What is Form INC-20A (Declaration of Commencement of Business)?

Form INC-20A is a mandatory declaration that must be filed with the Registrar of Companies (RoC) by all companies in India incorporated on or after November 2, 2018. This filing confirms two critical points:

1. All subscribers to the Memorandum of Association have paid their share capital in full.

2. The company is ready to commence its business operations.

Under the Companies Act, 2013, this form must be submitted within 180 days of incorporation. Without it, your company cannot legally start business activities or exercise borrowing powers.

Primary Objectives of Form INC-20A

• Declare Commencement of Business – Officially confirms the company is operational and ready to transact.

• Confirm Paid-Up Share Capital – Verifies that all shareholders have paid their committed share amounts.

• Prevent Shell Companies & Fraud – Requires proof of genuine business intent, such as bank statements showing receipt of capital.

• Enable Borrowing Powers – A company can only take loans or issue debentures after filing and approval.

• Ensure Legal Compliance – Avoids heavy penalties (₹50,000 for the company + ₹1,000/day for officers in default, capped at ₹1 lakh).

• Build Credibility – Filing boosts trust among investors, lenders, and government authorities.

• Avoid Strike-Off – Failure to file within 180 days can lead to removal of the company from the official register.

How Form INC-20A Helps Prevent Shell Companies

• Proves Intent to Operate – Requires declarations supported by bank statements or proof of transactions.

• Verifies Capital Contribution – Ensures the company has actual paid-up share capital.

• Eliminates Dormancy Risks – Stops companies from staying inactive for fraudulent purposes.

• Acts as a Legal Safeguard – Non-filing can trigger regulatory action, including company strike-off.

• Promotes Transparency – Builds a verified track record right from the start.

Benefits of Incorporating Your Company in India

Filing for incorporation is more than just a legal step — it’s a strategic move that sets your business up for long-term success. Whether you’re a startup founder or an entrepreneur scaling up, incorporation provides legal protection, credibility, funding opportunities, and growth advantages that unregistered businesses simply can’t access.

1. Limited Liability Protection

Separate your personal wealth from business risks. Once incorporated, your liability is limited to the amount you invest — shielding your personal assets from business debts, lawsuits, and obligations.

2. Enhanced Credibility & Trust

A registered company instantly looks more professional to clients, suppliers, banks, and investors. Incorporation signals that you are serious about compliance, ethics, and long-term operations.

3. Easier Access to Funding

Incorporated companies have more financing options — from bank loans to venture capital. You can issue shares, attract angel investors, and leverage a structured legal identity to secure funding.

4. Tax Advantages

Registered companies may qualify for deductions, exemptions, and startup tax holidays under schemes like Startup India, including capital gains exemptions and “angel tax” relief.

5. Perpetual Succession & Business Continuity

Your company lives on — even if founders retire, exit, or pass away. This stability ensures smooth succession planning and investor confidence.

6. Brand & Trademark Protection

Incorporation allows you to register your company name, logo, and trademarks — protecting your brand from misuse and building a competitive edge.

7. Legal Compliance & Governance

As a company, you operate under the Companies Act, 2013, ensuring transparency, accountability, and ethical governance — reducing risks of penalties and legal disputes.

8. Access to Government Schemes

Registered companies can apply for government subsidies, grants, and startup support programs, including the Startup India Seed Fund and Credit Guarantee Schemes.

9. Employee Benefits & Talent Retention

Offer structured benefits like Employee Stock Option Plans (ESOPs), PF, and insurance to attract and retain skilled talent — boosting morale and productivity.

10. Intellectual Property (IP) Protection

Your company can own patents, trademarks, copyrights, and trade secrets, giving you stronger legal grounds to protect innovations and creative works.

Who Must File Form INC-20A?

Form INC-20A is mandatory for all companies incorporated in India on or after November 2, 2018, provided they have share capital.

Applicable Entities

The requirement covers both Private Limited Companies and Public Limited Companies, including:

• One Person Companies (OPCs) with share capital – Even though OPCs have a simpler structure, they must comply if incorporated after November 2, 2018, with share capital.

• Section 8 Companies (Non-Profits) with share capital – Charitable or non-profit entities with share capital must also file.

• Producer Companies with share capital – These specialized entities fall under the rule if they meet the date and share capital criteria.

Exemptions

The following companies are not required to file Form INC-20A:

• Incorporated before November 2, 2018 – This rule applies only to companies formed after the amendment came into effect.

• Companies without share capital – For example, companies limited by guarantee, where there’s no requirement to confirm share subscription.

• Certain Government Companies – Some may be exempt under specific provisions or notifications.

Importance of the Date of Incorporation

The Date of Incorporation is the day the Registrar of Companies (ROC) issues the Certificate of Incorporation — officially marking the company’s legal existence.

