Form INC-20A: A Critical Compliance for Newly Incorporated Companies

 

What is Form INC-20A?

Form INC-20A is a declaration that must be filed by companies with share capital within 180 days of incorporation to commence business or exercise borrowing powers.

 

Purpose of Form INC-20A:

The form declares that subscribers to the memorandum have paid the value of shares agreed upon, ensuring compliance with Section 10A of the Companies Act, 2013.

 

Penalties for Non-Filing:

– Company Penalty: ₹50,000

– Officer-in-Default Penalty: This penalty is ₹1,000 per day, up to a maximum of ₹1,00,000.

 

Consequences of Non-Compliance:

– The company cannot commence business or exercise borrowing powers.

– The Registrar of Companies (ROC) may initiate action for removal of the company’s name from the register.

– If the company fails to file Form INC-20A within 180 days, it may need to file Form INC-28 (Condonation of Delay) before submitting Form INC-20A.

Key Points to Consider:

– Time Limit: Form INC-20A must be filed within 180 days of incorporation.

– Mandatory Filing: Filing Form INC-20A is crucial for the legal functioning and compliance of a newly incorporated company in India.

– Applicability: This form is applicable to companies with share capital, including startup companies.

Additional Requirements:

– The declaration in Form INC-20A must be verified by a Company Secretary, Chartered Accountant, or Cost Accountant in practice.

– Supporting documents, such as proof of payment for shares and a board resolution authorizing the signatory, are required.

 

What if You Cross 180 Days Without Filing?

If you miss the 180-day deadline, you’ll need to file Form INC-28 (Condonation of Delay) along with the prescribed fee and explanation for the delay, before submitting Form INC-20A. It’s essential to consult a professional to avoid any complications.