INC 20A Commencement of Business Certificate Late Fees Explained

Commencement

A company becomes a juristic person from the date of its incorporation and thus it owns all the rights of being artificial person such as right to own assets or right to sue or be sued and many more.

However, The MCA rolled out The Companies (Amendment) Ordinance, 2018 and thereby It has mandated every company having share capital and is registered in India to obtain Certificate of Commencement of Business by filing INC 20A before ROC. Thus from 2018, no company can commence its business or borrow any amount unless it has received a Certificate of commencement of business from ROC.

Now the question arises when and how to obtain this certificate and what shall be the consequences in case of failure of not obtaining this certificate.

In this blog, we will discuss the procedure and documents for obtaining the Certificate of Commencement of Business and other concepts related thereto.

How to obtain certificate of Commencement of Business for companies from ROC?

As the company is registered with Ministry of corporate Affairs in India, thereafter the shareholders of the company have to deposit the amount of share capital with the company. The amount of shares or share capital shall be the same as they have subscribed in the Memorandum of Association at the time of incorporation of company.

The key point to note here is that the share capital can be deposited either through cash or bank or both in the company.

Subsequently, the company shall be required to file the Form INC-20A with the ROC. Thereafter, the ROC shall, on being satisfied with the details and attachments of Form INC-20A, issue a certificate of commencement of business to the company.

 

What are the documents required to file Form INC20A before ROC?

  1. Certificate of Incorporation of Company (Received from ROC)
  2. Board Resolution for appointment of Authorized Signatory (the Authorized Signatory shall sign the Form INC 20A)
  3. Proof of Payment of Subscribed Capital – Bank Statement/ NEFT Receipts

 

What is the due-date for filing INC-20A?

According to the Section 10A of the Companies Act, 2013, the form INC 20A is required to be filed within 180 days from the date of Incorporation of Company before the ROC to obtain the Declaration of certificate of business commencement. The form can also be filed after the expiry of this 180 days period but additional fee is required to be paid depending upon the delay of the number of days from the due-date.

 

Period of Delay

Additional Fee

When Up-to 30 Days

2 Times

When More than 30 Days but either up-to or less than 60 days

4 Times

When More than 60 Days but either up-to or less than 90 days

6 Times

When More than 90 Days but either up-to or less than 180 days

10 Times

When More than 180 Days

12 Times

 

What shall be the consequences of not-filing INC-20A?

When the company or its directors fail to file the Form INC 20A within 180 days from the date of its incorporation then the company and its directors shall liable to pay high penalties.

  • In case of default in filing INC 20A before ROC, the Company shall be liable to pay Rs.50,000 as penalty.
  • In case of default in filing INC 20A before ROC, The Directors/other officers of the company who is in default shall be liable to pay penalty of Rs.1,000/- per day from the date of default up-to the maximum of Rs.1Lakh.
  • In case of default in filing INC 20A before ROC, The ROC may initiate the process of removal of name of the company.
  • The company cannot start its business and if any transaction or business activity is entered by the Company without the issue certificate of Commencement of business shall be an illegal activity.

 

What is the Government fee payable for filing INC-20A?

The Government fee payable for filing INC-20A depends upon the amount of Authorized share capital. The following Government fee is payable at the time of filing INC-20A –

Authorized Share Capital

Government Fee (in Rs.)

Less than 1 Lakh

200

1 Lakh – 4,99,999

300

5Lakh – 24,99,999

400

25 Lakh – 99,99,999

500

1 Crore or more

600

 

Conclusion

Incorporating a company is not sufficient to start business operations.  Since the Companies (Amendment) Act, 2018, It is compulsory for every company having share capital and is registered in India to obtain Certificate of Commencement of Business. Thus, every Company and its officer must ensure the filing of INC-20A within 180 days from the date of its incorporation in order to avoid late fee or penalties.

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Knowledge Source:

Conversion of Private Limited Company into LLP

Can A Foreigner Start A Private Limited Company In India?

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