As per the companies act, 2013, a company having share capital shall not commence any business or exercise any borrowing powers unless a declaration is filed by a director within a period of 180 days of the date of incorporation of the company.
The declaration must be filed in the form that is prescribed by the government and should be 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.
The form prescribed to file Commencement of business is Form INC-20A.
If the company has defaulted in complying with the requirement of section 10A commencement of business, then the company shall be liable to pay a penalty of 50,000 rupees.
Steps to be followed for filing commencement of business with the ROC.
After the incorporation process is over, the directors have to open a bank account in the name of the company.
Each subscribers are required to transfer share capital according to the memorandum of association signed. After getting total share capital to the company’s bank account, you should pass a resolution authorizing one of the directors to file form INC-20A as commencement of business.
File commencement of business in form INC-20A with all the details.
While filing the commencement of business form INC-20A, you will be asked the following details to be filled. You have to get those details before filing the form;
- Name of the shareholder,
- Bank Name with IFSC code where money has been deposited
- Amount of receipt from each subscriber
- Date of receipt against the amount received from the subscribers
You are required to attach the bank statement as a proof with the commencement of business form INC-20A.
Certificate of a professional
The webform INC-20A to file declaration for commencement of business shall be certified by a chartered accountant (in whole-time practice) or cost accountant (in whole-time practice) or company secretary (in whole-time practice) by using their digital signature certificate.
While signing, the chartered accountant (in whole-time practice) or cost accountant (in whole-time practice) is required to enter the membership number and select whether he/ she is an associate or fellow.
A company secretary (in whole-time practice) is required to enter his or her certificate of practice number.
Delay in filing commencement of business
As said earlier, commencement of business should be filed within 180 days from the date of incorporation. If you file it then a normal fee will be required to be paid based on the company’s share capital.
Here is the table showing the normal fee applicable to file commencement of business for companies based on its paid up share capital.
| Nominal Share Capital (INR) | Fee applicable (INR) |
| Less than 1,00,000 | 200 |
| 1,00,000 to 4,99,999 | 300 |
| 5,00,000 to 24,99,999 | 400 |
| 25,00,000 to 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |
In case of delay in filing, the company is required to pay an additional fee in addition to the normal fee based on the number of days in default.
| Period of delay | Additional fee applicable (INR) |
| 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 |
Once you file and pay the fee online, the form INC-20A will be processed in straight through process (STP) and shall be taken on record through electronic mode without any further processing.
Non Compliance to section 10A
Here are the consequences if a company fail to comply with section 10A;
- Company liable to pay penalty of Rs 50,000/-
- Every Officer-in Default liable to pay penalty of Rs 1,000/- for each day during which the default continues but not exceeding Rs 1,00,000/-
- If the Company fails to file Form INC-20A within the required time limit or the Company is not carrying on any business or operation as per physical verification of the registered office under section 12(9), ROC may initiate action for removal of name of the Company
