Form INC-20A (Declaration for Commencement of Business)

As per the MCA Notification dated 18th December, 2018, every company who is incorporated on or after 2nd November, 2018, is required to file e-form INC-20A within 180 days from the date of incorporation and such form should be verified by Company Secretary, Cost Accountant and Chartered Acco

Declaration for Commencement of Business is not a new concept, earlier it was already included in Companies Act, 1956. Only public companies were required to file declaration for commencement of business in e-form INC-21 (Declaration prior to the commencement of business) and private companies can start their business activity without compliance of them.

Reason/logic for re-introduction of new e-form INC-20A

There are so many reasons or logic behind the insertion of new section 10A of the Companies Act, 2013 read with rule 23A (Declaration at the time of commencement of business) Companies (Incorporation) Rules, 2014. Example: Allot shares without receiving subscription money or To protect lenders or banks or financial institutions and many more.

Applicability and Time Limit

e-Form INC-20A is required to be filed pursuant to section 10A(1)(a) of the Companies Act, 2013 and Rule 23A of the Companies (Incorporation) Rules, 2014. As per section 10A(1)(a) every company incorporated after the commencement of Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing power until and unless a declaration is filed by a director within a period of 180 days of the date of Incorporation of the Company.

Consequences if not filed within prescribed period

If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of Rs. 50,000/- (Fifty Thousand Rupees) and every officer who is in default shall be liable to a penalty of Rs. 1,000/- (One Thousand Rupees) for each day during which such default continues but not exceeding an amount of one lakh rupees.

What are the consequences if e-form INC-20A filed beyond 180 days

In case of a form filed beyond 180 days, then the company will have to pay additional fees and ROC has power to impose a penalty which is not less than 50,000.?