INC-20A — Declaration of Commencement of Business

Section 10A(1) of the Companies Act, 2013 (inserted by the Companies (Amendment) Ordinance, 2018): company incorporated after 02-11-2018 must not commence business or borrow money unless it files a declaration in Form INC-20A. Rule 23 of the Companies (Incorporation) Rules, 2014: prescribes the form and procedure for INC-20A, including requirement of a certificate from a practising CA or CS confirming receipt of subscription money. Section 10A(2) of the Companies Act, 2013: penalty for non-compliance — Rs. 50,000 on the company and Rs. 1,000 per day on each officer in default (up to Rs. 1,00,000). Section 248 of the Companies Act, 2013: empowers the Registrar to initiate strike-off proceedings against a company not carrying on business.

The Declaration of Commencement of Business, commonly known as INC-20A, is a foundational compliance requirement introduced to ensure that a company has the necessary capital structure in place before it commences operations. Under Section 10A of the Companies Act, 2013, which was inserted by the Companies (Amendment) Ordinance, 2018, no company incorporated on or after the 2nd day of November, 2018, is permitted to commence any business or exercise any borrowing powers unless a declaration is filed by a director in the prescribed form with the Registrar of Companies (ROC). This statutory prerequisite, mandated by Rule 23 of the Companies (Incorporation) Rules, 2014, serves as a critical checkpoint to verify that subscribers to the memorandum have paid the value of their shares as agreed upon.

The core substantive requirement for this filing is that the company must have received the subscription money from its initial members or subscribers as stated in the memorandum of association. This payment must be credited to the company's bank account, and a verification in the form of a certificate from a practicing professional (a Chartered Accountant or Company Secretary) must confirm this receipt. Failing to file INC-20A within 180 days from the date of incorporation results in severe consequences under Section 10A(2) of the Act. The penalty for such default is a sum of Rs. 50,000 payable by the company, and every officer of the company who is in default is liable for a penalty of Rs. 1,000 for each day of continuing default, which can extend up to Rs. 1,00,000. Furthermore, the Registrar retains the power to initiate proceedings for the removal of the company from the register of companies, effectively striking off its name, as per the provisions of Section 248.

Our professional service for INC-20A filing ensures meticulous preparation and timely submission, mitigating the significant financial and legal risks of non-compliance. We guide you through the entire process, starting with the documentation of subscription money receipts, followed by obtaining the mandatory professional certificate, and finally, accurate e-filing on the Ministry of Corporate Affairs (MCA) portal. Given the stringent 180-day timeline, our expert team ensures that your company avoids the penalty regime and maintains its good standing from inception, allowing you to focus on business operations with full legal authority to conduct them and avail credit facilities.