What are the Compliance and Annual Filing Requirements of One Person Company?

One Person Company (OPC) is a popular form of business structure in India, introduced by the Companies Act, 2013. It allows a single individual to form a company and enjoy the benefits of limited liability. While OPCs provide several advantages, it is crucial for the owner to be aware of the Annual Return Filing of One Person Company mandated by the Companies Act, 2013. These requirements ensure compliance, transparency, and accountability of OPCs. In this article, we will discuss the annual filing requirements that OPCs need to fulfill.

Meaning of One Person Company

In a One Person Company, the Director, Member, Shareholder, and Promoter are all the same individual. Section 2 (62) of the Companies Act, 2013 regulates this form of business.

The benefits of both a Private Limited Company and a Sole Proprietorship are combined for a One-Person Company and there is no need for paid-up capital in OPC. Like its members, an OPC is a distinct entity. Some of the essential traits of an OPC include the following:

• OPCs only have one member, hence in the event of the death of that person, the company must choose a nominee to go on with business as usual.
• OPCs are not permitted to list on the National Stock Exchange or use Stock Exchange Platforms (SEPs) to sell their shares to the general public.
• Due to these exclusions, an OPC is not needed to call an Annual General Meeting (AGM), making compliance costs in this kind of organization extremely low.
• It cannot raise money from the general public through a prospectus or a public offering.
• A One-Person Company may have up to 15 directors, with a minimum of one.
• Because the company collapses if the candidate is not allowed to join, the company’s perpetually succession is relatively low.

The Benefits of a One-Person Company

The following are some of the benefits of creating an OPC:

• Restricted Responsibility: The owner’s responsibility is restricted to the amount invested in the company, and thus their personal assets are not at risk in the event of a legal dispute.
• Distinct Legal Entity: Because an OPC is a distinct legal entity, it can sue or be sued in its own right, and its existence is not contingent on the owner’s life.
• Perpetual Succession: The ownership of a company can be transferred in the event of the owner’s death, ensuring the business’s continuance.
• Lower Compliance: When compared to a Private Limited Company, an OPC has less compliance obligations, which makes it easier to manage and administer.

Annual Return Filing Requirements of One Person Company

One Person Company (OPC) is a popular form of business entity in India that allows a single individual to incorporate a company and enjoy the benefits of limited liability. While OPCs offer various advantages, it is crucial for the business owner to understand and fulfill the statutory compliance requirements under the Companies Act, 2013. One such requirement is the annual return filing, which plays a vital role in maintaining transparency and providing essential information about the company to stakeholders and regulatory authorities.

An Annual Return is a comprehensive document that provides important details about a company, its activities, and its financial performance during a specific financial year. It serves as a significant source of information for shareholders, investors, lenders, and other stakeholders, helping them assess the company’s performance and make informed decisions.

The Annual Return Filing is a significant compliance requirement for every company, including OPCs. It provides important information about the company’s shareholders, directors, and financial performance to the Registrar of Companies (RoC). OPCs are required to file their annual returns within 60 days from the conclusion of the financial year.

Importance of Annual Return Filing of One Person Company

Annual return filing holds great importance as it ensures transparency and accountability on the part of the company and its management. It helps in building trust among the stakeholders, including shareholders, creditors, and regulatory authorities. Additionally, annual returns serve as a valuable tool for regulatory compliance and assist in the monitoring and oversight of companies by the Ministry of Corporate Affairs (MCA).

Documents Required for Annual Return Filing of One Person Company

The following documents are typically required for the annual return filing of an OPC:

• Financial Statements: The audited financial statements of the OPC, including the balance sheet, profit and loss statement, and cash flow statement.
• Board Meeting Minutes: The minutes of the board meeting approving the financial statements and authorizing the filing of the annual return.
• Annual Return Form (MGT-7): The completed and certified Form MGT-7, providing details about the OPC, its registered office, shareholders, directors, and share capital.
• Digital Signature Certificate (DSC): The director’s DSC is required to digitally sign the e-forms filed with the RoC.
• Certification by Company Secretary or Chartered Accountant: The annual return must be certified by a practicing Company Secretary or a Chartered Accountant.

Forms to be filled by a One Person Company for Annual Return Filing

A One Person Company is usually recommended to file three documents with ROC:

• ROC Form MGT 7: This form comprises information on the ownership structure, changes in directorship, and any share transfers that occurred during the fiscal year. The deadline for ROC Form, MGT 7 is November 28th. Because a One-Person Company is not required to convene an annual meeting, the due date for completing Form MGT 7 is 60 days after the end of the fiscal year.
• ROC Form AOC4: This form comprises information and annexures concerning the company’s balance sheet, profit and loss account, compliance certificate, registered office address, register of members, share and debt data, and debt details, as well as information about the company’s management. The due date for ROC Form AOC 4 would be 180 days after the fiscal year ended. That implies the deadline for AOC 4 for OPC is September 27th. (If we start counting 180 days from April 1st).
• ROC Form ADT 1: It is used to designate an auditor. The deadline for ROC Form ADT 1 is October 14th, which is within 15 days of the end of the AGM.

