Declaration- Commencement of Business - e- form 20A - Series - 416

Declaration- Commencement of Business
Companies (Amendment) Ordinance, 2019
E-form 20A w.e.f. 26.01.2019 Section 10A Rule 23A

Article updated as on 26th January, 2019
·         
        SHORT SUMMARY:

As per Companies (Amendment) Ordinance, 2019 effective w.e.f. 2nd November, 2018 a new Section 10A (i.e. Commencement of Business) inserted in Companies Act, 2013.


·         Effect of new section:

As per 10A, a company incorporated after ordinance SHALL NOT COMMENCE its business or exercises any borrowing powers unless:-


     · A declaration is filed by the directors within 180 days from date of incorporation of company with Roc that ‘every subscriber to the MOA has paid the value of the shares agreed to be taken by him”.

    · A verification of registered office as required filing u/s 12(2) within 30 days of incorporation.

QUICK BITES:

     1.    In which Form Company shall file declaration.

Company shall file declaration in e-form 20A (i.e. Declaration of Commencement of Business).

    2.    Whether ROC shall issue any Certificate of Commencement of Business after filing of declaration.

As per language of Section and content of form ROC, one can opine that ROC shall not issue any certificate of Commencement of Business.

     3.    Whether Company can start business or generate revenue before filing of declaration with ROC in e-form 20A.

As per language of Section 10A read with rule 23A, one can opine that a Company can’t start any business activity before filing of declaration with ROC.

     4.    Whether it is mandatory for companies incorporated after 02.11.2018 to file e-form INC-22 within 30 days of Incorporation.

Legal Language:
As per Section 12(2) read with rule 25 “The Company shall furnish to the Registrar verification of its registered office within a period of thirty days of its incorporation in e-form INC-22 along with attachments”.

Answer:
As per section 10A, one can opine that it is mandatory to file e-form INC-22 within 30 days of incorporation of Company. If Company incorporated after 02.11.2018.

     5.    What shall be proof to show that Company has received subscription money from subscribers?

Proof can be followings:
·        Copy of Bank Statement of Company.
·        Declaration from Director of Company or take note of same by Board in Board Meeting
   
    6.    What shall be consequences (in form of penalty), if company fails to file e-form 20A within 180 days?

Following shall be penalties:
a.       Penalty on Company: Company shall be liable for Penalty of Rs. 50,000/-
b.      Penalty on every Officer: Penalty shall be Rs. 1,000/- for each day during which default continue but maximum penalty Rs. 100,000/-

   7.    What can be other consequences, if Company fails to file e-form 20A declaration with ROC

If company fails to file such declaration within 180 days from the date of incorporation then Roc has reasonable cause to believe that the Company is not carrying on any business or operation, ROC may, initiate action for removal of name of Company (Strike off)

NOTE:
·     Form 20A is mandatory to get certified by Practicing CS, CA or CWA. Therefore, if there is any default in form or documents professionals shall be liable u/s 448 and 449.

·    In the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration form 20A.

    8.    Information required mentioning in e-form 20A (Declaration):

                          I.        CIN, Address and Email ID                Shall be Pre-filled
               II.        Whether the affairs of the Company is regulated by any sectoral regulator (Select Yes or No)
                      III.        Attachment:
·         Proof of Subscription of Money
·         Proof of Sectoral Regulator, if any Required.

    9.    When form 20A shall be available on MCA Website:
        E-form 20A shall be available on MCA website w.e.f. 26th January, 2019.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

     Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION



Comments

  1. Very good article Divyesh Sir
    Thank you

    ReplyDelete
  2. Can you tell the procedure to do compounding if form is not filed within 180 days

    ReplyDelete
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  4. This article gives the light in which we can observe the reality. This is very nice one and gives indepth information. Thanks for this nice article. Pakistan Stock Exchange

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