Annual Compliance - One-person Company (OPC)

Annual Compliance - One-person Company (OPC)

An OPC or One-person Company is a type of company that is owned and managed by a single individual. Section 2(62) of the Companies Act 2013 defines an OPC as a company with only one member. The management of an OPC is also solely controlled by one person who holds 100% of the shares in the company. In India, OPC can only be registered as a Private Limited Company, which means that all the legal provisions applicable to Private Limited Companies also apply to OPCs. This includes the need for OPCs to comply with specific annual provisions for Annual Compliance.

As a One Person Company (OPC) in India, it is essential to comply with the government's annual compliance requirements to ensure that your company remains compliant with all the applicable laws and regulations. At IndiaFilings, we understand the importance of Compliance and are committed to helping One Person Companies meet their annual compliance requirements. Our team of experts is always available to assist you with any compliance-related queries and provide timely and accurate advice. Contact us today to learn more about our annual compliance services for One Person Companies.

One Person Company

One Person Company (OPC) is a company with only one individual as its member or shareholder. OPC registration is carried out when only one member or promoter exists for the business. This type of registration is preferred by many entrepreneurs over sole proprietorship businesses due to the numerous advantages that OPCs offer.

One-Person Company Compliances

One Person Company (OPC) Compliances refer to the legal requirements that a company with a single owner must fulfill to maintain its active status as a separate legal entity. Every year, all registered OPCs must file an annual return and audited financial statements with the Ministry of Corporate Affairs (MCA), regardless of their turnover. These filings are used to report the company's activities and financial data for the previous financial year. The annual filing deadline depends on the Annual General Meeting date. Failure to comply with these requirements can result in the removal of the company's name from the RoC's register and the disqualification of its directors. MCA has taken strict action against non-compliance in the past.

Importance of Annual Compliances of One Person Company

Running a One-Person Company is not a simple task, as many individuals starting a company may not be aware of the mandatory compliances that need to be fulfilled. Failing to comply with these regulations can lead to hefty penalties and may result in the company and its directors facing scrutiny and further investigation.

It is worth noting that One-Person Companies are required to perform annual compliances from the time of their incorporation, and non-compliance can create various hindrances for the company in the Form of penalties and fines. Therefore, it is essential to be aware of and comply with the applicable regulations to avoid such situations. Additionally, One-Person Companies must provide accurate financial information to shareholders and investors.

Benefits of One-Person Company Compliances

One-Person Company (OPC) compliance has several benefits that include limited liability protection, increased opportunities to get funds from financial sponsors, and continuous existence.

Compliance with the Companies Act, Income tax, and GST helps to enhance investor confidence in the company

The following are some of the advantages of performing annual compliances for One-Person Companies:

  • Easy to raise funds from financial investors - Proper annual compliances, including for OPCs, enhance the confidence of financial investors and makes it easy to raise funds from them.
  • Maintains active status - Timely and proper Compliance helps maintain the company's active status.
  • Accurate data collection: Annual compliances ensure that the data collected for the compliances are accurate and true.
  • Avoids hefty penalties - Non-compliance often results in hefty penalties and fines. Proper annual compliances help in avoiding these penalties.

Mandatory Annual Compliances of One-Person Company

The mandatory annual compliances of a One-Person Company (OPC) are as follows:

  • Conducting Annual General Meeting (AGM): OPCs must conduct an AGM within six months from the end of the financial year. It is mandatory to hold an AGM even if only one director in the OPC exists.
  • Filing Financial Statements: OPCs must prepare financial statements such as balance sheets, profit and loss, and cash flow statements and file them with the Registrar of Companies (ROC) within 30 days of the AGM
  • Filing Income Tax Returns: OPCs must file income tax returns by July 31st of each year.
  • Filing Annual Return: OPCs must file an annual return with the MCA within 60 days of the AGM.
  • Statutory Audit: OPCs must conduct a statutory audit of their financial statements by a qualified Chartered Accountant
  • Maintenance of Statutory Registers and Records: OPCs must maintain various statutory registers and records, such as the register of members, register of directors, and minutes of board meetings.

Failure to comply with these annual compliances may attract hefty penalties and fines and may even lead to the deregistration of the OPC. Therefore, OPCS must ensure they comply with these mandatory annual compliances yearly.

Conducting the Board Meeting

According to the Companies Act 2013, Section 173 mandates that a One-Person Company must conduct a minimum of one Board meeting annually. These meetings should be spaced out at least 90 days apart from each other and held every six months. It's important to note that the provisions of Sections 173 and 174 regarding the quorum of meetings of the Board of Directors do not apply to a One-Person Company with only one director on its board.

