If your company has share capital and was incorporated on or after 2 November 2018, it may not start business or borrow money until a director files Form INC-20A with the Registrar. The form must go in within 180 days of the date on your Certificate of Incorporation. It is a short declaration, but missing it brings a fixed penalty on the company, a daily penalty on each officer in default and, in some cases, the company being struck off.
This post covers who has to file, what the declaration actually says, what you need in hand before filing, and what happens when the 180 days pass.
What INC-20A declares
Section 10A of the Companies Act, 2013 sets two conditions before a company with share capital can commence business or exercise borrowing powers:
- a director files a declaration that every subscriber to the memorandum has paid the value of the shares they agreed to take; and
- the company has filed a verification of its registered office under section 12(2).
INC-20A is the form for the first condition. It is not a licence and the Registrar does not “approve” your business. You are confirming a fact: the share money promised in the memorandum has actually reached the company. If you would rather have the filing handled, our ROC compliance support for companies prepares the commencement-of-business declaration and files it for you.
The second condition is usually already met. Most companies give the registered office address in SPICe+ at incorporation. If yours used a correspondence address instead, the office verification has to be filed separately, and both need to be in place.
Who has to file it, and who does not
| Company | INC-20A needed? |
|---|---|
| Private limited company with share capital, incorporated on or after 2 November 2018 | Yes |
| One Person Company with share capital, incorporated in the same period | Yes; the single member is the subscriber |
| Public company with share capital, incorporated in the same period | Yes |
| Company without share capital | No; section 10A applies only to companies “having a share capital” |
| Company incorporated before section 10A came into force | No |
The section talks about commencing “any business”. It does not exempt companies that are still setting up, so even a company that has not issued an invoice yet should file within the window if it intends to trade.
What you need before you file
The declaration is only as good as the money trail behind it. Before filing, make sure:
- The company bank account is open and each subscriber has transferred the full amount for their shares into it. Payment from the subscriber’s own account is the cleanest evidence.
- You have a bank statement or certificate showing those receipts. The MCA instruction kit expects proof of the subscription money to be attached.
- A director has a valid DSC, because the form is filed and signed by a director.
- The registered office has been verified, either in SPICe+ or by the separate filing.
Practising professionals usually certify the form before it is submitted.
The 180-day count
The 180 days run from the date of incorporation shown on the certificate, not from the date the bank account was opened. A company incorporated on 10 January has until early July. Set the reminder on the day the certificate arrives; bank onboarding delays are the usual reason companies run short.
There is no reason to wait for the deadline. Once the subscribers have paid and the statement is available, the form can be filed. Until it is, the company should not be trading or taking loans.
What happens if you miss it
Penalties under section 10A(2)
- The company is liable to a penalty of ₹50,000.
- Every officer in default is liable to ₹1,000 for each day the default continues, up to ₹1,00,000.
These are penalties imposed by the Registrar through adjudication under section 454, separate from the filing fee. Section 446B provides lower penalties (not more than half the specified amount) for small companies, One Person Companies and recognised start-ups, so the actual figure can differ for a young company.
Strike-off risk
Section 10A(3) lets the Registrar start removing the company’s name from the register if no declaration has been filed within 180 days and the Registrar has reasonable cause to believe the company is not carrying on business. Section 248(1)(d) says the same thing from the strike-off side: unpaid subscription without an INC-20A within 180 days is one of the grounds for the Registrar’s notice.
In practice, a company that missed the deadline but is genuinely operating should file as soon as possible, pay what is due and keep evidence of its activity. Continuing to delay only adds to the officers’ daily penalty.
Practical knock-ons
Because the law bars borrowing until the declaration is filed, a lender or investor doing due diligence may ask to see the INC-20A filing on the MCA record. An unfiled form tends to surface at exactly the moment the company needs money.
Frequently asked questions
Can we raise invoices before INC-20A is filed?
Section 10A says the company “shall not commence any business” until the declaration is filed. Having a GST number does not change that. File INC-20A before trading starts.
One subscriber has not paid yet. Can we still file?
No. The declaration states that every subscriber has paid. Filing it when that is untrue is a false statement under the Act. Collect the money first.
Does increasing share capital later need another INC-20A?
No. INC-20A is a one-time declaration about the subscribers to the memorandum. Later share allotments follow their own filings.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
