As per section 10A (1) of the Companies Act, 2013 and Rule 23A of the Companies (Incorporation) Rules, 2014 Every company incorporated on or after 02 November 2018 (having share capital) must file a Declaration of Commencement of Business with the Registrar of Companies (ROC) before starting any business or exercising any borrowing powers. This was inserted by the Companies (Amendment) Ordinance, 2018, WEF 01.11.2018.
Relevant Sections, Rules and Forms
The Companies Act, 2013 – Sections 10A, 12, 118, 173 and 403
The Companies Incorporation Rules, 2014 – Rule 23A
Forms – ROC eForm INC-20A
The company must fulfill the following 2 Conditions
-Subscription money must be received from the subscriber to the memorandum
-The Company must have registered office
Note 1: Money must be transferred from subcriber bank account and Cash deposit is not desirable and will lead to query by the department.
Note 2: The company must file Form INC-22 if the registered office was not confirmed at the time of incorporation.
Required Approvals
1. Board Resolution
2. Declaration of suscriber money from all the subscriber as agreed
3. Proof of Receipts of subsciber money received
4. Approval of Sectoral regulatory authority for the applicable cases – RBI, SEBI, IRDA.
5. Photograph of Registered office showing external building and inside office also showing therein at least one Director
Time Limit:
The form should be filed with ROC within 180 days from the date of incorporation of the company along
with attachents with fees as per the Companies (Registration Offices & Fees) Rules. 2014.
Procedure to call board meeting:
1. Prepare notice of board meeting along with draft resolution to be passed.
2. Send notice to all the directors at least 7 days before the date of board meeting or in such manner as prescribed under section 173(3) of the Companies Act, 2013.
3. Conduct the Board meeting and pass the resolution to take note of the receipt of subscription money. Take note of Preliminary expenses incurred by the subscriber to the MOA. Take note of sectoral approval if any. To Authorise the director to sign and submit e Form INC-20A.
4. Prepare the draft minutes of the board meeting and ciculate within a period of 15 days of conclusion of the meeting.
Companies which are not required to file Form 20A:
Companies incorporated after 2nd November 2018 without share capital.
A declaration under section 10A from the directors has to be provided in the form of a Board Resolution in the eForm itself.
Penalties for Default:
A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement.
Every such officer in default shall be liable to a penalty of Rs 1,000 per day for each day during which the default continues subject to a maximum of Rs 1,00,000.
If the Registrar has reasonable grounds to believe that the company is not carrying on any business or operations even after 180 days of incorporation, the registrar may remove the name of the company from the Register of companies.
Fee for filing eForm for companies having no share capital is Rs 200 only.
No certificate will be issued by the Ministry of Corporate Affairs.
Post Compliance Obligations:
1. The Companies are required to file all other returns like MSME and DPT3
2. The Copanies are rquired to file all other returns like AOC-4, MGT 7/ 7A annually to ROC as per section 92 and 137 of the Companies Act, 2013.
3. Maintenance of all the statutory records including register of members, register of Directors and register of charges as mandated by the Companies Act, 2013.
4. Holding Board Meeting and Annual General meeting as per section 96 of the Companies Act, 2013.
5. Compliance with other regulatory requirements such as Income Tax, GST, Labour Law, Customs, ESI and PF.
SAMPLE BOARD RESOLUTION
APPROVAL OF DRAFT OF DECLARATION FOR COMMENCEMENT OF BUSINESS “RESOLVED THAT pursuant to Section 10A of the Companies Act, 2013 and Rue 23 A of the Companies (Incorporation) Rules, 2014, including any statutory modification(s) and re-enactment(s) thereof for the time being in force, subject to Articles of Association of the company and subject to such approvals, consents, sanctions and permissions from any appropriate authority(ies) as may be necessary, confirmation from the board be and is hereby given that the subscribed money in full has been received from each subscriber to the memorandum of association as agreed by ham/her and has been deposited into bank account.
“RESOLVED FURTHER THAT the draft of declaration prepared as per provision of Section 10 A of the Companies Act, 2013 and rules made thereunder, as placed before the Board duly initialled by the Chairman for the purpose of identification, be and is hereby approved.
“RESOLVED FURTHER THAT Mr , a Director of the company be and is hereby authorised to certify the resolution and to sign digitally the e-Form INC 20A and to file the declaration along with form with the Registrar of Compames,. . . . . . . . . . so that the business of the company may be commenced.
“RESOLVED FURTHER THAT M/s , Company Secaelalies / Chartered Accountants / Cost Accountants having office at , be and is hereby engaged to certify and file the e-Form INC 20A with the Registrar of Companies . . . . . . . .”.
FORMAT OF DECLARATION
I. . . . . . . . . . . . . . .S/o . . . . . . . . . . . .. . . . R/o . . . . . . . . . . . . . . . ., being the authorised director of the company . . . . . . . . . . . . (CIN . . . . . . . . . . . . .) having its registered office at . . . . . . . . . . . . . . . do hereby solemnly confirm and declare as under :
1. That I am duly authorised director to give said declaration and copy of board resolution is attached with this declaration.
2. That the registered office address of the company, . . . . . . . . . . . Is situated at . . . . . . . . . . . . and duly verification and required e-Form INC-22 bas been filed with the Registrar of Companies vide SRN . . . . . . . . . . Dated . . . . . . .
3. That the authorised share capital of the company is Rs …. . .. Divided into . . . . . . . . . Equity and Preference shares respectively of Rs . . . . . . . . . Each .
4. That the suscribed captal of the company (subscibed by the subscribers of the MOA of the company) is Rs . . . . . . . Divided into . . . . . . . . shares of Rs . . . . . . . each.
5. That the subcribed money in full has been received, in bank from each subscriber as agreed by him/her and has been deposited in to bank account.
Place :
Date :
Signature
Director (Din . . . . . . .)
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