COMMON QUESTIONS ON DECLARATION OF COMMENCEMENT OF BUSINESS - Series 554
COMMON QUESTIONS ON
DECLARATION OF COMMENCEMENT OF BUSINESS
(Mandatory
for All Companies)`
MCA
has inserted New Section 10A after Section 10 by Companies (Amendment) Ordinance, 2018 Dated 02.11.2018 and same
has been inserted in Companies (Amendment) Act, 2019.
As
per 10A, a company having SHARE CAPITAL incorporated after ordinance i.e.
02.11.2018 shall not commence its business or exercise any borrowing powers
unless,
A declaration is filed
by the directors in e-form Form No.
INC-20A 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”.
FAQ’s
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1.
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Which type of
Companies required filing 20A?
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Every Company
incorporated on or after 02nd November, 2019 is required to file
e-form INC-20A with ROC. (Including OPC, Section 8, Normal Company etc)
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2.
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Whether ROC will
issue any certificate after filing of e-form 20A?
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Let’s have some
look on Background:
§ There
was section 149 in Companies Act, 1956 which required public Company to
obtain certificate of commencement of business from ROC.
§ In
Companies Act, 2013 there was Section 11 which required every company to
obtain certificate of Commencement of Business from ROC.
However,
such section has been omitted w.e.f. 29th May, 2015 by Companies
(Amendment) Act, 2015
§ On
02.11.2018 Govt. has introduced Companies (Ordinance), 2018 and inserted
section 10A “Declaration of Commencement of Business”.
Before 02.11.2018
there was sections for obtaining ‘Certificate of Commencement of Business”
from ROC but section 10A states about “Declaration of Commencement of
Business”.
Therefore, after
filing of INC-20A Roc shall not issue any certificate of commencement of
business. It is just an declaration from the Directors of Company
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3.
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Whether Subscription
money can receive in cash?
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As per Companies
Act, 2013 that subscription money must be received in Bank account of
Company. Therefore, one can opine that Company can receive subscription money
in cash also and book the same in books of accounts of Company.
Even as per section
269ST of Income Tax Act, a Company can accept maximum Rs. 200,000/- per day
per person in cash.
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4.
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What is the time
period of issue of share certificate by the Company?
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As per section 56, every
company shall deliver the certificates of all securities allotted,
transferred or transmitted within a period of two months from the date of
incorporation, in the case of subscribers to the memorandum.
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5.
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How to issue share
certificate within 60 days if subscription money not received in 60 days?
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As per section 56:
Company need to issue share certificate within 2 month of Incorporation of
Company.
As per section 10A:
Company can receive money within 180 days of incorporation of Company.
Note: In such case one can opine that
whether subscription money received or not it is duty of Company to issue
share certificates to subscribers of Memorandum of Association.
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6.
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Whether Company can
commence business without filing of declaration of commencement of business?
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As per Section 10A
Company can’t commence business without filing of e-form 20A.
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7.
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Whether Company can
accept loan from any stake holder (Director, Shareholder etc) without filing
of INC 20A?
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As per Section 10A
Company can’t commence accept loan/ borrowing without filing of e-form 20A.
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8.
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Whether Company can
file any other form with ROC before filing of form 20A? (Like ADT-1)
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As per MCA system a
Company can’t file any form without filing of e-form INC-20A with ROC.
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9.
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What are the consequences
if company fails to file e-form 20A within 180 days from incorporation of
Company? 50,000 and 1000 per day upto 100,000?
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Company can file such
form INC-20A with Roc even after 180 days by paying additional fees as per
fees rules. However, until unless form is not filed above mentioned
restrictions shall be applicable on Company.
§ Penalty On Company:
the company shall be liable to a penalty of fifty thousand rupees.
§ Penalty on Officer in Default:
every officer who is in default shall be liable to a penalty of one
thousand rupees for each day during which such default continues but not
exceeding an amount of one lakh rupees
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10.
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Whether Company can
Strike off without filing of 20A, if promoters don’t want to commence
business?
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A Company can’t file
Strike off form STK-2 without filing of e-form 20A. Therefore, it is
mandatory to file 20A before strike off of Company.
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11.
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What are the
attachments of e-form INC-20A?
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§
In case of subscription money
received in Bank Account, attachment shall be copy of Bank Statement.
§
In case of subscription money
received in cash, attachment shall be a declaration along with copy of books
of account of Company.
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12.
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Restriction before
filing of e-form INC-20A?
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§ Company
can’t Commence Business.
§ Company
Can’t exercise Borrowing Powers.
§
Practically MCA system not
allows filing any e-form with ROC.
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13.
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Whether company
incorporated without share capital need to file declaration in form INC- 20A?
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As
per Section 10A this declaration of commencement of business is required to
file only by Companies having Share Capital. Therefore, Company not having
share capital need not to file 20A.
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(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
In case of company required prior approval of authorities RBI/SEBI/IRDA so how we can file any other form before filing INC-20A
ReplyDeletepractically not allowed to file forms.
DeleteHi, I have recently filed INC 22 and DIR 12 of the Company before filing on INC 20A.
ReplyDeleteKindly list of the form which be able to file before INC-20A
DeleteSir, as RBI approval is still pending for us for NBFC registration, can you please clarify, if we can attach clarification letter & file INC-20A? Is that fine?
ReplyDeleteHi can i file ADT appointment of auditor without filing the INC-20 business commencement form
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ReplyDeleteWe (5 Directors) have registered the company in May 2020 and did not file 20A because of lack of funds due to COVID and now 3 of the directors would like to resign and get away with this. Could you please let me know if they are allowed to file DIR -2. Also if Yes, does the remaining directors should invest the authorized capital as per MOA what was committed by all the 5 directors earlier?
As per the companies amendment(ordinance) act, 2019, the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under subsection (1) of section 10A;
ReplyDeleteSo, INC-20A is not mandatory for strike off
so the point you mentioned in your blog is incorrect
company incorporated 2016 year. but 24-07-2021 filed INC 22 not allowed. error is INC 20A NOT FILED PLS FILE AND THEN FILE INC 22 . PLS REPLY OR CALL 9942099441.
ReplyDelete