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MCA has inserted New Section 10A after Section 10 by Companies (Amendment) Ordinance, 2018 Dated 02.11.2018 and same has been inserted in Companies (Amendment) Act, 2019.

As per 10A, a company having SHARE CAPITAL incorporated after ordinance i.e. 02.11.2018 shall not commence its business or exercise any borrowing powers unless,

A declaration is filed by the directors in e-form Form No. INC-20A within 180 days from date of incorporation of company with ROC that 'every subscriber to the MOA has paid the value of the shares agreed to be taken by him'.

FAQs on Declaration of Commencement of business



Which type of Companies required filing 20A?


Every Company incorporated on or after 02nd November, 2019 is required to file e-form INC-20A with ROC. (Including OPC, Section 8, Normal Company etc.)


Whether ROC will issue any certificate after filing of e-form 20A?


Let's have some look on Background:

There was section 149 in Companies Act, 1956 which required public Company to obtain certificate of commencement of business from ROC.

In Companies Act, 2013 there was Section 11 which required every company to obtain certificate of Commencement of Business from ROC.

However, such section has been omitted w.e.f. 29th May, 2015 by Companies (Amendment) Act, 2015

On 02.11.2018 Govt. has introduced Companies (Ordinance), 2018 and inserted section 10A 'Declaration of Commencement of Business'.

Before 02.11.2018 there was sections for obtaining 'Certificate of Commencement of Business' from ROC but section 10A states about 'Declaration of Commencement of Business'.

Therefore, after filing of INC-20A Roc shall not issue any certificate of commencement of business. It is just an declaration from the Directors of Company


Whether Subscription money can receive in cash?


As per Companies Act, 2013 that subscription money must be received in Bank account of Company. Therefore, one can opine that Company can receive subscription money in cash also and book the same in books of accounts of Company.

Even as per section 269ST of Income Tax Act, a Company can accept maximum Rs. 200,000/- per day per person in cash.


What is the time period of issue of share certificate by the Company?


As per section 56, every company shall deliver the certificates of all securities allotted, transferred or transmitted within a period of two months from the date of incorporation, in the case of subscribers to the memorandum.


How to issue share certificate within 60 days if subscription money not received in 60 days?


As per section 56: Company need to issue share certificate within 2 month of Incorporation of Company.

As per section 10A: Company can receive money within 180 days of incorporation of Company.

Note: In such case one can opine that whether subscription money received or not it is duty of Company to issue share certificates to subscribers of Memorandum of Association.


Whether Company can commence business without filing of declaration of commencement of business?


As per Section 10A Company can't commence business without filing of e-form 20A.


Whether Company can accept loan from any stake holder (Director, Shareholder etc.) without filing of INC 20A?


As per Section 10A Company can't commence accept loan/ borrowing without filing of e-form 20A.


Whether Company can file any other form with ROC before filing of form 20A? (Like ADT-1)


As per MCA system a Company can't file any form without filing of e-form INC-20A with ROC.


What are the consequences if company fails to file e-form 20A within 180 days from incorporation of Company? 50,000 and 1000 per day upto 100,000?


Company can file such form INC-20A with Roc even after 180 days by paying additional fees as per fees rules. However, until unless form is not filed above mentioned restrictions shall be applicable on Company.

Penalty On Company: the company shall be liable to a penalty of fifty thousand rupees.

Penalty on Officer in Default: 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


Whether Company can Strike off without filing of 20A, if promoters don't want to commence business?


A Company can't file Strike off form STK-2 without filing of e-form 20A. Therefore, it is mandatory to file 20A before strike off of Company.


What are the attachments of e-form INC-20A?


In case of subscription money received in Bank Account, attachment shall be copy of Bank Statement.

In case of subscription money received in cash, attachment shall be a declaration along with copy of books of account of Company.


Restriction before filing of e-form INC-20A?

  • Company can't Commence Business.
  • Company Can't exercise Borrowing Powers.
  • Practically MCA system not allows filing any e-form with ROC.


Whether company incorporated without share capital need to file declaration in form INC- 20A?


As per Section 10A this declaration of commencement of business is required to file only by Companies having Share Capital. Therefore, Company not having share capital need not to file 20A.

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Category Corporate Law, Other Articles by - CS Divesh Goyal