Form 20A – Declaration for Commencement of Business

Overview

Form 20A is a mandatory declaration that must be filed by a company’s directors when commencing business operations. This form must be certified by a practising Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant.

Introduction

According to the Companies (Amendment) Ordinance, 2018, every company incorporated on or after 2nd November 2018 must submit a declaration of commencement of business. Form 20A must be filed by the directors within 180 days from the date of incorporation. This is a crucial compliance requirement, and failure to file it attracts significant penalties.

Companies Exempt from Filing Form 20A

The following entities are not required to file Form 20A:

• Companies incorporated before 2nd November 2018, i.e., prior to the enforcement of the Companies (Amendment) Ordinance, 2018.
  
• Companies incorporated after 2nd November 2018 that do not have share capital.

Filing Timeline

Every company required to file Form 20A must do so within 180 days of incorporation.

Requirements and Procedure

A certificate of commencement of business must be obtained within 180 days from incorporation by filing Form 20A with the concerned Registrar of Companies (ROC).

• A declaration under Section 10A must be submitted through a Board Resolution within the eForm.
• Proof of deposit of the paid-up share capital by the subscribers must be attached to the form.
• If the company’s business activities require prior approval or registration from sectoral regulators like the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI), such approvals must be obtained and attached along with the declaration.
• The eForm must be verified and certified by a practising professional before submission to the ROC.

Penalties for Default
Severe penalties have been prescribed to discourage non-compliance and reduce the formation of shell companies.

• For the Company: A penalty of ₹50,000 will be imposed for failure to file Form 20A.
• For Officers in Default: Every defaulting officer will be liable to pay ₹1,000 per day of continued default, up to a maximum of ₹1,00,000.
• Company Strike-Off: If the Registrar has sufficient reason to believe that a company is not conducting any business or operations even after 180 days of incorporation, the company’s name may be struck off from the Register of Companies.

Fee for Filing Form 20A

For Companies Having Share Capital

The filing fee for Form 20A varies depending on the nominal share capital of the company:

For Companies Without Share Capital

If the company has no share capital, a flat filing fee of ₹200 applies.

Additional Fees for Delayed Filing

If Form 20A is not submitted within the prescribed period, additional fees will be levied as follows:

Timely filing of Form 20A is essential to avoid additional charges and ensure smooth compliance with the Companies Act, 2013.
The form must be verified and certified by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant in practice before submission.

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