WHAT ARE THE COMPLIANCE REQUIRED OF OPC?
Here are the compliance requirements of an One Person Company (OPC) in India:
- Incorporation: The first step in complying with the requirements of an OPC is to incorporate the company. This can be done by filing the necessary documents with the Registrar of Companies (ROC). The documents that need to be filed include the Memorandum of Association (MoA) and the Articles of Association (AoA). The MoA is the company’s constitution, and it sets out the company’s name, objects, and capital structure. The AoA is the company’s bylaws, and it sets out the rules and procedures for how the company will be managed.
- Appointment of a director: An OPC must have at least one director. The director can be the sole shareholder of the company. The director is responsible for managing the company’s affairs and ensuring that the company complies with all applicable laws and regulations.
- Filing of annual returns: OPCs are required to file annual returns with the ROC. The annual return must contain information about the company’s activities, its directors, and its shareholders. The annual return must be filed within 30 days of the close of the financial year.
- Filing of financial statements: OPCs are also required to file their annual financial statements with the ROC. The financial statements must be audited by a chartered accountant. The financial statements must be filed within 30 days of the close of the financial year.
- Payment of taxes: OPCs are required to pay taxes on their income in the same way as other companies. They are also required to withhold taxes on payments made to their employees and other third parties.
Compliance with other laws: OPCs are also required to comply with other laws, such as the Companies Act, the Income Tax Act, and the Labour Laws
Here are some of the penalties for non-compliance with OPC requirements:
- Fines: The ROC may impose fines on OPCs that fail to comply with the requirements of the Companies Act. The amount of the fine will depend on the nature of the non-compliance.
- Imprisonment: In some cases, non-compliance with the Companies Act may result in imprisonment. The maximum term of imprisonment is two years.
- Liquidation: In the most serious cases, non-compliance with the Companies Act may result in the liquidation of the company. This means that the company will be dissolved and its assets will be distributed to its creditors.
It is important to note that these are just some of the penalties that may be imposed for non-compliance with OPC requirements. The actual penalties that will be imposed will depend on the specific circumstances of the case.
Here are some tips for ensuring compliance with OPC requirements:
- Keep good records: OPCs are required to keep certain records, such as the company’s MoA, AoA, financial statements, and annual returns. These records must be kept for at least six years.
- Make timely filings: OPCs are required to file certain documents with the ROC on a timely basis. These filings include the annual return, financial statements, and changes to the company’s constitution.
- Comply with all applicable laws: OPCs are required to comply with all applicable laws, including the Companies Act, the Income Tax Act, and the Labour Laws.
- Seek professional advice: If you are unsure about any compliance requirements, it is advisable to seek professional advice from a lawyer or accountant.
ADVANTAGES OF COMPLIANCE
- Simplified compliance requirements: OPCs have fewer compliance requirements than other types of companies. This makes it easier and less expensive to comply with the law.
- Limited liability: The liability of the members of an OPC is limited to the amount of their investment in the company. This means that the members’ personal assets are protected in the event that the company fails.
- Ease of management: OPCs can be easily managed by the sole member. This can save time and money on administrative costs.
- Tax benefits: OPCs can enjoy certain tax benefits, such as the lower rate of taxation on dividends.
DISADVANTAGES OF COMPLIANCE
- Limited access to capital: OPCs can only raise capital from the sole member. This can limit the company’s growth potential.
- Lack of flexibility: The structure of an OPC is relatively inflexible. This can make it difficult to change the company’s constitution or make other changes to the company’s structure.
- Personal liability of the member: In some cases, the sole member of an OPC may be personally liable for the company’s debts. This is if the company fails to comply with certain legal requirements, such as filing its annual returns.