According to Section 2(62) of the Companies Act, 2013, a One Person Company means a company which has only one person as a member/shareholder. The one person company features are incredibly unique. It allows a single founder to enjoy full corporate limited liability and a separate legal entity status, while legally requiring them to appoint a “nominee” who will step in as the member in the event of the founder’s death or incapacity.
One Person Company
To understand the OPC, it is helpful to analyze one person company vs private limited structures:
- Membership: An OPC requires only one director and one shareholder (who can be the same person).
- Annual General Meetings (AGM): An OPC, however, is statutorily exempt from holding an Annual General Meeting.
- Scale and Limits: Historically, there were strict one person company limits dictating mandatory conversion, but under the current Companies Act framework, OPCs enjoy privileges similar to small companies. A “Small Company” is defined as one having a paid-up share capital not exceeding Rs. 2 crores (or up to prescribed limits of Rs. 10 crores) and a turnover not exceeding Rs. 20 crores (up to Rs. 100 crores). As long as an OPC aligns with these frameworks, it enjoys lesser regulatory burdens.
Understanding OPC Compliance and OPC Rules
While an OPC is a single-owner entity, it is still a registered company under the MCA and is therefore subject to rigid opc rules and opc company compliance.
As an expert, here is your definitive opc annual compliance checklist and the opc requirements you must adhere to:
- Form INC-20A (Declaration of Commencement of Business) Before an OPC can legally start its business operations or borrow any money, it must file Form INC-20A within 180 days of incorporation. This form is a declaration verified by a CA, CS, or CMA in practice, confirming that the sole subscriber has paid the full value of their shares into the company’s bank account. Failing to file this attracts a penalty of Rs. 50,000 on the company and can lead to the MCA striking off the company name.
- Financial Statements (Form AOC-4) Because an OPC is exempt from holding an AGM, its timeline for filing financial statements is different from other companies. As per the third proviso to Section 137(1) of the Companies Act, 2013, an OPC must file a copy of the financial statements (duly adopted by its sole member) with the Registrar within 180 days from the closure of the financial year. The financial statements of an OPC are not required to include a cash flow statement.
- Annual Return (Form MGT-7A) Previously, every company had to file Form MGT-7. However, the MCA has simplified opc compliance. From the financial year 2020-21 onwards, OPCs and Small Companies must file a simplified Annual Return via Form MGT-7A.
- Exemptions in MGT-7A: The form strips away complex disclosures. It does not require details of board meetings, unclassified share capital, or promoter/non-promoter breakdowns. Furthermore, MGT-7A does not require certification by a practicing Company Secretary; it can be filed using just the Digital Signature Certificate (DSC) of the sole director.
- Due Date: It must generally be filed within 60 days from the date the AGM should have been held, effectively placing the deadline around November 29th for standard financial cycles. Non-filing incurs a penalty of Rs. 100 per day of default.
- Board Meetings Even though there is only one member, an OPC must fulfill board meeting opc requirements. Under Section 173(5) of the Companies Act, 2013, an OPC is deemed to have complied with board meeting requirements if at least one meeting of the Board of Directors is conducted in each half of a calendar year, and the gap between the two meetings is not less than 90 days. Note: If the OPC has only one director on its Board, the provisions regarding the minimum number of board meetings and quorum do not apply at all.
- DIR-3 KYC Just like the designated partners in an LLP, the sole director of an OPC must file the DIR-3 KYC form (or DIR-3 KYC-WEB) by the 30th of September every financial year to keep their Director Identification Number (DIN) active.
- Appointment of Statutory Auditor (Form ADT-1) An OPC must appoint a statutory auditor. The first auditor must be appointed by the Board of Directors within 30 days of incorporation, and the company must file Form ADT-1 with the ROC within 15 days of the appointment.