Form 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Chartered Accountant (CA) or Company Secretary (CS) or a Cost Accountant in practice.
As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2 November 2018 to file a certificate of commencement of business. Form 20A is a declaration filed by the directors within 180 days of the date of incorporation of the company. This is one of the most important compliances to follow as the penalties for non-filing is extremely high.
2.Companies which are not required to file Form 20A
The following companies are not required to file form 20A:
- 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.
3.The time period for filing Form 20A
Every company required to file form 20A shall file the same within 180 days of its incorporation.
4.Requirement and procedure
A certificate of business commencement has to be obtained within 180 days from the date of incorporation and an eForm has to be filed with the concerned ROC (Registrar Of Companies) regarding the same. A declaration under section 10A from the directors has to be provided in the form of a Board Resolution in the eForm itself. In addition to this, a proof of deposit of the paid-up share capital by the subscribers also needs to be attached in the eForm.
If a company pursues objects requiring registration or approval from any sectoral regulators such as The Reserve Bank of India and Securities and Exchange Board of India etc, then it shall obtain such registration or approval along with the attached declaration. The eForm has to be verified and certified by a practising professional before filing with the ROC (Registrar Of Companies).
5.Penalties for Default
The penalties for non-compliance are very high which has been done intentionally so as to curb out the number of shell companies incorporated. Following are the penalties for non-compliance:
- 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.
6.Fee for filing Form 20A
Fee for filing eForm for companies having share capital :
|Nominal Share Capital||Applicable Fees in (Rs.)|
|Where share capital is less than 1,00,000||200|
|1,00,000 or above but not exceeding 4,99,999||300|
|5,00,000 or above but not exceeding 24,99,999||400|
|25,00,000 or above but not exceeding 99,99,999||500|
|1,00,00,000 or above||600|
Fee for filing eForm for companies having no share capital:
In this case, the fees applicable is only Rs 200.
Additional fee (in case the form is not filed within the time)
|Nominal Share Capital||Applicable Fees in (Rs)|
|Up to 30 days||2 times of normal fees|
|Above 30 but not exceeding 60 days||4 times of normal fees|
|Above 60 days but not exceeding 90 days||6 times of normal fees|
|Above 90 days but not exceeding 180 days||10 times of normal fees|
|Above 180 days||12 times of normal fees|