A company can commence its business/operations only after it files a declaration in Form No INC-20A declaring its registered address and with a Bank Statement Showing deposit of capital by the shareholders. The INC 20A must be filed within 180 days of the Incorporation of the Company. Before the declaration in Form, INC-20A is filed by the company, the entire subscribed share capital as shown in the MOA of the company must be deposited in the bank account of the newly registered company.
Only after approval of the INC-20A a company can commence its business activity, what so ever. The maximum time prescribed for filing of INC-20A is 180 days from the date of incorporation of the company. Non-compliance has very serious effects on the company and it may be punishable with a fine of Rs. 50,000 and every officer in default is punishable with a fine of Rs. 1000/- per day for each day of default, however, the maximum punishment cannot be more than Rs. 1,00,000/- The company shall be closed if the declaration for Commencement of Business is not Filed.
Applicability On all Newly Incorporated Companies
The MCA has notified the new provision on 26th January 2019 which shall have retrospective effect to all companies incorporated on or after 2nd November 2018. Hence every applicable company must take steps to file INC-20A ASAP.
Cant Start Business until approval of INC-20A
A company must not enter into any transaction or business activity before approval of INC-20A. In other words, any agreement, sale, purchase without the issue of the certificate of commencement of business shall be an illegal activity.
First Deposit the Capital from Initial Promoters
The share capital amount must be deposited in the company bank A/c through Banking Channels only. However, it may be deposited in parts but the aggregate transfer should exactly match with the paid-up capital.
Check if the Registered Address if Filed to ROC
The company must check if the registered address has been reported to ROC at the time of incorporation or not and obtain Bank Statement of Company Showing transaction pertaining to capital. Now file INC-20A with DSC.
Documents for Filing of INC-20A (Declaration to Commence Business)
- Bank Statstrongent Of Company Showing Capital
- Digital Signature Of One Director
- Professional Certification By CA/CS/CMA
- File Inc-20A With Prescribed Govt Fee
- Check that Registered Address is Filed
- No Other Transaction in Bank Except Capital
- Should not have raised any Invoice
- No business activities started
Frequently Asked Questions on INC-20A
Q1: What is e-form INC-20A?
The form INC-20A is the prescribed eform through which a company has to file a declaration before commencing the business operations of the company. This form has been notified on 25th January 2019, however, is applicable to all companies which have been incorporated on or after 2nd November 2018.
Q2: What is the time limit for filing the e-form INC-20A?
The Form INC-20A must be filed immediately after incorporation of the company as the company shall not be able to start any business activity as such. However, the last date of filing the same is fixed at 180 days from the date on which the company got registered.
Q3: Why companies need to file eform INC-20A?
This is a legal requirement, as without filing a declaration for the commencement of business you can not start any business activity. Non filing not only results in a heavy penalty but it also leads to the closure of the company.
Q4: Can I file the Form INC-20A even when I miss the deadline of 180 Days?
Yes, you have the option of filing the form INC-20A even if the due date is missed, however with an additional fee to be paid based on the delay of the number of days from the due date. The below table is for reference to calculate the additional fees.
| S.No | Delay in Days | Amount (INR) |
|---|---|---|
| 1. | Delay up to 30 Days | 2 Times |
| 2. | More than 30 days and up to 60 days | 4 Times |
| 3. | More than 60 days and up to 90 days | 6 Times |
| 4. | More than 90 days and up to 180 days | 10 Times |
| 5. | More than 180 days | 12 Times |
Q5: What is the penalty of non-filing?
The non-filing is punishable with a fine of Rs 1,00,000/- to be paid by the company and every officer in default which includes the director is to pay Rs. 1000 for each day of non-compliance. However, the penalty shall not be more than Rs. 1,00,000/- for directors.
Q6: Is there any government fee payable for filing the Form INC-20A?
Yes, the general fee as prescribed under the rules are also applicable for filing the form INC-20A and the fee is based on the authorized capital of the company. Below is the list of the filing fee for the declaration for the certificate of commencement of business.
| S.No | Authorised Capital | Amount (INR) |
|---|---|---|
| 1. | Less than 1,00,000 | Rs 200 |
| 2. | 1,00,000 to 4,99,999 | Rs 300 |
| 3. | 5,00,000 to 24,99,999 | Rs 400 |
| 4. | 25,00,000 to 99,99,999 | Rs 500 |
| 5. | 1,00,00,000 or more | Rs 600 |
Q7: What are the documents required for filing the eform INC-20A?
To file form INC-20A you need to attach a certified copy of the Bank Statement of the company where the paid-up capital has been received from the first subscribers of the MOA/Shareholders.
Such a very helpful blog for new entrepreneurs. It has helped me a lot in growing my business legally.