Whenever we talk about business, one of the most accepted form of business in sole proprietorship. Of course we have many other form of business like company, partnership, LLP etc but sole proprietor ship is looked on as a model where there is high control and no distribution of dividend. These benefits came with many disadvantages also like high risk and unlimited liability.
As more persons want to avoid risk, they were reluctant to start sole proprietorship business. This negatively affected the creation of business culture and flow of funds to the market.
Companies Act 2013 came out with new change, which is one person company of OPC. This means even one person can create a company legally and enjoy the benefits of company like artificial legal person, perpetual succession, limited liability etc.
Of course the new form of business gives lot of flexibility and assurance to entrepreneurs, but they come with little compliances as they are registered under Companies Act 2013.
One Person Company (OPC) means a company which has only one person as a member as defined under Section 2(62) of Companies Act, 2013.
The member who constitute a OPC will be called as share holder and he also can be the director of the company. So we can say that an OPC is a company with one share holder as its member.
Section 96 of the companies act says that there is no requirement of Annual General Meeting for an One Person Company, but for the appointment of Auditors under section 139, an auditor of the company can only be appointed in an Annual General Meeting, so AGM is necessary.
Mandatory Attachments :
Mandatory Forms required to file:
Form ADT-1 for appointment of Auditor within 15 days of conclusion of Annual General Meeting.
Form AOC-4 for filling Financial Statements (i.e. Balance Sheet and Statement of P&L) and Abridged Board’s Report within 30 days of conclusion of Annual General Meeting.
Form MGT-7 for filling Annual Return within 60 days of conclusion of Annual General Meeting.
Another compulsory meeting for an One Person Company is it Board meeting. Board meetings are compulsory for a company form of business to manage its affairs as per the provisions of the Companies Act, 2013.
Section 174 (5) of the Companies Act, 2013 says that an OPC should hold at least one meeting of the Board of Directors has been conducted in each half of calendar year. Here we should note that calendar year mentioned and not financial or accounting year. It means the year will be calculated from 1st January to 31stDecember. The gap between two meetings should not be less than 90days.
Following can be seen as an indicative list of disclosures to be made by an One Person Company.
It is mandatory that the annual return should be made available in
the website of the company. So the company should disclose the web address of the company, where the annual return has been placed;
Disclose the number of meetings of the Boards;
Director’s Responsibility Statement also should be attached.
If the auditors reported any frauds, the Details of frauds as reported
by auditors to be disclosed to Central Government;
Explanations or comments by Board on every observation made by the auditor in his report;
The state of the Company’s affairs;
The financial summary or highlights also should be disclosed in proper format;
The material changes in the nature of business during the year and its impact on the financial position of the Company;
The details of appointment/resignation of directors with regard to the year of reporting;
Details of material orders passed by regulators/courts/tribunals which can impact the going concern status of the company and its operations in future;
The Board’s Report shall also include the particulars of the contract or arrangements entered with related parties in the Form AOC-2.
Needless to say that the laws are evolving and every years necessary updation or changes need to updated.