OPC Compliance

February 19, 2025 by Team Instabizfilings

The Companies Act, 2013 provides for the One Person Company (OPC) as a new company structure. The business structure enables a single person to start their enterprise through liability protection. An OPC stands as a combination structure between sole proprietorship characteristics alongside company benefits. Even though OPCs receive some diminished regulatory tasks compared to other companies they need to follow several necessary legal requirements to run their business without obstacles.

Here’s a comprehensive guide to the compliance requirements for an OPC:

Board Meetings and Annual Meetings

Since an OPC is governed by only one director, it is exempted from holding board meetings. However, the following points are still essential:

Annual General Meeting (AGM):

OPCs are exempt from holding AGMs as they only have one director and shareholder.
They must prepare a directors' report to be filed with the financial statements.

Director’s Report:

Although OPCs do not hold AGMs, they must still prepare a director’s report at the end of each financial year, which must accompany the financial statements.

Filing of Financial Statements (Form AOC-4)

An OPC must prepare and file its financial statements annually, which include:

Balance Sheet
Profit and Loss Account
Cash Flow Statement (if applicable)

These financial statements must be filed with the Registrar of Companies (RoC) in Form AOC-4 within 30 days of the AGM. The financial statements must be signed by the director of the OPC and audited by a certified chartered accountant.

Filing of Annual Return (Form MGT-7)

An OPC is required to file an Annual Return with the ROC using Form MGT-7 within 60 days from the date of the AGM. This return includes:

The details of the shareholder(s)
Directors and other company details
Shareholding pattern and other statutory information about the OPC.

Income Tax Filing (ITR-6)

An OPC must file its Income Tax Return under ITR-6 by 31st July of the assessment year. The company must disclose its income, expenses, liabilities, and other relevant information as per the income tax laws.

Auditor’s Report: If the OPC is required to undergo an audit (as per income tax or any other applicable law), an auditor's report will be included in the financial statements filed with the RoC.

Appointment of Auditor

An OPC must appoint a chartered accountant to audit its financial statements annually. The auditor must be appointed at the first AGM, and the appointment must be ratified annually by the company.

Tenure: The auditor can be reappointed for 5 consecutive years, after which the company must rotate the auditor.

Statutory Registers Maintenance

Like other companies, OPCs are required to maintain statutory registers that must be updated regularly. These registers are important for keeping track of the company's structure and business activities. The key registers include:

Register of Members: Details of the sole shareholder.
Register of Directors: Information about the directors of the company.
Register of Charges: If the company takes loans or mortgages.

These registers must be maintained at the company's registered office.

Compliance with Other Laws

An OPC, depending on the nature of its business, may also need to comply with various other statutory requirements such as:

Goods and Services Tax (GST): If the company is engaged in taxable supply of goods or services.
Employee Provident Fund (EPF): If the company employs a certain number of people.
Tax Deducted at Source (TDS): If the company deducts TDS on payments made.

Filing of Special Resolution (Form MGT-14)

Although OPCs don’t hold AGMs or meetings with multiple directors, there may be specific cases where a special resolution needs to be passed. For example, when:

Changing the name of the company
Altering the Articles of Association (AoA)
Approving significant transactions

In these cases, Form MGT-14 must be filed with the RoC.

Capital Structure Changes

Issue new shares
Alter its paid-up capital
Transfer shares to another person

It must file the relevant forms with the RoC to reflect these changes. This ensures the updated ownership structure is officially recognized.

OPC Conversion to Private Limited Company

If an OPC grows and has more than one director or shareholder, it may choose to convert into a Private Limited Company. However, this conversion can only happen when the OPC exceeds a threshold limit on its paid-up capital or annual turnover.

File a special resolution to convert the OPC into a Private Limited Company.
Ensure the required documents are submitted to the RoC.
The company will need to adhere to the full set of compliance requirements applicable to Private Limited Companies post-conversion.

Compliance Timelines for OPCs

Here’s a quick summary of compliance timelines for an OPC:

Filing of Financial Statements (Form AOC-4): Within 30 days from the AGM.
Filing of Annual Return (Form MGT-7): Within 60 days from the AGM.
Income Tax Filing (ITR-6): By 31st July of the assessment year.
Appointment of Auditor: At the first AGM and ratified annually.

Conclusion

A One Person Company has less complicated compliance requirements than traditional companies yet non-compliance may result in penalties. The primary compliance duties for One Person Companies consist of hosting yearly meetings or preparing a substitute annual report in addition to keeping statutory records and submitting financial statements and annual reports and fulfilling tax responsibilities.

Starting and managing a business through an OPC structure presents suitable options to entrepreneurs because of its ease and adaptability but entrepreneurs must sustain proper regulatory compliance with both Companies Act 2013 laws and additional applicable statutes.

The legal protection and successful expansion depend on OPCs maintaining compliance with regulations because this prevents fines and safeguards their authorized status.

Businesses seeking reasonable compliance management solutions can benefit from OPC compliance packages provided by professionals which deliver efficient processes and affordable prices for timely submissions.

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