Penalty for Non- Compliance:

In non-compliance, the company will be subject to a penalty of Rs. 25,000/-, while the officer in default will be charged with a penalty of Rs. 5,000/-

Appointment of Auditor

As per Section 139 of the Companies Act, a One Person or Company must appoint an Auditor. A Chartered Accountant firm shall audit the company's accounts, and the Auditor will verify the books of accounts and issue an Audit report.

It's important to note that the provision regarding the rotation of the Auditor does not apply to a One Person Company.

Filing of Annual Return

Every One Person Company must file their Annual Return within 180 days from the end of the Financial Year. The Annual Return should include details about the company's shareholders or members and its directors.

The filing process requires the submission of Form MGT-7, the Annual Return form. OPCs need to ensure that this Form is filed within the specified timeline of 180 days from the end of the financial year.

Financial Statement

One Person Company must file Financial Statements, which reflect the company's finances and include the Balance Sheet, Statement of Profit and Loss Account, and Director Report. 

The submission of Form AOC-4 for Financial Statements is mandatory, and it should be filed within 180 days from the end of the financial year.

Disclosure of Interest in Other Entities

In each financial year, the directors of the OPC must disclose any interest they have in other entities in the first meeting of the Board of Directors, using Form MBP-1.

Penalty: Any Director in default may be subject to imprisonment for a term of up to 1 year.

KYC of the Director of the company

To comply with regulations, individuals holding DIN as of March 31st of the financial year must submit Form DIR-3-KYC for the respective financial year by September 30th of the immediate next financial year.

Filing the Form DPT-3

The Form DPT-3 must be filed annually by every company, providing the Return of deposits and particulars that are not considered as deposits as of March 31st. The deadline for filing this Form is on or before June 30th.

Preparing the Statutory Register

According to Section 88 of the Companies Act 2013, One Person or Company must maintain statutory registers. Additionally, OPCs must comply with certain event-based requirements, including:

  • Share Transfer
  • Director Appointment or Resignation
  • Change in Nominee or Bank Signatories
  • Change in Auditor.

Under OPC Statutory Audit, CA Firm will give review report certification. OPC utilizes form AOC 4 to record their yearly fiscal summaries to ROC. A massive penalty of Rs 100 daily on delay in documenting Form AOC 4 is levied. Moreover, a sum of Rs. 1000 every day of default is charged from the organization, which can go the most extreme up to Rs. 10, 00,000.

Income Tax Filing

All private or public companies are obligated to make Income Tax Returns Filing. Each OPC enlisted in India needed to file ITR. ITR is an essential requirement for annual Compliance for OPC regardless of whether OPC has not.

An OPC (One Person Company) must file its income tax returns (ITR) every year by the due date, usually July 31st for individuals and September 30th for businesses. The ITR filing process involves reporting the company's income, expenses, and deductions for the financial year to the Income Tax Department.

Amount of Rs. 10000/ as a fee will be imposed regarding non-filing of ITR.

The OPC must also obtain and maintain a valid Permanent Account Number (PAN), which is used to identify the company for tax purposes.

GST Filing for OPC

An OPC (One Person Company) registered under GST (Goods and Services Tax) must file regular returns to comply with the GST laws. GST returns are filed online through the GST portal, and the frequency of the returns depends on the turnover of the OPC.

An OPC with an annual turnover of up to Rs. 5 crores must file quarterly returns, while those with a turnover above Rs. 5 crores must file monthly returns. The GST returns filed by the OPC include details of its sales, purchases, and taxes paid and collected. The returns must be filed within the due date specified by the GST laws to avoid penalties and interest charges.

Apart from regular returns, an OPC may also be required to file an annual return and get its accounts audited if its annual turnover exceeds Rs. 2 crores. An OPC should maintain accurate and up-to-date records of its transactions to ensure timely and accurate GST compliance. Seeking the guidance of a qualified GST professional can help an OPC comply with the GST laws and avoid any legal consequences.

IndiaFilings Ledgers Platform for OPC

IndiaFilings Ledgers Platform for OPC is an online accounting and bookkeeping software that allows OPCs to manage their financial transactions and comply with regulatory requirements. The software is cloud-based, meaning it can be accessed from anywhere with an internet connection.

