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Ministry of Corporate Affairs has added a new form Form INC 20A after the company Registration process to file Form INC 20A , specified to obtain Certificate of Commencement of Business, by declaring that the paid up share capital has been brought in to the Companies Bank Account,

Form INC 20A has issued pursuant to Companies Amendment Ordinance 2018 and Subsequent ordinance in Companies Amendment Ordinance 2019, which has the following objectives

  1. Eliminate shell companies
  2. To facilitate the ease of doing business.
  3. To enhance the scope of corporate compliance.

What is Certificate of Commencement of Business and Form INC 20A?

Once the company is formed with the agreed Share capital, the Promoters/ entrepreneurs need to bring in their agreed share capital into the companies Bank account and Filed for form INC 20A with 180 days to obtain the certificate of commencement of Business.

Now, the Subscribers to the Memorandum of Association of the Company cannot delay their investing money in the bank account of the company as share capital in respect of the shares subscribed by them, as it has become mandatory to get Certificate of Commencement of Business in Form INC 20A otherwise the company risks being struck off/ dissolved by the Registrar of Companies

ARE ALL COMPANIES REQUIRED TO FILE FORM INC 20A TO OBTAIN CERTIFICATE OF COMMENCEMENT OF BUSINESS?

FORM INC 20A to obtain Certificate of commencement of business need to filed only by

  • Private Limited Companies/One Person Company /Public Limited registered on or after 2nd November 2018 need to mandatorily file FORM INC 20A and Obtain Certificate of Commencement of Business
  • Companies Registered prior to 2nd November 2018 it's not mandatory to comply, that is any company registered till 1st November 2018 need not comply
  • Companies cannot borrow money without obtaining the certificate of Commencement of Business by filing INC 20A

WHAT ARE THE TIMELINES TO FILE FORM INC 20A TO OBTAIN CERTIFICATE OF COMMENCEMENT OF BUSINESS?

FORM INC 20A to obtain Certificate of commencement of business need to filed within

  • Private Limited Companies/One Person Company /Public Limited registered on or after 2nd November 2018 need to mandatorily file FORM INC 20A and Obtain Certificate of Commencement of Business within 180 Days from the Date of Registration
  • The Only Other Condition is that the company Should have filed forms for verification of Registered office address in form INC 22 under section 12(2) of the Companies Act 2013 in case the option to verify registered office is selected as "No" In incorporation form SPICE INC 32

WHAT ARE THE MANDATORY DOCUMENTS TO BE ATTACHED TO FORM INC 20 A FOR CERTIFICATE OF COMMENCEMENT OF BUSINESS, IS PRACTISING PROFESSIONAL CERTIFICATE MANDATORY?

FORM INC-20A HAS TO BE FILED FOR THE FOLLOWING:

  • Subscribers Proof of Payment for the value of shares.
  • Certificate of Registration issued by RBI in case of NBFC companies
  • Copy of Board Resolution
  • Certificate form a practising professional (CA/CS/CMA) stating the said the capital amount has been brought in

What is the Government fees to be paid for filing INC 20 to obtain Certificate of Commencement of Business?

Fee for filing e-Form 20A:

1. In case of company have share capital

Nominal Share Capital Fee applicable
Less than 1,00,000 Rupees 200
1,00,000 to 4,99,999 Rupees 300
5,00,000 to 24,99,999 Rupees 400
25,00,000 to 99,99,999 Rupees 500
1,00,00,000 or more Rupees 600

2. In case of company do not have share capital: Rupees 200

Additional fee after 180 days from the date of Incorporation

Period of delays Fees
Up to 30 days 2 times of normal fees
More than 30 days and up to 60 days 4 times of normal fees
More than 60 days and up to 90 days 6 times of normal fees
More than 90 days and up to 180 days 10 times of normal fees
More than 180 days 12 times of normal fees

What are the Penalties for Non-Compliance of Form INC 20A and failure to obtain Certificate of Commencement of Business?

  • Company shall be liable to a penalty of fifty thousand rupees (Rs 50,000)
  • Every officer (Directors of the Company) who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding the number of one lakh rupees. ( Rs .1000 Per day of Default up to a maximum of Rs Rs 1,00,000/- )
  • Where no Declaration is filed with 180 days and Registrar has reasons to believe that the company is not carrying on any business the company may be struck off and directors would be disqualified

RELEVANT SECTION AND RULES UNDER THE COMPANIES ACT 2013 GOVERNING INC 20A, CERTIFICATE OF COMMENCEMENT OF BUSINESS

eForm INC-20A is required to be filed pursuant to Pursuant to Section 10A(1)(a) of the Companies Act, 2013 and Rule 23A of the Companies (Incorporation) Rules, 2014, which are reproduced for your reference.

Section 10A:

(1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless—

(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

(b) The company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.]

Rule 23A: Declaration at the time of commencement of business

The declaration under section 10A by a director shall be in Form No, lNC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the contents of the said form shall be verified by a company Secretary or a chartered Accountant or a cost Accountant. in practice: Provided that in the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.

Purpose of the eForm INC 20A

Declaration prior to the commencement of business or exercising borrowing powers

Source Credit: CERTIFICATE OF COMMENCEMENT OF BUSINESS HOW TO COMPLY WITH FORM INC 20A AND AVOID PENALTIES!


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Category Corporate Law, Other Articles by - CA Viswanathan 



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