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Form INC 20A - Declaration as to obtain certificate of Commencement of Business
SAHU & ASSOCIATES:Introduction:
- After the incorporation, company can start its business right after getting its Certificate of Incorporation. However, by the applicability of "The Companies (Amendment) Ordinance, 2018, the provision for Commencement of Business has been brought back effective from 2nd November, 2018 which used to exist in previous Companies Act, 1956.
- All the Companies registered in India and having a share capital is required to obtain commencement of business certificate before commencing any business or exercising any borrowing powers.
- To Eliminate shell companies
- To enhance the scope of corporate compliance
- To facilitate the ease of doing business
- Form INC-20A is required to file pursuant to Section 10A (1)(a) of the Companies Act, 2013 and Rule 23A of the Companies (Incorporation) Rules, 2014 (further amended as Companies (Incorporation)Fourth Amendment Rules, 2018 in December 2018).
- Companies (Private Limited/One Person/Public Limited) registered on or after 2nd November 2018 need to mandatorily file FORM INC 20A (declaration by directors under section 10A) within 180 Days from the date of Registration to obtain Certificate of commencement of business.
- Addition to above the company Should file forms for verification of Registered office address in form INC 22 under section 12(2) of the Companies Act 2013 in case the option to verify registered office is selected as “No” in Incorporation form.
Rule 23ADeclaration form shall be verified by a Company Secretary or a Chartered Accountant or a Cost Accountant, in practice:
Provided that 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.
Not required to file Form INC 20A
The following companies are not required to file:
- 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.
Documents required along with Form INC 20A
- Subscribers Proof of Payment for the value of shares (Credits in company bank statement).
- Certificate of Registration issued by RBI in case of NBFC companies
- Copy of Board Resolution
- Certificate from a practicing professional (CA/CS/CMA) stating that the said capital amount has been brought in by the subscribers to the memorandum of association.
Penalties for Default:
- 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