CLOSURE OF ONE PERSON COMPANY|OPC

If an OPC is inactive for more than one year from the date of incorporation then the owner can apply for the closure of the company under the normal procedure or Fast Track Exit (FTE) scheme of the Ministry of Corporate Affairs. An OPC can be wound up voluntarily or by the order of the Tribunal. As even though it is inactive or not conducting any business activity, it is mandatory to file all regulatory compliances and annual returns on regular bases, unless it has filed the closure application with the concerned registrar of companies. Therefore it is better to file for the closure application, so the members of the company can be relived from fulfilling the legal and regulatory compliances.

1. WINDING UP

   Section 425, of Companies Act, 1956, deals with the process of winding up.

   The winding up of a company can be done either -

   (a) By the Tribunal (in case of compulsory winding up)

   (b) By Voluntary winding up

   (C) subject to the supervision of the Court

   The following steps of winding up which are summarized below (except Voluntary winding up):

   a) Issuing a written demand for debt payments to the proposed company

   b) Submit a winding up petition to the court and the company

   c) Court hearing for the petition

   d) Issuing of winding up order by the court

   e) Meeting of creditors and other relevant parties

   f) Appointment of a liquidator

   g) Comprehension and distribution of company’s assets to the creditors

   h) Realize of duties for liquidator

   i) Dissolution of the company

   
   

   OVERVIEW OF WINDING UP OF OPC
   

   Voluntary winding up which may be:

   i) Member’s Voluntary winding up

   ii) Creditor’s Voluntary winding up

   In case of voluntary winding up, the whole process is done without court supervision. When the winding up is complete, the relevant documents are filed before the court for getting the order of dissolution. A Voluntary winding up can be proceeding by members or creditors. The conditions in which company may be wound up voluntarily are:

   a) When the fixed period for the duration of the company in its articles has expired

   b) When an event on the occurrence of which the company is to be dissolved as per its articles happen.

   c) The company resolves by special resolution at the general meeting to be voluntary winding up.

2. STRIKE OFF AN OPC UNDER SECTION 560

   Section 560, of the Companies Act, 1956, deals with strike off provisions of a defunct company. Any defunct company desiring to strike off its name from the register of Registrar of company can apply for strike off its name from the register maintained by Registrar of company as per Guidelines issued vide General Circular No. 36/2011 dated 7.6.2011. Similarly, ROC also has the power to strike off any defunct company after satisfying to have reasonable cause. But before passing any order in regards to strike off, an opportunity of being heard will be provided to the defunct company as per the procedure u/s 560.

• Incorporation documents that is Memorandum of Association and Article of Association, Certificate of Incorporation, PAN card and other registration certificates of OPC

• The financial statement of the Company for the recent year, prepared prior to 30 days of filing the application

• Details whether the company has been operating any activity for any period, If yes, since when the operations are discontinued

• A statement regarding pending litigations, if any involving the OPC

• Company should provide NOC for closure from creditors, if any

• NOC from regulatory bodies to apply for company closure from Income Tax Department, SEBI, RBI, etc. if relevant

• The application for Striking off the OPC

• Board Resolution in favor of the winding up of the company

• Consent Letter and Affidavit from Director of the company

• Consent of the Creditors of the OPC

• Indemnity Bond

• Statement of Accounts

• The Statement of the Assets and Liabilities of the company

The procedure for one person company closure voluntarily, involves the following steps:

• Passing a resolution with consent of the 2/3rd number of the creditors of the OPC, for voluntary winding up of the company

• The notice of this board resolution is to be submitted to the related registrar of companies within the 10 days of its approval from the creditors. A declaration is also needed to be submitted which contain the information that the OPC has no debts, or if there are some debts, these will be paid off through sales of its assets within one year.

• Filing the application for striking off the OPC in Form STK-2 with the concerned registrar of companies, along with the attachment of Board Resolution in favor of winding up, in case, STK-2 Form can be file in the case when the closing OPC has been inactive for one year after its incorporation, within the 30 days from the date of signing the statement of assets and liabilities of the closing OPC.

• The notice for winding up is also to be advertised in the Official Gazette and also in a newspaper which is commonly circulated in the district where the head office/registered office of the closing OPC is situated.

• Appointing a registered Liquidator for processing of necessary tasks associated with the winding up of the OPC. This liquidator is required to maintain and submit all required reports and accounts that is Submission of the Statement of Accounts, Statement of Assets and Liabilities, Indemnity Bond, etc to the Tribunal and also to the Registrar of companies.

• Lastly, if application is satisfactory, the Tribunal and the Registrar will pass the winding up, and announce the OPC closed.