In practice, a Cost Accountant or a Chartered Accountant should verify the information on Form 20A filed by company directors upon initiation of the business.
An Introduction
In accordance with the Companies (Amendment) Ordinance 2018, all companies incorporated on or after 2 November 2018 are required to file a certificate of commencement of business. It is one of the most important compliances to follow because the penalties for non-filing are extremely high. Form 20A is a declaration filed by the directors within 180 days of the company’s incorporation date.
Those companies that do not have to file Form 20A
INC Form 20A is not required for the following companies:
- Corporations incorporated before the Companies (Amendment) Ordinance, 2018 (i.e. before its commencement).
- Companies incorporated after 2nd November 2018 without share capital.
Filling out Form 20A within the deadline
Within 180 days after incorporation, every company required to file form 20A must do so.
Requirements and procedures
A certificate of business commencement must be obtained within 180 days from the date of incorporation, and an eForm must be submitted with the concerned ROC (Registrar Of Companies) to obtain the certificate. Using an eForm, directors must provide a statement under section 10A in the form of a Board Resolution. Additionally, the eForm must include a proof of the subscriber’s deposit of paid-up capital. A company must obtain registration or approval from any sectoral regulator such as Securities and Exchange Board of India along with the attached declaration if it pursues any objects requiring registration or approval. A practising professional must verify and certify the eForm before it can be filed with the ROC (Registrar of Companies).
Defective Payments and Penalties
Noncompliance is punishable by high penalties, which were designed to reduce the number of shell companies formed. Here are the penalties for noncompliance:
- Deficiency in complying with the above requirements will result in a penalty of Rs 50,000 given to the company.
- In defaulting officers are subject to a daily fine of 1,000 rupees for every day the default continues, up to a maximum fine of a million rupees.
- Registrars may strike off the names of companies whose names they reasonably believe do not carry on any business or activities after 180 days of incorporation.
Filing fee for Form 20A
Share capital companies must pay an eForm filing fee of :
| Nominal Share Capital | Applicable Fees in (Rs.) |
| Having a share capital of less than 100,000 | 200 |
| At least 1,00,000 but not more than 4,99,999 | 300 |
| At least 5,00,000 but not more than 24,99,999 | 400 |
| At least 25,00,000 but not more than 99,99,999 | 500 |
| A total of $1,000,000 or more | 600 |
Fees for submitting eForms for companies without share capital:
The fee is only Rs 200 in this case.
If the form isn’t filed by the deadline, there will be an additional fee.
| Capitalization nominal | The applicable fees are in (Rs) |
| 30 days maximum | Two times the normal fee |
| A period of time that exceeds 30 days but does not exceed 60 days | The fees are 4 times what they normally are |
| Not more than 90 days but not more than 60 days | 6x the normal fee |
| At least 90 days but less than 180 days | Ten times the normal fee |
| At least 180 days | 12 times the usual fee |