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Must Known Facts of Form INC-20A “Declaration for Commencement of Business”

Companies (Amendment) Ordinance, 2018 dated 02.11.2018 introduced New Section 10A after Section 10, and the same have been inserted in Rule 23A of the Companies (Incorporation) Rules, 2014.

Every company incorporated on or after November 2, 2018, and has share capital is obliged to file an e-form INC-20A with their respective Registrar of Companies within 180 days of the date of establishment.

  • Companies Act 2013 Section Attracts-10A
  • Companies (Incorporation) Rules, 2014, Rule 23A, Attracts
  • Every company with share capital formed on or after November 2, 2018, must file the Form.
  • The deadline is 180 days after the date of establishment.

What To Declare?

A declaration that all MOA subscribers have deposited the total value of the shares agreed to be accepted by them in the Companies Bank Account.

Other declarations: If the company is pursuing objectives that need registration or approval from sectoral regulators such as the RBI or SEBI, the registration or approval, as the case may be, from such authority must be obtained and included in the disclosure.

What to include: verification of receipt of subscription funds in the form of a bank statement or a cash ledger if paid in cash. Here, the limit allowed by the income tax legislation must be checked and other declarations as stipulated above, such as RBI and SEBI approvals, if any.

Professional Certified by: This e-Form must be confirmed by a company secretary, a chartered accountant, or a practicing cost accountant.

Provisions for Penalty: A company can file a form INC-20A with Roc after 180 days by paying additional fees according to the fees guidelines.

Company Penalty: A penalty of 50,000 rupees will be imposed.

Officer in Default Penalty: Every officer in default is subject to a penalty of one thousand rupees for each day that the default persists, up to a maximum of one lakh rupees.

ROC’s Strength:

Suppose the Form is not completed within the specified time frame. In that case, the Registrar may have the company’s name removed from the register because the firm is not doing any business or operations. 

If the form is not submitted on time, the following consequences will occur:

  • The company is unable to borrow funds.
  • The company is unable to begin operations.

Important Practical Considerations Concerning This Form

1. No company can take any loans, raise funds, enter into any agreements, or make any investments before completing form INC-20A, which implies they can’t start doing business.

 

2. A company can change its directorship without filling out the INC-20A if the event occurs within 180 days of its incorporation, but it can’t do so after that time has passed and it can’t fill out the DIR-12. In this case, the authority perspective that the company does not begin any business activity has not allowed it to change its directorship.

 

3. The firm will not be allowed to fill out Form SH-7, MGT-14, charge-related forms, or any annual filing forms if it does not fill out Form INC-20A within 180 days or after 180 days from the incorporation date.

 

4. However, companies that have not submitted INC-20A within 180 days of the establishment might be struck out voluntarily by filling out form STK-2. 

The submission of Form INC-20A is permitted after 180 days from the date of incorporation. 

Following that, if they like, they can submit STK-2 by following the relevant provisions of the Act relating to the strike-off procedure.

 

5. No corporation should change its registered office address before completing the INC-20A form.

 

6. It’s also worth noting that the authority has not generated a certificate for completing this form. The only documentation of submitting the Form is the payment receipt; however, we may also verify the status of this Form by viewing public documents on MCA.

 

7. In conclusion, we can say that this Form is simply a declaration made by the company to the appropriate ROC that the company has received the subscription money from the shareholders and obtained all necessary approvals, such as RBI and SEBI if applicable, and that the company has now begun operations.