Corporate Law
Form INC-20A: Declaration for Commencement of Business
A company incorporated with share capital cannot start business or borrow until it has filed a declaration that its subscribers have paid for their shares. This declaration is filed in Form INC-20A under Section 10A of the Companies Act, 2013, and is due within 180 days of incorporation.
Missing it is one of the most common early defaults, and it can lead to penalties and even removal of the company’s name from the register. This article explains the requirement and the filing steps.
Who must file
- Companies incorporated on or after 2 November 2018
- Having a share capital
- Not applicable to companies without share capital, such as many Section 8 companies limited by guarantee
Before filing
- Each subscriber must have paid the full value of the shares agreed to be taken in the Memorandum.
- The money should be received in the company’s bank account, so that the bank statement can be attached as proof.
- The registered office should be verified; INC-22 is due within 30 days of incorporation where the address was not given at incorporation.
- The share certificates should be issued, within the time allowed by the Act.
Filing steps
- Prepare the declaration by a director that the subscribers have paid the value of their shares.
- Attach the bank statement or other proof of receipt of subscription money.
- Have the form signed by a director with a digital signature and certified by a practising professional.
- Pay the fee and file on the MCA portal.
Consequences of not filing
| Consequence | Detail |
|---|---|
| Penalty on the company | ₹50,000 |
| Penalty on officers in default | ₹1,000 per day of default, up to ₹1,00,000 |
| Business restriction | The company cannot commence business or exercise borrowing powers |
| Strike off | The Registrar may initiate removal of the name if the declaration is not filed and the company is not carrying on business |
If the filing has been missed, it should be made as early as possible and the penalty position examined. See adjudication proceedings and restoring a company after strike off.
For other first-year compliance, see the post-incorporation checklist.
Frequently asked questions
Can INC-20A be filed after 180 days?
The portal allows it with additional fee, but the penalty under Section 10A remains for the period of default and may be adjudicated.
What if a subscriber has not paid?
The declaration cannot be correctly made until payment is received. The subscriber should pay before the form is filed.
Does a company need INC-20A if it was incorporated before November 2018?
No. Section 10A applies to companies incorporated after the provision came into force.
ചുരുക്കം (Summary in Malayalam)
2018 നവംബർ 2-നു ശേഷം ഷെയർ ക്യാപിറ്റലോടെ രൂപീകരിച്ച കമ്പനികൾ, സബ്സ്ക്രൈബർമാർ ഷെയറിന്റെ തുക അടച്ചു എന്ന ഡിക്ലറേഷൻ INC-20A ഫോമിൽ 180 ദിവസത്തിനകം ഫയൽ ചെയ്യണം. ബാങ്ക് സ്റ്റേറ്റ്മെന്റ് തെളിവായി ചേർക്കണം. ഫയൽ ചെയ്യുന്നതുവരെ ബിസിനസ് തുടങ്ങാനോ വായ്പ എടുക്കാനോ പാടില്ല. ഫയൽ ചെയ്തില്ലെങ്കിൽ കമ്പനിക്ക് ₹50,000, ഓഫീസർമാർക്ക് ദിവസം ₹1,000 (പരമാവധി ₹1 ലക്ഷം) പിഴയും, പേര് റദ്ദാക്കാനുള്ള നടപടിയും ഉണ്ടാകാം.
This article gives a general overview of Form INC-20A under the Companies Act, 2013. Forms, fees and penalties are revised from time to time; for accurate and current requirements, refer to the Act, the rules as amended and the MCA portal. The article is not advice on any particular case.
Please note. This article is provided for general information and is not professional advice or a solicitation of work. The law is stated as understood on the date shown above and may have changed since.