One person company is an improvement over the sole proprietorship business entity. However, the annual compliance requirement of One Person Company is much higher than the sole proprietorship firm.
The concept of one person company(OPC) was introduced through companies Act 2013. Just like sole proprietorship the OPC also consist one member who solely owns and manages the affairs of the company. The main distinction between the two is that the identity of One Person Company and its members is completely distinct, unlike sole proprietorship. One person is required to compliance requirements as per the Income Tax Act, Companies Act and other regulations as applicable.
The annual compliances requirements of an OPC are as follows-
Appointment of auditors- Every One Person Company is required to conduct the annual general meeting and appoint Auditors by filing form ADT 1 for the five years. This means that the statuary auditor appointed shall hold the office till the conclusion of 6th annual general meeting. The auditor appointed shall audit the financial statements of the one person company.
Filing of Annual Return- Every One Person Company is required to file its annual return in form MGT 7 within the period of 60 days from entry of ordinary resolution in Minutes Books. The time gap between one annual general and the other meeting shall not exceed the period of 15 months.
Filing of Financial Accounts – Every one person Company is required to file AOC 4 for the Financial Accounts within 30 days from the conclusion of Annual General Meeting. An OPC shall submit its balance sheet, profit and loss account, statement of change in equity annually. Further, the OPC has been exempted from submitting the cash flow statement thus it is not required to submit cash flow statement like every other form of company.
Holding board Meeting- Every OPC is required to hold two board meetings in a year with the gap of 6 months. The gap between two meetings should not be less than 90 days. The provisions of the quorum of board meeting do not apply to OPC when there is only one director on the board.
Corporate Stationary – Every One Person Company is required to purchase the following stationary in order to fulfill the compliance requirements-
• Letterhead of the company- On all the letterheads, invoices, notices and other official documents of the OPC the name and registered office address of the OPC must be printed on.
• Name Board-One person companies must paint or affix the name of the company and address of its registered office outside every office or place in which it carries on business.
•Company rubber stamp- Every OPC must acquire the round rubber stamp bearing name of the company and a straight rubber stamp bearing the name of the company along with the designation of the authorised signatory. It is required for executing various legal documents like Board Resolutions, bank account opening forms, cheques, etc.
Opening a Bank Account
After its incorporation, it is mandatory for every one person to open a bank account in its own name. Every one person company is required to submit the following documents in order to open a current account in the name of the OPC:
• Self-attested copies of OPC Certificate of incorporation
• Memorandum of Association of OPC
• Articles of Association of OPC
• Resolution to open bank account for Company
• Copy of PAN allotment letter
• Copy of the telephone bill
• Identity proof of the Director
One point to be noted here is that the documents submitted for the opening of bank account must be self-attested with the seal of the company.