Closure of OPC

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Closure of OPC - An Overview

One Person Company also known as OPC, is a company incorporated by a single person. Earlier a single person was unable to incorporate a company, but due to implementation of section 2(62) of the Companies Act 2013 it has become possible.  

Section 2(62) of the Companies Act,2013 defines a one-person company as a company that has only one person as its member.  

Furthermore, members of a company are nothing but subscribers to its memorandum of association (MOA), or its shareholders. So, an OPC can be viewed as a company that has a mere one shareholder as its member. 

It is a company where the compliance requirements and legal requirements are lesser than that of a private company. 

The Companies Act, 2013 provides that an individual can even form a company with one single member and one director. The director and member can be the same person.  

Even though OPC has just one member, it is legally required to follow compliances similar to other registered entities. It is compulsorily required to file all regulatory compliances and regular returns on a timely basis even if it is inoperative, unless it has filed the closure documents with the concerned Registrar of Companies (ROC). 

Sometimes it is a good option to file for closure of OPC, when the member of the company is getting relieved from fulfilling the legal and regulatory compliances. 

The procedure to close an OPC is guided by a set of rules under MCA. If the closure of OPC is not properly undertaken, penalties and fines nay be warranted including for the reason of non-compliance. 

If an OPC is inoperative for more than a year from the date of incorporation then the owner may apply for closure of the company under the normal procedure or Fast Track Exit (FTE) scheme of the MCA.  

It also has an option to voluntarily wound up and in some cases, the winding up of OPC is done by the order of the tribunal. 

Methods of Closing OPC 

The Process of closing a One Person Company (OPC) is prescribed under the Companies Act 2013. Under the Companies Act we can see a provision named Strike off or company closure.  

Company closure procedure in India is done as per newly notified rules Companies (Removal of Names of Companies) Rules, 2016 which is governed by section 248 of Companies Act, 2013.  

Section 248 to 252 of the Companies Act, 2013 provides the procedure of striking off company names by the ROC or voluntary strike off by the company.  

Strike off of a company name is the process closing an inoperative company in a faster manner. It is the simplest way to dissolve a company.  

Following are the two ways for closing an OPC: 

  • Winding-up 

The dissolution of OPC is done by having the approval of the majority of creditors participating in the meeting.  

Then the board must submit a request (in writing or electronic form via the company registration portal).  It should provide the dissolution resolution and the minutes of the general meeting. 

Winding up is a long process that requires the appointment of a liquidator to manage the affairs of the wound-up company. 

  • Striking off 

Striking off or removal of OPC through the Fast track exit scheme is a less complex method for closure of OPC. 

When OPC gains the status of a dormant company it can be wound up with a fast-track procedure through STK-2 form. 

Company closure is filed under Form STK 2 (Earlier form was FTE) along with the government fees of ₹5000 accompanied by essential documents. However, it can only file this form owing to following conditions: 

  • Paying all the Liabilities:  

Liabilities should be paid off and a No Objection Certificate should be obtained from the creditors. 

  • Need 75% Consent:  

This condition does not apply to One Person Company (OPC) in India because under OPC all the 100% shares are owned by the individual and hence he needs no approval from any other person. 

  • Prepare Application:  

The application should be drafted and filed with ROC through form STK – 2. 

Documents Required to Close OPC

List of the following documents are needed for closure of an OPC: 

  1. Company’s Memorandum of Association (MOA), Article of Association (AOA), Certificate of Incorporation, PAN card, and other registration certificates if any. 
  2. The financial statements of the Company for the most recent year prepared prior to 30 days of filing the application.  
  3. Indemnity Bond notarized by Directors (STK 3). 
  4. A statement regarding pending litigations against the OPC if any.  
  5. Statement of Accounts containing assets & liabilities of the Company audited by CA.  
  6. An affidavit in Form STK 4 by sole Director 
  7. Signed resolution by the sole member. 
  8. PAN card of OPC. 
  9. Bank account closure certificate and bank details. 
  10. No Objection Certificate (NOC) by creditors, if any. 
  11. No Objection Certificate from Tax

Advantages of Closing OPC

  • Needless to pay compliance fees when the business is inoperative. 

  • The burden of yearly regulation and adherence to legal compliances doesn’t arise once the OPC name is struck off. 

  • Penalties are not levied unnecessarily. 

  • There is no obligation to maintain accounting records. 

  • It saves companies resources that were earlier engaged in auditing and unnecessary record maintenance. 

  • Conditions before Closing OPC 

For striking off the name of a company following things should be kept in mind: 

  1. The OPC should have not changed its name or shifted the registered office from one state to another in the previous three months from the date of application. 
  2. In the previous three months, the company should have not disposed off any value of property or rights held by it, immediately before stopping trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business. 
  3. In the preceding three months, OPC has not engaged itself in any other business except for what it has been created for and for the purpose of making an application for strike off as a statutory requirement. 
  4. The procedure for strike off can be initiated by active company and dormant company and not by section 8 company.

How to close OPC company in India?

Choosing EAUDITOR Office

FAQs about Bookkeeping & Accounting

A company strike-off is?the process when the companies name is removed from the Companies House register and ceases to exist.

Yes, Form INC-4 will be helpful in changing the Member/Nominee.

Yes, you can sell OPC to another person.

Closure of the OPC can be done voluntarily through filing of the form STK-2 with registrar. Winding up of the company can be done voluntary or by the order of the Court by appointing an official liquidator to monitor the process of Winding up.

Sub-section (1) of section 96 of Companies Act, 2013 provides that?an OPC is not required to hold its annual general meeting.

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