Declaration for Commencement of Business within 180 Days

Form INC-20A is a mandatory declaration under the Companies Act, 2013 for companies incorporated in India after November 2, 2018. This declaration form must be filed with the Registrar of Companies (ROC) to confirm that the company has fulfilled the prerequisites to commence business operations.

In this article, CA Manish Mishra talks about the mandatory provision of filing INC-20A within 180 days of incorporation.

What is Form INC-20A?

Form INC-20A is a statutory declaration that:

- Certifies the company has received the subscribed share capital from its shareholders.

- Declares compliance with Section 10A of the Companies Act, 2013.

- Is a prerequisite for starting business operations or borrowing funds.

Applicability of Form INC-20A

• Private Limited Company
• Public Limited Company

- Exemptions:

Companies without share capital and specific government-notified entities are exempt.

When to File Form INC-20A?

The form must be filed within 180 days of incorporation. Failure to file within the stipulated time can lead to penalties and other legal consequences.

Key Requirements for Filing Form INC-20A

• Ensure the company has received the initial subscribed capital in its bank account.
• Open a corporate bank account in the company’s name.

• Bank Statement: Proof of the deposit of subscribed share capital.
• Certificate of Subscription: Declaration from the subscribers stating their contribution.
• Proof of Registered Address (if not already submitted during incorporation).

• The form must be digitally signed by a director of the company using a Digital Signature Certificate (DSC).

• The form requires certification by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (CMA).

Steps to File Form INC-20A

- Login to the MCA Portal: Access the Ministry of Corporate Affairs (MCA) website.

- Download Form INC-20A: Fill in the required details, such as CIN, company name, and declaration.

- Attach Documents: Upload proof of share capital deposit and other supporting documents.

- Digital Signature: Ensure the form is signed by a director and certified by a professional.

- Pay Fees: Submit the form along with the prescribed filing fee based on the company’s authorized capital.

- Submission: File the form online and download the acknowledgment receipt.

Consequences of Non-Compliance

Monetary Penalty:

Company: ₹50,000

Directors: ₹1,000 per day (up to ₹1,00,000)

Deactivation of CIN:

The company’s Corporate Identification Number (CIN) may be deactivated.

The company will be unable to file other statutory forms or start operations.

Other Penalties:

The company may be struck off the register.

Legal action may be initiated against the directors.

Importance of Filing Form INC-20A

Legal Compliance: Filing ensures the company complies with Section 10A of the Companies Act, 2013.

Eligibility to Start Business Operations: It is a mandatory step for operating legally.

Access to Credit: Companies cannot borrow funds or raise loans without filing Form INC-20A.

Avoid Penalties: Timely filing prevents financial and operational repercussions.

Conclusion

Filing Form INC-20A is a critical step for new companies in India to commence business legally. Adhering to this requirement ensures compliance with statutory obligations, enabling smooth operations and avoiding severe penalties. Companies should prioritize the timely filing of this declaration for a hassle-free start.

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