Commencement of Business Certificate-Form 20A declaration
All companies Incorporated on or after 2 November 2018 are required to Provide a Certificate of Beginning of Operation in Accordance with the Companies (Amendment) Ordinance 2018. The Directors Shall make a statement on Form 20A within 180 days after the date of formation of the Company. Due to the severe Penalties for not Submitting ,this is one of the most crucial compliances to follow.
What is Form 20A and Why is it Filed?
In order to announce the opening of a business ,a firm submits Form 20A. All companies with share capital that were Established on or after November 2, 2018, are obliged to file Form 20A with the ROC (Registrar of Companies),Notifying them that their Business has begun, in accordance with Section 10A of the Companies (Amendment) Ordinance 2018 (the “Ordinance”). The Company’s Director(s) shall file this form within 180 Days of the date of the Company’s establishment.
After that, the information entered into the form is confirmed by a company secretary or a certified accountant. In addition, completing Form 20A is an essential step in the legal requirements for incorporating a business.
Benefits of Filling Form 20A
Eligible for Borrowing Money
Companies are immediately eligible to use their borrowing capacity to raise capital from banks ,financial institutions ,and other sources provided they file Form 20A within 180 days of establishment. If a firm does not submit Form 20A ,they lose their ability to borrow money.
Avoid Fines & Penalties
By submitting the form INC-20A within 180 days after their incorporation ,businesses can avoid fines and penalties. Corporate directors may be penalised up to ₹1,000 each day of violation ,and Companies may face Penalties of up to ₹50,000 per day of Noncompliance.
Authenticate the Business
If the INC-20A form is submitted within 180 days after establishment, the company will be entered into a Public database with Complete Information. The Information is now available to the Public whenever they wish. As a Consequence ,the business may get Public Verification ,which also helps to boost its reputation.
Checklist Penalties for Non-Compliance of Form 20A
Any carelessness when submitting form INC 20A might result in severe fines. The intention is to limit the formation of phoney or shell businesses. The following are the penalty for submitting Form Inc 20A:
- Companies that are in default must file a Penalty of ₹50,000/- if they fail to Meet the fundamental requirement of Completing Form 20A for the Start of Business.
- Defaulting officers Each Company officer Who is in Charge of Submitting Form Inc. 20A shall be assessed a fine of ₹1,000 every day until the form is submitted ,up to a Maximum fine of ₹1,000,000 per day.
- If a firm hasn’t completed any commercial transactions or operations after 180 Days of business Registration ,the ROC may remove its name from the registry.
Form 20A Fees Levied by Companies Based on Share Capital
- Where the Total Capital is Less than ₹1,000,000 ,the Fee of the form 20A is ₹200.
- When the Share Capital is ₹1,000 or more but not more than ₹4,99,999 ,the form 20A Charge is ₹300.
- The Form 20A Charge is ₹400/- when the Share Capital is ₹5,00,000 or more but not more than ₹24,99,999
- If the Share Capital is ₹25,000 or More but not ₹99,99,999 ,the form 20A Charge is ₹500.
- The form 20A fee is ₹600/- if share capital is ₹1,00,000 or above
- For enterprises without share capital, the filing fee for form 20A is ₹200. However, if the submission is delayed, there are extra costs.
Process of Filing Form INC 20A
Step 1:
Get Our Legal Assistance to File Form INC 20A in an Easy Manner Company Bank Account:
Opening a business bank account (or current account) is the first Step in any Financial Activities for the firm. This calls for the Aforementioned Papers ;Certificate of Incorporation ,Articles of Association ,Memorandum of Association ,Permanent Account Number ,and Director(s) of Company Know Your Customer Information
Step 2:
Collection Of The Capital:
According to the firm's memorandum of association ,which includes a list of Shareholders and the sums they each invested ,the corporation is required to collect the money contributed by its shareholder.
Step 3:
Deposit Capital Share In The Company Bank Account:
The capital investment made by each shareholder is gathered and placed into the business's bank account. Before declaring the commencement of the company, the corporation must now get a certified copy of the bank statement providing evidence of deposit.
Step 4:
File Form Inc 20A:
By filing form INC 20A, the declaration of the start of business is finally made. The company director(s) digitally sign the form, which is subsequently verified by an authorised CA or CMA.
Documents Required for Filing Form 20A
When it comes to filing documents/attachments along with the form 20A:
- Documentation demonstrating that shareholders have paid the sum specified in the Memorandum of Association for the value of the shares. In order to use the form 20A for this purpose, company bank account statements must be included.
- A certificate of business start-up must be obtained by the company within 180 days of its Establishment. Then ,this Certification must be Obtained by the Registrar of Companies.
- In line with section 10A of the 2013 Companies Act the Company Director(s) shall file a declaration of the board resolution.
- Documentation demonstrating that shareholders have paid the sum specified in the Memorandum of Association for the value of the shares.
- In addition to the attached declaration ,the firm must additionally get a registration or Approval if its goals require it to work with a Sectoral regulator like the Securities and either the Reserve Bank of India or the Exchange Board of India.
Frequently Asked Questions:
Ans- Yes, Form 20A is a mandatory requirement to declare the commencement of a business. As for the companies which are eligible to file form 20A, they are those that have been formed on or after 2 November, 2018, with a share capital.
A- The companies which are eligible to file form 20A ,are those that have been formed before 2nd November ,2018 ,and have no share capital.
A- The due date for the First time Filing of 'Form 20A' for Companies Incorporated on or after 2nd November 2018 within 180 days from date of Incorporation.
A- The details required are that all shareholders (as listed in the MOA) have paid the total value of shares ,as Agreed by each shareholder.
A- Proof of payment by shareholders for the value of shares, as listed in the Memorandum of Association. For this purpose, company bank account statements are attached along with the form 20A.
A- In that case, instead of a bank account statement a valid payment proof like NEFT / IMPS receipts, can be attached.
A- Companies that do not Comply with the basic requirement of Filing form 20A for the Commencement of business ,will have to file a Penalty of ₹50,000/-. Every Company Officer who is responsible for filing Form inc 20A will be charged a penalty of ₹1,000/- day ,for every day ,until the form is Filed and reaches the Maximum amount of ₹1,00,000/-
A- The ROC can remove a company name from the registry ,if the company has not executed any Business transaction or operation ,after 180 days of registering the business.