Resolution to open a bank account for Company
  • Copy of PAN allotment letter;
  • Copy of the telephone bill;
  • Identity proof of the Director

Documents submitted for opening the bank account must be self-attested with the seal of the Company. Hence, obtaining the company seal and company letterhead after incorporation of the OPC is essential.

Compliance Requirement: Form 20A for OPC Commencement of Business.”

OPCs are required to file Form 20A, which is a declaration for the commencement of business. This Form 20A must be filed within 180 days of the OPC’s incorporation.

  • The purpose of Form 20A is to ensure that the OPC has started its business operations within the specified timeline as per the legal requirements.
  • By filling out this form, the OPC confirms its readiness to undertake business activities and demonstrates compliance with the regulations.

Form 20A is a vital compliance document that OPCs must fulfill to establish their business and operate legally.

Compliance Requirement for OPC Director: Form DIR-8 Declaration of Non-Disqualification

As an OPC (Person Company) typically has only one Director, the compliance requirement for OPC directors regarding Form DIR-8 remains applicable. The sole Director of the OPC must submit Form DIR-8 annually, confirming that they are not disqualified from holding the position of Director.

This compliance requirement aims to ensure that the Director of the OPC continues to meet the eligibility criteria and is not barred or disqualified under any relevant laws or regulations. By submitting the Form DIR-8 declaration, the Director affirms their qualification and suitability to hold the directorial role in the OPC.

Despite having only one Director, the OPC must adhere to this compliance requirement to maintain transparency, accountability, and good governance.

Ongoing Maintenance of Mandatory Records for OPC

For One Person Companies (OPCs), there is a requirement to maintain mandatory statutory registers, a minute’s book, and other secretarial records. This obligation entails ongoing maintenance to ensure compliance with regulatory guidelines.

The OPC must diligently maintain the following records:

  • Statutory Registers: These registers include the Register of Members, Register of Directors, Register of Charges, and any other registers prescribed by the applicable laws. The OPC is responsible for updating and keeping these registers accurate and up-to-date.
  • Minutes Book: The OPC needs to maintain a minutes book to record the proceedings of its board meetings, general meetings, and any committee meetings. It is essential to record resolutions, decisions, and discussions chronologically.
  • Secretarial Records: OPCs must also maintain other secretarial records, such as copies of annual returns, resolutions passed by the Company, agreements, contracts, and other relevant documents. These records should be organized and readily accessible for future reference.

The ongoing maintenance of these records is crucial for OPCs as it ensures transparency, accountability, and compliance with legal obligations.

Financial Statements: Form AOC-4

One of the essential compliance requirements for One Person Companies (OPCs) is to file Form AOC-4, which pertains to submitting financial statements.

  • OPCs file Form AOC-4 within 180 days from the end of the financial year (typically March 31).
  • It involves the submission of financial statements, including the balance sheet, profit and loss statement, and other relevant financial information.
  • OPCs must ensure the accuracy and compliance of their financial statements with applicable accounting standards.
  • The timely filing of Form AOC-4 demonstrates the OPC’s commitment to transparency and financial accountability.
  • It enables stakeholders to make informed decisions based on the Company’s financial health and performance.

Annual Return Filing for One Person Company – Form MGT 7:

One of the essential One Person Company compliances requirements is filing an annual return, which provides crucial information about the Company’s activities and financials. The OPC Annual Return should be attached to Form MGT 7, the official document for reporting the Company’s activities during the financial year.

  • OPCs must file Form MGT-7 within 180 days from the end of the financial year, which typically ends on March 31.
  • The Annual Return provides a comprehensive snapshot of the OPC’s affairs, including its shareholding structure, directors’ details, and other essential information.
  • OPCs must ensure the accuracy and completeness of the information provided in Form MGT-7.

The timely filing of Form MGT-7 demonstrates the OPC’s compliance with statutory obligations and promotes transparency. It allows stakeholders and regulatory authorities to access vital information about the OPC’s operations, governance, and compliance status.

