E-Form INC -20A: Declaration for the Commencement of Business
- Every company incorporated on or after 02nd November 2018
- Having Share Capital
- To be filed by the Directors of the company
- Within 6 months of Incorporation
- To be verified by a Chartered Accountant/ Company Secretary / Cost Accountant in practice
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As per the Companies (Amendment) Ordinance 2018, all the companies registered on or after 2 November 2018 are required to file a certificate of commencement of business. Form 20A is a declaration filed by the directors within 180 days of the date of incorporation of the company. It is important to file this form as non-filing attracts huge penalties.
Penalties for Default
Non-compliance with Form 20A attracts huge penalties which have been done intentionally to curb the number of shell companies incorporated. The following are the penalties for non-compliance:
- Penalty to be levied on the company: A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement.
- Penalty to be levied on the officers: 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.
- Company strike-off: 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.
|Additional fee (in case the form is not filed within the time)|
|Nominal Share Capital||Applicable Fees in (Rs)|
|Up to 30 days||2 times of normal fees|
|Above 30 but not exceeding 60 days||4 times of normal fees|
|Above 60 days but not exceeding 90 days||6 times of normal fees|
|Above 90 days but not exceeding 180 days||10 times of normal fees|
|Above 180 days||12 times of normal fees|
Within 180 days from the date of incorporation.
A 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.
Practical Points related to Form 20A
1.) No company can take any borrowings, raise any funds, do any agreements; or make an investment before filling out form INC-20A, which means every company can start the business activity only after filing Form 20A.
2.) Without filling INC-20A, the company can change the directorship if the event is held within 180 days from the date of incorporation but can’t do the same after the lapse of 180 days of incorporation and cannot file form DIR-12.
3.) Due to non-filling Form 20A, within 180 days or after 180 days from the date of incorporation, the Company is not allowed to file Form SH-7, MGT-14, charge-related forms or any annual filing forms.
4.) Company can be voluntarily struck off by filling out form STK-2 who have not filed INC-20A within 180 days of incorporation. After a period of 180 days of incorporation, filing of form INC-20A is allowed to be filed first. Thereafter, they can file STK-2 if they desire so by following the relevant provisions of the Act relating to Strike off procedure.
5.) Registered office of the company can be changed only after filling out INC-20A. Hence, this form is just a declaration made by the company to the respective ROC that the company have received the subscription money from the shareholders and taken necessary approvals i.e. RBI, SEBI if any, and now the company has started its business.
Companies which are not required to file Form 20A
The following companies are not required to file form 20A:
- Companies incorporated before 2 November 2018 (i.e. Before the commencement of the Companies (Amendment) Ordinance, 2018).
- Companies incorporated after 2nd November 2018 without share capital.