As per the Companies (Amendment) Ordinance 2018, Section 10A, a new section inserted after Section 10 of the Companies Act 2013, a company which has been incorporated on or after 02/11/18 and which has share capital, can not commence business or exercise its borrowing powers unless its directors file a declaration within 180 days from the date of incorporation of the company in form 20A with the ROC. The statement says that every subscriber to the MOA has paid the value of the shares agreed to be taken by him on the date of making of such a declaration.’
The contents of this form have to be verified by a Company Secretary or a Chartered Accountant or a practising Cost Accountant. Form 20A is one of the most essential compliances to be followed by a company because the penalty for non-filing it is incredibly high.
Yes, it is mandatory to file Form 20A and obtain a certificate for commencement of business. All the companies formed before 2nd November 2018 and all companies formed on or after 2nd November 2018 having a share capital have to file form 20A.
Individual companies are exempted from filing form 20A, which are as follows:
• A company incorporated before the commencement of Companies (Amendment) Ordinance 2018, i.e., 2nd November 2018.
• A company which has been incorporated after 2nd November 2018 without share capital.
The due date of filing form 20A is within 180 days from the date of incorporation of the company.
It is mandatory to provide the bank statement of the company which has all credit entries showing the receipt of subscription money received from all the subscribers to the MOA.
• The company has to obtain a certificate of commencement of business within 180 days of the incorporation of the company and has to file an eForm with the concerned Registrar of Companies regarding it.
• The Directors have to provide a declaration under Section 10A in the form of a Board Resolution within the structure itself.
• It is also compulsory to provide proof of deposit of the paid-up share capital by the subscribers, along with the eForm.
• The company shall also obtain a registration or approval along with the attached declaration provided that the company pursues objects which require registration or support from a sectoral regulator from the example the Reserve Bank of India or the Securities and Exchange Board of India etc.
The form is required to be verified and certified by a practising Company Secretary, Chartered Accountant or Cost Accountant before filing it with Registrar of Companies (ROC).
The penalty for default in filing form 20A is exceptionally high. This has been done intentionally to curb out the number of shell companies being incorporated. The penalties of non-compliance in filing form 20A are as follows:
• Penalty to be levied on the defaulting company: A company which fails to comply with the mentioned requirements will have to pay a penalty of Rs. 50,000.
• Penalty to be levied on the defaulting officers: Every officer in default will be liable to a penalty of Rs. 1000 every day. This shall continue for every day during which the default continues reaching to a maximum of Rs. 1,00,000.
• Company strike-off by Registrar: The Registrar can remove the name of the company from the Register of companies if the Registrar has reasonable ground to believe that the company has not been carrying out any business operations or transactions even after 180 days of incorporation.
The fee levied for companies filing form 20A, having a share capital is as follows:
• A fee of Rs. 200 where share capital is less than Rs. 1,00,000.
• A fee of Rs. 300 where share capital is Rs. 1,00,000 or above but not exceeding Rs. 4,99,999.
• A fee of Rs. 400 where share capital is Rs. 5,00,000 or above, not exceeding Rs. 24,99,999.
• A fee of Rs. 500 where share capital is Rs. 25,00,000 or above but not exceeding Rs. 99,99,999.
• A fee of Rs. 600 where share capital is above Rs. 1,00,00,000 or above.
The applicable fee for filing eForm for companies having no share capital is Rs. 200 only. In case the form is not filed on time, an additional charge is levied on the company, which is as follows:
• Two times of standard fee up to 30 days.
• Four times of standard fee above 30 days but not exceeding 60 days.
• Six times of standard fee above 60 days but not exceeding 90 days.
• Ten times of standard fee above 90 days but not exceeding 180 days.
• Twelve times of standard fee above 180 days