OPC Income Tax Return – Form ITR-6

One Person Companies (OPCs) must file their Income Tax Return by September 30 of each financial year. This filing ensures compliance with the income tax regulations and reporting obligations.

  • The relevant form for filing the Income Tax Return for OPCs is Form ITR-6
  • OPCs must provide accurate and comprehensive information about their income from various sources, including business activities, investments, and other applicable income categories.

In addition to income details, OPCs should report deductions, exemptions, and any other relevant tax-related information as required by the tax laws.

DIR-3 KYC Compliance Requirement for OPC Directors

Directors of One-Person Companies (OPCs) must fulfill the compliance requirement of completing DIR-3 KYC (Directors KYC) by September 30 of the next financial year.

DIR-3 KYC is a process through which directors verify and update their personal and professional details with the Ministry of Corporate Affairs (MCA). It helps maintain accurate records of directors and enhances transparency in corporate governance.

OPC directors must provide relevant information such as their details, contact information, director identification number (DIN), and any changes in their residential address or contact information.

By complying with the DIR-3 KYC requirement, OPC directors demonstrate their commitment to maintaining up-to-date records and adhering to regulatory obligations. Failure to complete DIR-3 KYC within the specified timeline may result in penalties or other consequences.

OPC directors should proactively verify and update their details through the DIR-3 KYC process by September 30 of the next financial year.

Appointment of Auditor through ADT-1

One Person Companies (OPCs) are required to appoint an auditor by filing Form ADT-1. The appointment of an auditor is a crucial compliance step that ensures the independent examination and verification of the Company’s financial statements.

  • To appoint an auditor, OPCs must file Form ADT-1 with the Registrar of Companies (RoC). The form contains relevant details such as the auditor’s name, address, and professional qualifications.
  • The appointment of an auditor through ADT-1 is typically made for five years. However, OPCs may also opt for shorter terms as per their requirements.

By appointing an auditor through ADT-1, OPCs fulfill the regulatory requirement of having an independent professional review their financial records. This contributes to transparency, accountability, and the integrity of the financial reporting process.

OPCs should ensure filing Form ADT-1 to comply with the auditor appointment requirement. Selecting a qualified and experienced auditor who can provide a comprehensive and unbiased assessment of the Company’s financial affairs is essential.

Filing of E-Form MSME-I (Half-Yearly Return) for OPC:

OPCs must file E-Form MSME-I, the Half-Yearly Return, to provide details regarding outstanding payments dues to micro and small enterprises. The filing deadlines for this form are as follows:

  • For the period from April to September, the E-Form MSME-I should be filed by October 31.
  • For the period from October to March, the E-Form MSME-I should be filed by April 30 of the subsequent year.

The Half-Yearly Return in E-Form MSME-I requires OPCs to furnish details such as the number of outstanding payments, the name and address of the micro and small enterprises, and the reasons for any delay in payment.

Filing of E-Form DPT-3 (Return of Deposits) for OPC:

OPCs are required to file E-Form DPT-3, the Return of Deposits, to provide details and bifurcation of outstanding loans or amounts as of March 31, regardless of whether they fall under the definition of a deposit.

  • The filing deadline for E-Form DPT-3 is June 30.
  • OPCs are required to file E-Form DPT-3, the Return of Deposits, to provide details and bifurcation of outstanding loans or amounts as of March 31, regardless of whether they fall under the definition of a deposit.

MBP-1 – Disclosure of Director’s Interest in another Entity:

As per the compliance requirement, every Director of an OPC is obligated to submit Form MBP-1 annually. This form discloses the Director’s interest in any other entity.

Form MBP-1 serves as a means for directors to disclose their involvement or interests in other organizations, whether as a director, partner, shareholder, or in any additional capacity. By submitting this form, directors provide transparency and ensure that any potential conflicts of interest are disclosed.

The submission of Form MBP-1 is essential to maintain the integrity and ethical standards of the directorship position.