A One Person Company (OPC) has less complex compliance requirements than other forms of corporations, but is nonetheless required to file annual returns under the Companies Act, 2013. Non-compliance may be punishable and may have an impact on the legal status of the company.
This blog will provide a clear picture of what OPC owners should do to comply with annual compliance requirements in Chennai, including the forms to be used, statutory due dates, and penalties for non-compliance, to ensure OPC owners are legally compliant and not subjected to unwarranted penalties.
Introduction
A One Person Company is the business structure of choice among solo entrepreneurs who would prefer limited liability with business recognition and relatively less compliance cost. Although OPCs do not bear some of the requirements that are imposed on private limited companies, OPCs are not spared and must be able to meet certain annual compliance requirements.
The OPCs in Chennai are subjected to central corporate laws as in any other part of India, and they are registered as such and the filing to the Registrar of Companies (ROC). By knowing the forms, timeframes, and fines, it is necessary to have a smooth business performance and to be under its active status.
Overview of Annual Compliance for OPC
Annual compliance is a set of filings and disclosures that an OPC is required to carry out on an annual basis to the Ministry of Corporate Affairs (MCA). Such filings provide accountability and transparency, besides providing updated records of the financial and operational position of the company.
Even though OPCs do not have to conduct an Annual General Meeting, they are still obliged to the rules of financial reporting and filing of ROCs.
Mandatory Annual Forms for OPC
Form AOC-4 is one of the most important filings of an OPC that is used to file the financial statements of the company. This will consist of balance sheet, profit and loss account, report of the auditors, and notes to accounts.
The other filing that is mandatory is Form MGT-7A, which is the annual return that is applicable to OPCs and small companies. This form entails information on shareholding, management and other statutory information of the firm.
Besides these, OPCs must keep statutory registers, update records and keep accounting and auditing standards.
Due Dates for OPC Annual Filings
Form AOC-4 is to be submitted within 180 days after the financial year. As OPCs do not need to conduct an AGM, the due date is computed from the end of the financial year, which is normally on 31st March.
Form MGT-7A should be submitted within 60 days of the date on which annual financial statements were recorded in the books of the company, which usually coincides with the date of approval of the financial statements by the sole member.
These forms need to be filled out on time to prevent late payment and fines.
Audit Requirement for OPC
All OPCs must engage a statutory auditor and get their financial statements audited on an annual basis. The annual filings also comprise the audit report.
Under ordinary circumstances, audit compliance cannot be dispensed with, regardless of the high turnover rate or low number of transactions of the OPC.
Income Tax and Other Compliance Obligations
Other than MCA filings, OPCs are also required to meet the requirements of income tax. This involves submitting the income tax return within the stipulated due date and ensuring payment of the tax.
In case the OPC is registered under GST or any other local laws, further periodic compliances can be enforced depending on the type of business conducted in Chennai.
Sanctions against Non-Compliance
Not filing Form AOC-4 or MGT-7A within the stipulated time would result in extra charges on a daily basis. These late charges may add up and lead to huge financial liability.
Failure to comply further will also result in the disqualification of the director, which will place the company in an inactive state or lead to legal action by the Registrar of Companies. Failure to do so may also have additional implications on the company in terms of its credibility with the bank, investors, and even with the regulatory bodies.
Importance of Timely Compliance
The routine compliance will keep the OPC in a legal limbo and prevent unwarranted examination by the regulating bodies. It also assists in developing credibility with the financial institutions, vendors and clients.
Clean compliance records are of special importance to OPCs intending to convert to a private limited company at a later date or require funding.
Conclusion
Even in One Person Companies, where compliance is not as complex as in other companies, it is still mandatory and vital. Submission of the required forms on the due dates assists OPCs in Chennai in evading goods and in being law-abiding corporations.
The owners of OPCs can focus on business expansion without being hindered by regulations, as it remains compliant with ROC filing and audit requirements, as well as tax obligations. The appropriate management of compliance is not only an essential requirement of the law but a prerequisite to the successful and professional running of a business.
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