Introduction  

eForm INC-20A (Declaration for commencement of business) is required to be filed pursuant to Pursuant to Section 10A(1)(a) of the Companies Act, 2013 and Rule 23A of the Companies (Incorporation) Rules, 2014.

As per new section inserted after section 10 of the companies act 2013, section 10A says a company incorporated on or after 02//11/2018, having share capital shall not commence its business or exercise any borrowing powers unless a declaration is filed by the directors within 180 days from date of incorporation of company in INC form 20A (notified on 26/01/2019), with the Registrar of Companies that ‘every subscriber to the MOA has paid the value of the shares agreed to be taken by him on the date of making of such declaration” and the contents of the said form shall be verified by a Company Secretary or a Chartered Accountant or a Cost Accountant, in practice:

Provided that in the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.

♦ Is it mandatory to file form INC 20A?

Yes, it is mandatory to obtain certificate of Commencement of Business by filing form 20A

♦ Who shall file “Form INC 20A”?

  • all the companies incorporated on or after 02//11/2018
  • and having a share capital to file form 20A

♦ Who shall not file “Form INC 20A”?

  • Companies incorporated before 02//11/2018
  • and limited by guarantee not having share capital

♦ What is the due date of filing form INC 20A ?

Due date for the first time filing of “Form 20A”

Particular Due Date
Company incorporated on or after 02//11/2018 From the date of incorporation within 180 days

♦ What details are required to be furnished in “Form 20A”?

Declaration that all the subscribers to the MOA have remitted the total value of the shares agreed to be taken by them  in the Companies Bank Account.

 What are the attachments to the form 20A?

Subscribers proof of payment for value of shares

One has to attach the Bank Account statement of Company having all credit entries for receipt of subscription money received from all subscribers to MOA.

♦ What if Bank Statement is not available?

valid payment proof like NEFT / IMPS receipts.

♦ What are the Penalty if not Filed the form INC- 20?

  • Company liable to pay Rs. 50,000
  • every officer who is in default liable to pay Rs. 1000/- per day of default upto a Maximum Rs. 1,00,000/-.

♦ What are the Consequence if form is not Filed within time?

  • Registrar may initiate action for the removal of the name of Company
  • Company cannot borrow money
  • Company cannot start business

Extract of Section 10A of Companies Act, 2013:

Section 10A:

(1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless2

(a)    a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

(b)   The company has filed with the Registrar a verification of its registered office as provided in sub–section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.]

Extract of Rule 23A of the Companies (Incorporation) Rules, 2014

Rule 23A: Declaration at the time of commencement of business‑

The declaration under section 10A by a director shall be in Form No, 1NC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the contents of the said form shall be verified by a company Secretary or a chartered Accountant or a cost Accountant. in practice: Provided that in the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.

Source link:

http://www.mca.gov.in/MCA21/dca/downloadeforms/eformTemplates/NCA/Form_INC-20A.zip

Companies (Amendment) Ordinance, 2018

Companies (Amendment) Ordinance, 2019

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19 Comments

  1. Madan mohan jangid says:

    Hii Sir.. If company did not submit inc 20A form within 180 days from date of incorporation. Is their any penalty in that situation..

    1. csmanjulaur says:

      CLARIFICATION ON CONDONATION OF DELAY FOR E-FORM INC-20A:
      1. Form INC-20A is required to be filed within 180 days of the date of incorporation of the Company;
      2. If you try to file the form after the above mentioned period then it gives the error “Please file form INC-28 for condonation of delay and then proceed to file form INC-20A”
      3. Form INC-28 is an eform to be filed for filing of “Notice of Order of the Court or any other competent authority”. So the process of condonation can not be completed with the said eform;
      4. As per Section 460 of the Companies Act the applications which could not be filed within the time specified therein than CG may for the reasons record in writing can condone the delay;
      5. An application under the said Section shall be filed in E-form CG-1; but for the application of condonation of delay for delay in filing the form INC-20A the form CG-1 is giving the error “Form Filing is not allowed since Declaration for Commencement of Business is not filed in form INC-20A. Please file form INC-28 for condonation of delay and proceed to file form INC-20A”;
      6. As per the current scenario there is no procedure or process under the Companies Act, 2013 for the said condonation;
      7. As per our opinion currently there is no solution except waiting for MCA clarification or a new revised form being deployed which shall allow filing of the said form with additional fee, because the condonation of the said form will impose another time period of a couple of months which could be harmful for the new startups as they would not be able to conduct the business and it would not be a good example of ease of doing business.
      8. As per the resolution of a ticket and discussion the said resolution or clarification might be received within next 10-15 working days.

  2. Gomathi says:

    If a company wants to obtaining status of dormant company before 180 days, do they need to file INC 20A. Declaration for commencement of business? Please help me out.

  3. Mustanir Shayerwala says:

    A comapny was incorporated on 14.3.17 no bank account was opened and comapny did not received any share capital money from members can i file MGT-7 as company is having no share capital for 17-18? if not then what are the steps for compliance?

    1. csmanjulaur says:

      this section 10A implies on companies incorporated on or after 02//11/2018. So if you have a company which has not opened the bank account can do the business in Cash also but the shareholder must accumulate the share capital money for this.There is no question of Filling MGT-7 and AOC-4 without receiving any subscription money.

  4. Ayushi Sharma says:

    Please anyone help me out in the matter that whether it is mandatory to file E-Form INC-22 to ROC in case of newly formed company even if the details of Registered Office address was disclosed at the time of incorporation of the company.

    1. csmanjulaur says:

      You must file inc 22 if during the incorporation you have attached NOC and the rent agreement is due because of a incorporation.

  5. sajid says:

    Hello,
    As said in above articles to file a declaration. Is there is any specific format for it. or self declaration( what is need to be mention in the declaration) can anybody help me out. Thanks in advance

    1. csmanjulaur says:

      It can be a simple self declaration that states that the subscriber has deposited the required amount in the companies bank account with in the time limit and the details of transaction may also be stated by him.

  6. SKDAS says:

    Hi, we incorporated a Pvt.ltd in April 2019 (2 partners). Our subscription amount is 10 lakh, but we are not in the position to collect and deposit in account. We opened current account. Kindly advise what to do. Any provision to apply without share capital or any minimum amount for service sector.

    1. csmanjulaur says:

      Sir there is no such provision one has to deposit the said funds in the bank account. 180 days are given for this reason only so that the subscribe can arrange the committed funds.

  7. Arvind Kumar Choudhary says:

    My client has not filed INC20A with in 180 days. now for filing of INC20A it is asked to file INC28. And for INC 28 order for condonation of delay is required.

    My question is from which authority i can get the same . And also the procedure . TIA

  8. Jay says:

    My company was incorporated on 15.11.2018. Form 20A is not yet filed.
    Should i get a condonation of delay order and file form 28? how can i get a condonation of delay for Form 20A?
    Could you please help with the correct idea?

  9. Rameez Siddiqui says:

    Hi.
    I got the registration of my company on 1/4/2019 and started the buisness without submitting inc 20. Have did all transctions to vendors through my personal account.

    Is the penalty will be charged if I submit inc20 now??

  10. Deeraj says:

    What if the subscribers to memorandum has paid the amount in cash ??? or is it mandatory to pay it through the bank ??. If cash mode is allowed what will be the proof of payment.

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