Once the Private Limited Company (PLC) is incorporated, it is essential to stay abreast of laws and compliances that enable growth and scaling of the business. Especially those which can drastically impact the survival during the initial stages of the company.
As per the Companies Act 2013, private companies can only start the business or borrow any funds after filing INC-20A with the Registrar of Companies (ROC) within 180 days. Hence, Form INC-20A becomes one of the most important compliance. Let’s try and understand the applicability, fees, time limit, required documents, and penalties.
What is Form INC-20A?
As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2nd November 2018 to file a declaration of commencement of business. Form INC-20A was introduced to fulfil that requirement. It needs to be filed by the directors/owners with the ROC. It has to be verified by the practising Chartered Accountant (CA), Company Secretary (CS), or Cost Management Accountant (CMA).
Who needs to file it?
All the companies having Share Capital and incorporated on or after the Company (Amendment) Ordinance or 02/11/2018 needs to file a declaration in eform INC-20A.
Who doesn’t need to file it?
- All the companies incorporated before the Company (Amendment) Ordinance or 02/11/2018,
- All the companies without share capital and limited by a guarantee.
What are the required documents?
Following are the details and documents required:
- Board Resolution: As per Section 10A, directors need to provide a Board Resolution for commencement of business,
- Bank Statement of Company: As proof of Shareholder’s deposit of paid-up share capital.
- Approval Letter: If any company requires approval from the Reserve Bank of India and Securities and Exchange Board of India then, it needs proof for the same.
The eForm is verified by a Practicing professional before filing with the ROC.
What is the INC-20A due date?
The due date is 180 days from the date of incorporation of a company.
What is the Fee for Filing INC-20A?
Following is the fee applicable for INC-20A:
|Nominal Share Capital||Applicable Fees in RS|
|If the share capital is less than 1,00,000||200|
|Above 1,00,000 and less than 5,00,000||300|
|Above 5,00,000 and less than 25,00,000||400|
|Above 25,00,000 and less than 1,00,00,000||500|
In case, the company doesn’t have a share capital, the applicable fee is Rs 200.
What if the form is not filed within the time frame?
Additional fees will be applicable as per below table:
|Period of delays||Applicable Fees in Rs|
|Up to 30 days||2 times of normal fees|
|Above 30 days and less than 60 days||3 times of normal fees|
|Above 60 days and less than 90 days||4 times of normal fees|
|Above 90 days and less than 180 days||5 times of normal fees|
|Above 180 days||6 times of normal fees|
What are the penalties for Default?
Penalties for non-compliance are:
- The company is liable to pay 50,000 if not filed INC-20A Form.
- Directors of the company are liable to pay 1000 per day up to the maximum limit of 1,00,000.
- Registrar can remove or strike off the name from the Register of Companies if the business is not in operations after 180 days from the incorporation.
Staying compliant is vital to the longevity and health of the business wherein; filing INC-20A is the first step after the incorporation of the business. The next step is to maintain books of accounts to know the financial situation at the end of the year.