A newly incorporated company can commence its business activities only after fulfilling the applicable requirements for filing the INC-20A declaration of commencement of business. The declaration must generally be filed within 180 days from the date of incorporation.
Failure to comply can result in significant penalties. The company may be liable for a penalty of ₹50,000, while every officer in default may face a penalty of ₹1,000 per day for the period of default, subject to the prescribed maximum limit. The company may also face action for non-compliance, including restrictions on carrying on business.
Applicability to Newly Incorporated Companies
The MCA introduced the requirement for filing INC-20A in January 2019, with applicability to companies incorporated on or after 2 November 2018. Therefore, companies covered by this requirement should complete the declaration within the prescribed time.
Can the Company Start Business Before Filing INC-20A?
A company covered by Section 10A of the Companies Act should not commence business or exercise borrowing powers until the required declaration has been filed. Therefore, the company must complete the INC-20A compliance before undertaking business operations or entering into relevant transactions.
First Deposit the Capital from the Initial Promoters
The subscribers to the company’s memorandum must deposit the agreed share capital into the company’s bank account through proper banking channels. The amount can be deposited in multiple transactions, but the total amount deposited should correspond with the company’s paid-up share capital.
Check Whether the Registered Office Has Been Filed with the ROC
Before submitting INC-20A, the company should ensure that its registered office details have been properly filed with the ROC. The company should also obtain a bank statement showing the receipt of the subscription money.
Once the required conditions are satisfied, the company can proceed with filing INC-20A using the Digital Signature Certificate (DSC).
Documents and Requirements for Filing INC-20A
- Company bank statement showing receipt of the subscribed share capital
- Digital Signature Certificate (DSC) of one director
- Professional certification by a CA, CS, or CMA, where applicable
- Prescribed government filing fee
- Confirmation that the registered office details have been filed
- Bank statement showing the capital contribution received through proper banking channels
- Confirmation that the company has not commenced business activities before fulfilling the requirement
- Relevant records supporting that the subscribed capital has been received
Frequently Asked Questions (FAQs)
1. What is Form INC-20A?
Form INC-20A is a declaration filed with the Registrar of Companies (ROC) confirming that a company having share capital has received the subscription money from its shareholders and has fulfilled the requirements for commencement of business.
2. Who is required to file INC-20A?
Companies incorporated in India with share capital are generally required to file the commencement of business declaration, subject to the exemptions and conditions prescribed under the Companies Act.
3. What is the due date for filing INC-20A?
The declaration is generally required to be filed within 180 days from the date of incorporation of the company.
4. Is INC-20A mandatory for every newly incorporated company?
No. The requirement primarily applies to companies having share capital. Companies that fall outside the prescribed requirements may not need to file INC-20A.
5. What information is required to file INC-20A?
The filing generally requires details of the company, incorporation, subscribers, and confirmation regarding receipt of the subscription money. Supporting documents, such as a bank statement or other prescribed proof, may also be required.
6. Who can certify Form INC-20A?
Form INC-20A must be digitally signed by a director of the company and certified by a practicing professional, such as a Chartered Accountant, Company Secretary, or Cost Accountant, as applicable.
7. Can a company commence business without filing INC-20A?
A company that is required to file INC-20A should not commence business or exercise borrowing powers until the required declaration has been filed.
8. What happens if INC-20A is not filed within the prescribed time?
Failure to file within the prescribed period can result in statutory penalties and may also affect the company’s ability to commence business or exercise borrowing powers.
9. Can INC-20A be filed after the due date?
Yes, a delayed filing may generally be made subject to applicable additional fees, penalties, and other consequences under the Companies Act.
10. Is a bank statement required for INC-20A filing?
Proof of receipt of subscription money is required. Depending on the applicable MCA requirements, a bank statement or other prescribed document may be submitted as supporting evidence.
11. What is the penalty for non-filing of INC-20A?
Non-compliance can attract penalties on the company and officers responsible for the default. The company may also face restrictions relating to commencement of business and borrowing powers.
12. Why is timely INC-20A filing important?
Timely filing helps the company comply with the Companies Act, avoid penalties and regulatory complications, and establish that the company has fulfilled the requirements for commencing business.