Governing Section & Rule:
- Section 10A(1)(a) of Companies Act, 2013
- Rule 23A of Companies (Incorporation) Rules, 2014 inserted vide Companies (Incorporation) Fourth Amendment Rules, 2018.
What is INC – 20A?
It’s a Declaration by director to Registrar that “Every subscriber to MOA has paid the value of shares agreed to be taken by him.”
Applicability & Time Frame:
Result of Non-Compliance:
> Penalty to Company: Rs. 50,000.
> Penalty to every officer in default: Rs. 1,000 each day till the default continues subject to max. Rs. 1 lakh.
> Registrar may take initiatives to remove name of the Company from Register of Company.
> Additional fees for filling the form will be attracted.
Steps for filing INC-20A:
> Step 1: Enter CIN of the Company:
Basic details will be prefilled.
If email id is not prefilled then enter the mail id manually as it is mandatory.
> Step 2: Sectoral Regulation:
If the Company is governed by any Sectoral Regulator (SEBI, RBI, etc.) select YES, otherwise NO.
If YES is selected:
-
- Select the name of regulator (if name of regulator is not there select “others” and enter the name of governing authority).
- Enter Letter No. / Registration No.
- Enter date of Approval/ Registration.
Step 3: Attachments:
√ Proof of payment by subscribers for the shares subscribed:
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- Bank Statement of Company showing Credits of subscription money
- If paid through NEFT/IMPS or any else mode, receipt of it.
- If paid in cash, then the same can be deposited in bank and then submit the bank statement.
√ Certificate of Registration (If YES is selected in Sectoral Regulator):
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- g. Certificate of registration issued by RBI for NBFC Company.
√ Optional Attachments, if any.
Step 4: DSC:
To be digitally signed by the Director of the Company (he should not be disqualified); and Company Secretary, Chartered Accountant and Cost Accountant in Practice.
Fees for filling the Form:
| Nominal Share Capital | Fees Payable |
| Less than 1 Lakh | 200 |
| 1 Lakh – 4,99,999 | 300 |
| 5 Lakh – 24,99,999 | 400 |
| 25 Lakh – 99,99,999 | 500 |
| 1 Cr. or More | 600 |
Additional fees:
| Period of delays | Fees |
| Upto 30 Days | 2 times of normal fees |
| More than 30 Days – 60 Days | 4 times of normal fees |
| More than 60 Days – 90 Days | 6 times of normal fees |
| More than 90 Days – 180 Days | 10 times of normal fees |
| More than 180 Days | 16 times of normal fees |
Author Bio
Is the penalty for delay in filing mandatory? If there is a reasonable cause can the penalty be waived ?
IS THERE A COMPULSION THAT NO CREDIT OR DEBIT ENTRIES TO BE MADE IN BANK UNTIL THE SHARE CAPITAL IS INTRODUCED?
This Section is basically a reflection of Section 11(1)(a) of the Act which was omitted on 29th May, 2015 and the Certificate of Commencement which was required to be obtained under the previous Companies Act.
So, again the Act is amended to insert this requirement with certain modifications.
The term Commencement of Business & Exercising its Borrowing powers:
The act no were defines the term “Commencement of Business” or “Borrowing Powers”.
Commencement of Business: (Illustrative):
A Company cannot commence its business before filling of form INC-20A. Hence a Company cannot enter into binding contracts before filling of the said form. But it can enter into provisional contracts which would be binding only after filling of the said form.
Liabilities incurred by Company before filing of the said form are not binding on Shareholders.
A Company can issue prospectus inviting public to subscribe its share capital. It can also conduct its Board Meeting and carry out transactions like appointment of KMP, auditors, approving preliminary agreements, R.O. of Company, Disclosure of Interest, Opening of Bank account, Printing of Share Certificate, etc.
Borrowing Powers:
It refers to the power of Board to borrow monies under Section 179(3) (d) and Section 180(1) (c) which lays down restriction on the borrowing powers of the Board. A Company cannot exercise this power before filling of the said form.