Procedure for Annual Return Filing for a One Person Company

The following steps outline the procedure for filing the annual return of an OPC:

• Obtain DSC (Digital Signature Certificate): The first step is to obtain a Digital Signature Certificate for the director of the OPC. A DSC is necessary for digitally signing the e-forms that need to be filed with the RoC.
• Prepare Financial Statements: OPCs must prepare financial statements, including the balance sheet, profit and loss statement, and cash flow statement, as per the requirements of the Companies Act, 2013.
• Conduct Board Meeting: The director of the OPC must convene a board meeting to approve the financial statements and authorize the filing of the annual return. The minutes of the board meeting should be maintained for record-keeping.
• Prepare Annual Return: Once the financial statements are finalized, the OPC needs to prepare the annual return in the prescribed format. The annual return consists of Form MGT-7, which includes details about the company, its registered office, shareholders, directors, and share capital.
• Certification of Annual Return: The annual return of an OPC must be certified by a company secretary or a chartered accountant in practice. The certification ensures that the information provided in the annual return is true and correct.
• File Annual Return: After the annual return is prepared and certified, it needs to be filed with the RoC using the MCA21 portal. The OPC must upload the required e-forms, including Form MGT-7, along with the applicable filing fees.

Connect to our Experts at Legal Window for One Person Company Registration and Compliance Services, you can contact our team at 072407-51000 or [email protected].

What are the Compliance and Annual Filing Requirements of One Person Company?

Like any other type of company, an OPC is required to fulfill certain annual filing requirements to comply with the regulatory framework. Which are as follows:

• Appointment of the Director: An OPC must have a minimum of one director, who is also the sole shareholder of the company. The director must be an individual and an Indian resident. Additionally, the OPC cannot have more than one director at any time.
• Obtaining Director Identification Number (DIN): The director of an OPC must obtain a unique DIN from the Ministry of Corporate Affairs (MCA). The DIN serves as a unique identification number for the director and is necessary for various filings and compliances.
• Name Reservation: Before incorporating an OPC, it is crucial to reserve a suitable name for the company. The name should comply with the naming guidelines provided by the MCA. Once the name is approved, it remains reserved for a period of 20 days, during which the OPC must complete the incorporation process.
• Filing of Incorporation Documents: The OPC must file various documents with the Registrar of Companies (ROC) to complete the incorporation process. These documents include the Memorandum of Association (MoA), Articles of Association (AoA), and other relevant forms prescribed by the MCA.
• Payment of Stamp Duty and Registration Fees: To complete the incorporation, the OPC must pay the necessary stamp duty and registration fees. The amount varies based on the authorized capital of the company.
• Maintaining Statutory Registers and Records: An OPC is required to maintain certain statutory registers and records as prescribed by the Companies Act. These include registers of members, directors, and related party transactions, minutes of general meetings, and resolutions passed by the company.
• Conducting Annual General Meeting (AGM): OPCs are required to hold an AGM within six months from the end of the financial year. The director, being the sole shareholder, can pass resolutions instead of convening a physical meeting. The resolutions and financial statements must be filed with the ROC within 30 days from the date of the AGM.
• Preparation and Filing of Financial Statements: OPCs must prepare annual financial statements, including the balance sheet, profit and loss account, and cash flow statement. These statements should be audited by a qualified auditor and filed with the ROC along with the annual return within 60 days from the end of the financial year.
• Income Tax Filing: OPCs are treated as separate entities for income tax purposes. The company must obtain a Permanent Account Number (PAN) and file annual Income Tax Returns, disclosing the income and expenses of the company. The tax return must be filed by the due date prescribed by the tax authorities.
• Compliance with Other Laws: In addition to the above requirements, OPCs must comply with other applicable laws and regulations, such as Goods and Services Tax (GST), professional tax, labor laws, and any industry-specific regulations.

Consequences of Non-Compliance

Failure to comply with the annual return filing requirements can lead to severe consequences for a One Person Company. Some of the key repercussions include:

• Penalty: The company may be liable to pay a significant penalty for non-compliance, which can vary based on the period of delay and the size of the company.
• Legal Consequences: Non-compliance with annual return filing requirements can result in legal action being taken against the company and its officers. This may lead to legal disputes, loss of reputation, and financial liabilities.
• Regulatory Scrutiny: Companies that fail to fulfill their statutory obligations, including annual return filing, may attract regulatory scrutiny, which can hamper their business operations and growth prospects.

Conclusion

In conclusion, an OPC is an attractive business structure for individuals who wish to start a business without the hassle of having to find a partner. However, an OPC is also required to comply with certain rules and regulations, and file its annual returns and financial statements with the ROC and Income Tax Department. It is essential for OPCs to maintain proper records and adhere to the compliance and annual filing requirements to avoid penalties and legal action