Overall, the Ledgers Platform for OPC is a comprehensive solution for OPCs looking to manage their finances and comply with regulatory requirements.

Documents Required for the Annual Compliance of One Person Company

The Annual Compliance of a One Person Company requires several documents to be submitted, including:

  • Receipts of purchases and sales, along with invoices of expenses incurred during the year
  • Bank statements from April 1st to March 31st for all bank accounts in the name of the company
  • Details of GST returns filed (if applicable)
  • Details of TDS challans deposited and TDS return filed (if applicable)
  • Balance sheet and profit & loss account
  • Financial statements
  • Director's report
  • Details of the member/shareholder
  • Details of directors

These documents are necessary to comply with the legal requirements and regulations of the Companies Act 2013.

At IndiaFilings, we have a team of well-trained experts to assist you throughout the Annual Compliance process of your one-person company. Our team of experts will guide and assist you in the compliance process, ensuring your work's timely and effective completion. If you have any queries related to Annual Compliance and related services, our experienced and trained professionals at IndiaFilings are always ready to help. You can contact us, and our team of experienced professionals will provide you with timely updates about the process and get your job completed efficiently.

Annual Compliance - OPC FAQ's

Who can form an OPC in India?

In India, only a natural person who is an Indian citizen and a resident of India can form an OPC (One Person Company). The person must not be minor or incapacitated to contract under the Indian Contract Act 1872.

What is a One-Person Company (OPC)?

A Person Company (OPC) is a company where a single person can be the sole shareholder and director. This means that the company is owned and managed by one individual with limited liability, i.e., his/her personal assets are separate from the companys assets. OPCs were introduced in India under the Companies Act 2013 to provide a legal structure for small businesses and entrepreneurs who want to start a business with limited liability.

What are the compliance requirements for an OPC?

An OPC must comply with various legal and regulatory requirements, such as maintaining proper books of accounts, filing annual returns with the Registrar of Companies (ROC), holding an Annual General Meeting (AGM), and appointing an auditor.

What is the Mandatory Annual Compliances of a One-Person Company?

The mandatory annual compliances of a One-Person Company (OPC) are as follows:
  • Conducting Annual General Meeting (AGM)
  • Filing Financial Statements
  • Filing Income Tax Returns
  • Filing Annual Return
  • Statutory Audit
  • Maintenance of Statutory Registers and Records

What is the minimum capital requirement for an OPC?

There is no minimum capital requirement for an OPC, but it must have authorized capital of at least Rs. 1 lakh.

What are the annual compliances for an OPC?

Annual compliances for an OPC include filing annual returns, financial statements, and tax returns. The OPC is also required to hold an AGM within six months of the close of the financial year.

Can an OPC convert into a Private Limited Company?

Yes, an OPC can convert into a Private Limited Company if it meets certain conditions, such as having a paid-up share capital of at least Rs. Fifty lakhs or a turnover of at least Rs. 2 crores.

What is the penalty for non-compliance by an OPC?

The penalty for non-compliance by an OPC (Person Company) in India varies depending on the type and extent of the non-compliance. It can include late filing fees, penalties for non-filing of annual returns and financial statements, and penalties for non-compliance with other provisions of the Companies Act. The penalties can range from Rs. 100 per day to Rs. 5,00,000, and an OPC needs to comply with all applicable laws and regulations to avoid legal consequences.

Can an OPC have more than one director?

An OPC can have only one director, who is also a shareholder. However, the director can appoint a nominee director who will act as the director of the original director becomes incapacitated.

Is it mandatory to have a Company Secretary for an OPC?

No, an OPC does not need to have a Company Secretary. However, if the company has a paid-up share capital of at least Rs. 5 crores, it must appoint a Company Secretary.

Can an OPC have branches in multiple locations?

Yes, an OPC can have branches in multiple locations, but it must comply with each locations legal and regulatory requirements.

How can an OPC ensure compliance with legal and regulatory requirements?

An OPC can ensure compliance by maintaining proper books of accounts, appointing an auditor, filing annual returns and tax returns on time, and holding an AGM. The company can also engage the services of a professional company secretary or consultant to assist with compliance.

What are the benefits of forming an OPC?

The benefits of forming an OPC (One Person Company) in India include the following:
  • Limited liability protection.
  • Easy and cost-effective incorporation.
  • Continuity of existence.
  • Better credibility and fundraising capacity.
  • Additionally, OPCs enjoy various tax benefits, are easier to manage, and have a separate legal entity from their owner.

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Last updated: Apr 20, 2023


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