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What are the basic compliances to be followed in a ONE PERSON CORPORATION

With the rising trend in the number of one person corporations being registered let us look into the basic compliances to be followed in a OPC.

A person as a single promoter can incorporate a company and have the benefits of limited liability company, a one person corporation (here by referred to as OPC) is considered as a separate legal entity of a company.

OPC does not require any need for partner or co-founder.

Basic checklist to incorporate an OPC:

  • Only a natural person who is an Indian citizen and resident of India or non-resident of India can incorporate an OPC.
  • Legal entities like a company, LLP etc. cannot incorporate an OPC
  • Minimum authorised capital of an OPC should be Rs. 1 lakh
  • Business in financial activities cannot be incorporated as OPC
  • Nominee should be mandatorily appointed by the promoter during incorporation.

Regarding nominee of an OPC

OPC incorporation requires name of the nominee to be mentioned in the company’s MOA, the nominee will undertake the entity after the incapacity or death of the promoter/director/owner.

MOA should also include the written consent of the nominee which must also be filled with the registrar during incorporation along with MOA and AOA.

The nominee is entitled to withdraw his/her consent, for which the promoter needs to nominate another member as the legal heir of the company within 15 days of the notice of the withdrawal. The nomination of the new personnel must be communicated to the company through a written consent in form INC-3.

Once communicated, the company should file the notice of withdrawal of consent along with the intimation of the new nominee with the registrar through form INC-4.

The sole member of a OPC is entitled to change the nominee of the company for any reasons.

In the event of change of the nominee, a notice in writing should be provided in the company. The new nominee must consent to the nomination through form INC-3.

The company must file the notice of change and consent of the nominee with the registrar along with the applicable fee within 30 days of receiving the intimation of change.

If  a nominee becomes in-charge if the OPC due to the cessation of the promoter due to death or incapacity, then the new promoter(old nominee) must appoint a nominee as a replacement.

The incorporation process remains similar across all types of entity registration, however there are few changes which are mentioned below:

1. Obtaining digital signature:

Digital signature certificate must be obtained for the sole promoter and the nominee for processing incorporation. Application for DSC would require passport size photos, identity proof and address proof of the promoter and the nominee.

2. Obtaining Director Identification Number:

Once digital signature is obtained, DIN must be obtained for the promoter and the nominee. No additional documents would be required while filing for DIN.

3. Name availability:

Once the digital signature is obtained, application for name reservation is to be submitted to the MCA. The name should mandatorily include ‘OPC’ in or at the end if the name. Up to 6 name options is to be submitted to the MCA. The name reservation for OPC usually takes 24-72 hours.

4. Certificate of incorporation:

After obtaining the name registration, incorporation application can be filed with the MCA along with signed MOA, AOA, identity proof and residence proof of the member and the nominee. Affidavits and declaration of the sole promoter along with the consent form of the nominee must be submitted through form INC-3.

On filing for certificate of incorporation, approval is granted by the ROC. In case, there are any issues with the documents submitted, the application for incorporation can be resubmitted.

Post incorporation formalities for OPC:

If the notice of situation related to registered office was not filed during incorporation, it must be filed after incorporation within 30 days under INC-22.

The documents required for INC-22 are:

  • Lease deed or rent agreement along with rent receipts, if any
  • Copies of utility bills not older than 2 months.
  • A no objection certificate by the landlord if the company is renting the registered space and not leasing it.
  • Declaration and consent of the proposed director through forms INC-9 and DIR-2 to be submitted to the ROC after receiving certificate of incorporation.
  • After incorporating and commencing business operations, the OPC should properly maintain and file with ROC the balance sheet, profit and sales accounts, statement of changes in equity(if applicable) and a explanatory note forming parts of any documents.

Major compliances to be followed:

  1. Form INC-20A Form in respect of commencement of Business within 180 days of incorporation
  2. Stamp duty on Share Certificates Payment of stamp duty is to be made within 30 days from the issue of share certificates
  3. Board Meeting Minimum Two Board Meetings Atleast one Board Meeting in each half of calendar year and gap between two meetings is not less than 90 days
  4. Annual General Meeting No such requirement to hold AGM as OPC is exempted from holding Annual General Meeting
  5. MBP-1 Disclosure of interest is required to be given in the first Board Meeting or where ever there is any change by every Director of Company
  6. DIR-8 Declaration in form DIR-8 that director is not disqualified is required to be given in every financial year
  7. Statutory Registers, Minutes Books and Records Maintenance of mandatory statutory registers, minutes Book and other secretarial records is required to be done
  8. Form AOC-4 (Financial Statements) 180 days from end of financial year i.e. 31st March
  9. Form MGT-7 * (Annual Return) 180 days from end of financial year i.e. 31st March
  10. Income Tax Return of Company 30th of September of each financial year
  11. DIR- 3 KYC (Directors KYC) 30th of September of next financial year
  12. ADT-1 (Auditor’s Appointment) Auditor will be appointed for 5 years
  13. E-Form MSME-I (Half Yearly Return) Every Company having outstanding payments dues to micro and small enterprises and in case the payment of the same is pending beyond 45 days, then the Company has to furnish details as per the following timeline: For April to September by 31st October For October to March by 30th April
  14. E-Form DPT-3 (Return of Deposits) All the Company having any outstanding loan/amount as on 31st March of every financial year has to furnish details and bifurcation of such outstanding amount irrespective of the fact whether such amount is falling under the definition of deposit or not by 30th June.

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