Form 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Chartered Accountant (CA) or Company Secretary (CS) or a Cost Accountant in practice.

1. Introduction

As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2 November 2018 and having share capital must file a Declaration for commencement of business in Form INC-20A. It is a declaration filed by the directors within 180 days of the date of incorporation of the company. This is one of the most important compliances to follow as the penalties for non-filing is extremely high.

2. Companies which are not required to file Form 20A

The following companies are not required to file form 20A:

• Companies incorporated before 2 November 2018 (i.e. before the commencement of the Companies (Amendment) Ordinance, 2018).
• Companies incorporated after 2nd November 2018 without share capital.

3. The time period for filing Form 20A

Every company required to file form 20A shall file the same within 180 days of its incorporation.

4. Requirement and procedure

The Company shall not commence any business or exercise any borrowing unless the Declaration of Commencement is filed with Registrar of Companies within 180 days from the date of incorporation. Proof of deposit of the paid-up share capital by the subscribers also needs to be attached in the eForm.

If a company pursues objects requiring registration or approval from any sectoral regulators such as The Reserve Bank of India and Securities and Exchange Board of India etc, then it shall obtain such registration or approval along with the attached declaration. The eForm has to be verified and certified by a practising professional before filing with the ROC (Registrar Of Companies).

5. Penalties for Default

The penalties for non-compliance are very high which has been done intentionally so as to curb out the number of shell companies incorporated. Following are the penalties for non-compliance:

Penalty to be levied on the company: A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement.

Penalty to be levied on the officers: Every such officer in default shall be liable to a penalty of Rs 1,000 per day for each day during which the default continues subject to a maximum of Rs 1,00,000.

Company strike-off: If the Registrar has reasonable grounds to believe that the company is not carrying on any business or operations even after 180 days of incorporation, the registrar may remove the name of the company from the Register of companies under Chapter XVIII.

6. Fee for filing Form 20A

a) Fee for filing eForm for companies having share capital: