Compliance is a term or we can say a provision to maintain the company's annual filing, books of account and other statutory requirements. It is mandatory information needed to be informed to the central government. People need to spend some money on their Company so that their company runs uniformly without any legal barrier.
One Person Company is liable to certain Compliance which needs to be completed with a month from Date of Incorporation. A company should accept the foregone reality that compliance will help entrepreneurs to do business with comfort and ease. The concept of OPC was evolved to eradicate the limitation of a sole proprietorship which was introduced in Companies act, 2013. It is one of the newest and one of the most popular forms of Company. In OPC Person enjoys commencement of Business without any involvement of any other person.
In comparison with Private Limited Company OPC have lesser compliance formalities. Below is the mandatory compliance requirement.
After OPC registration it is recommended to purchase the following stationery for use with OPC compliance matters.
Name Board is the requirement of the company. Companies including an OPC are required to 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's Rubber Stamp is a round rubber bearing name of the company and straight rubber stamp bearing the name of the company along with the designation of the authorized signatory can be purchased from the local vendor. It is required for the execution of various legal documents like Board Resolutions, bank account opening forms, cheques, etc.
Letterhead is a printed heading which should be mentioned including name and registered office address of the OPC. It consists of all the forms of invoices, notices and other official documents of the company.
In the case of OPC, One Person Company must be mentioned in brackets below the name of the company, wherever its name is printed whether it has been affixed or engraved.
OPC PAN Application
Obtaining PAN card is the first step after incorporation of any corporate legal entity. PAN can be applied online after incorporation to receive the PAN allotment letter. The letter must then be signed by the OPC Director, sealed with a company rubber stamp and couriered to the NSDL office. PAN Card will be issued in about 15 days after receipt of the hard copy PAN application from the applicant.
Opening OPC Bank Account
Proprietorship bank account opening is a bit tricky but opening bank account for an OPC is very simple. Additional tax registrations or documents are required to open a bank account for an OPC. According to the Reserve Bank of India's KYC norms, the following are the documents required to open a current account in the name of an OPC:
- Self-attested copies of OPC Certificate of incorporation
- Memorandum of Association and Articles of Association
- Open Bank for Company
- Copy of the telephone bill;
- Copy of PAN allotment letter;
- Identity proof of the Director
Documents submitted for opening of the bank account must be self-attested with the seal of the company. Hence, it is important to obtain company seal and company letterhead after incorporation of the OPC.
Appointment of Auditor
Appointment of the Auditor of the Company is a requirement, it can be individual; practicing Chartered accountant within 30 days of incorporation. In case of OPC as well, an Auditor must be appointed by the Director of the OPC for auditing of financial statements of the company.
OPC Annual General Meeting
All companies other than an OPC is required to hold an AGM (Annual General) each financial year with not more than fifteen months elapsing between the date of one annual general meeting of a company and that of the next. However, in case of an OPC where there is only one director on the Board of Directors, then it is sufficient for the resolution by one Director be passed and entered in the minutes-book. The signed and dated resolution by Director of a OPC is deemed to be the meeting of the Board of Directors for all the purposes under the Companies Act. Also, provisions relating to a quorum for meetings of Board do not apply to an OPC where there is only one Director on its Board of Directors.
OPC Financial Statements
All companies are required to prepare and file with the ROC, the following financial statements:
- Cash flow statement for the financial year
- A balance sheet as at the end of the financial year;
- Profit and loss account;
- Statement of changes in equity, if applicable;
- Explanatory note forming part of any document.
Compliance in OPC is needed for the rapid growth and it is necessary that it stays clear of unnecessary legal paraphernalia. Falling in line with the compliance system ensures that in certain cases it can all be sorted with a warning but when the issue is a graver one, the companies end up paying fines for not following the compliance.
Reasons why should OPC be compliant
Improved Public Relations- Marketing and advertising become easy after fulfilling all the legal obligations. The company becomes Job Creator encouraging more and more people becoming part of the Company. Good compliance management creates a good reputation in the market.
Employee retention There are many compliance issues that deal with the benefit of the employees, some these even talk about protecting the employees. For a company that adheres to these guidelines, it becomes easy to retain the employees as the workforce of the company feels home in the company and strives to work for the betterment of the business and the product.
Thus, for a One Person Company, which anyway is bound by a lot of compliance guidelines, it is paramount to manage all that. As in the longer run, it showers the company with all the benefits that may or may not be visible in the beginning.
- Smooth operations
Certain rules help more than they harm. Rules related to discrimination and harassment help create a better working environment for employees which can lead to better productivity. Also, better security financial as well as physical help employees provide more to the company.