Let’s discuss about the concept of newly formed companies incorporated on or after 02-11-2018. These companies shall not commence the business or exercise any borrowing unless obtain the certificate of Commencement of Business by filling of Form INC-20A to the Registrar of Companies.
Section 10A(1)(a) of the Companies Act, 2013 and Rule 23A of the Companies \
(Incorporation) Rules, 2014 describe as under:-
- A company incorporated on or after 02-11-2018 and having share capital, shall not commence any business or exercise any borrowing powers unless-
- a declaration is to be filled by the director of the company within a period of 180 days from the date of incorporation of the company with the Registrar of the companies in Form INC-20A that:
- every subscriber to the Memorandum has paid the value of shares agreed to be taken by him on the date of making such declaration and
- a verification of its registered office.
2. In case of default in complying with the requirement of this section then:
- Company shall be liable to a penalty of Rs. 50,000/- and
- Every officer who is in default shall be liable to a penalty of Rs. 1,000/- for each day during which such default continue but not exceeding of Rs. 1,00,000/-.
3. Where no declaration has been filled with the Registrar of companies within 180 days from the date of incorporation of the company and Registrar has reasonable cause to believe that the company is not carrying any business or operations, he may, without prejudice to the provision of sub-section (2), initiate action for the removal of the name of the company from the register of companies.
Rule 23A: (Declaration at the time of commencement of the business):-
- Declaration shall be filled by the directors of the company in Form INC-20A.
- The content of the said Form shall be verified by the CA/CS/CMA in practice.
- In case of a company pursuing objects requiring registration or approval from any sectoral regulators such as RBI, SEBI etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with declaration.
What is Form INC-20A ?
- Companies incorporated on or after 02-11-2018 require to file Form INC-20A and
- Company having the share capital.
- Declaration is filled by the directors of the company with the Registrar of Companies that every subscriber to the Memorandum has paid the value of shares agreed to be taken by him on the date of making such declaration.
Consequence if company does not file the Form INC-20A ?
- Company cannot commence the business.
- Company cannot borrow the money.
- Registrar may initiate the action for removal the name of the company.
- Company liable to pay penalty of Rs. 50,000/-
- Every officer who is in default liable to pay of Rs. 1,000/- per day subject to maximum of Rs. 1,00,000/-
What is the attachment of Form INC-20A ?
- Subscriber proof of payment for value of shares like Copy of Bank statement which shown that subscriber has deposit the value of shares or valid proof payment like IMPS/NEFT/RTGS detail.
What is due date of filling of Form INC-20A ?
The date of filling of Form INC-20A is 180 days from the date of incorporation of the company.