It is critical for Form INC-20A because:

1. Determines Applicability – Only companies incorporated on or after November 2, 2018, are required to file.

2. Starts the 180-Day Clock – The filing deadline is exactly 180 days from incorporation.

3. Gates Business Operations – A company cannot legally start business or use borrowing powers until this form is filed.

4. Avoids Penalties & Strike Off – Missing the deadline can lead to heavy fines and even the ROC striking off the company’s name.

Essential Documents for Filing Form INC-20A

Filing Form INC-20A is mandatory for newly incorporated companies with share capital in India (post–November 2, 2018). The documents below ensure the company has fulfilled the conditions to commence business and received its subscribed share capital.

1. Bank Statement of the Company

• Purpose: Confirms that all subscribers have deposited their share capital into the company’s bank account.

• Details: Should cover from the incorporation date to the declaration date, showing clear credit entries from all subscribers. Ideally, include at least the first 30–60 days of transactions.

2. Board Resolution

• Purpose: Authorizes a director to sign and file INC-20A and confirms receipt of share capital.

• Details: Must explicitly state the decision to commence business and authorize the specific director for filing.

3. Digital Signature Certificate (DSC) of Authorized Director

• Purpose: Required for digitally signing the form.

• Details: Must be active and registered on the MCA portal for the director’s DIN.

4. Director Identification Number (DIN) of Authorized Director

• Purpose: Mandatory field in the form for the signing director.

5. DSC of Practicing Professional (CA, CS, or CMA)

• Purpose: The form must be certified by a practicing professional.

• Details: Provide their DSC, membership number, and membership status (Associate or Fellow).

6. Certificate of Incorporation (Reference Only)

• Purpose: For retrieving accurate CIN and incorporation date while filling the form.

7. Proof of Registered Office Address (if not filed earlier)

• Purpose: Confirms compliance with Section 12(2) of the Companies Act.

• Details: May include utility bills (≤2 months old) or rent agreement, if required.

8. Approvals from Sectoral Regulators (if applicable)

• Purpose: Required for companies in regulated sectors (e.g., RBI for NBFCs, SEBI, IRDAI).

• Details: Include approval letters or registration certificates.

9. Photographs of Registered Office (Optional but Recommended)

• Purpose: Acts as supporting evidence of genuine operations.

• Details: External view with signboard and internal view showing office space, preferably with a director/KMP present.

Step-by-Step Filing Procedure for Form INC-20A

Step 1 – Log in to MCA Portal

• Go to mca.gov.in

• Log in using your registered MCA user account (create one if needed).

Step 2 – Download e-Form INC-20A

• Navigate to: MCA Services → e-Filing → Company Forms Download.

• Download the latest INC-20A – Declaration for Commencement of Business.

Step 3 – Fill in the Form Details

• Enter CIN → auto-populates company name & registered office.

• Enter Date of Incorporation.

• Declare that all subscribers have paid their share capital.

• Confirm registered office verification is done (usually via INC-22).

• Add regulator approval details (if applicable).

• Provide DSC details of the signing director.

Step 4 – Attach Documents

• Bank Statement showing share capital receipt.

• Board Resolution (if separate).

• Regulator approvals (if applicable).

• Optional: Office photographs.

Step 5 – Validate the Form

• Use Pre-fill to cross-check with MCA records.

• Use Check Form to validate entries and fix any errors.

Step 6 – Affix Digital Signatures

• DSC of the Authorized Director.

• DSC of the Practicing Professional with membership details.

Step 7 – Upload the Form

• Go to MCA Services → Upload e-Forms.

• Select and upload the filled INC-20A PDF.

Step 8 – Make Payment

• Pay applicable government fees (based on nominal share capital).

• Late filing incurs additional fees.

Step 9 – Acknowledgement & Approval

• Save the generated Service Request Number (SRN) and payment challan.

• Track status via SRN on MCA portal.

• Most INC-20A filings are approved instantly via STP mode if correct.

Due Date & Government Fees for Form INC-20A Filing

Deadline: Within 180 days from the date of incorporation.

Consequences of Not Filing Form INC-20A on Time – Taaza Private Limited

Failing to file Form INC-20A (Declaration for Commencement of Business) within 180 days of incorporation can lead to severe legal and financial consequences, including heavy penalties and even company strike-off by the Registrar of Companies (RoC).

1. Penalties for Non-Filing

• Company Penalty: ₹50,000

• Officer Penalty: ₹1,000 per day for each defaulting officer (maximum ₹1,00,000 per officer)

• Additional Risks: Operational restrictions, loss of credibility, and potential legal action.

2. Risk of Company Strike-Off by RoC

If Form INC-20A is not filed, the RoC may assume your company is inactive and can initiate strike-off proceedings, leading to:

• Loss of Legal Status: Company ceases to exist as a legal entity.

• Asset Forfeiture: Remaining assets may be vested with the government.

• Director Disqualification: Directors may be barred from holding other directorships.

3. Restrictions on Business & Borrowing Powers

Under Section 10A of the Companies Act, 2013 (for companies incorporated on or after 2nd November 2018), you cannot:

• Start business operations

• Exercise borrowing powers

until:

1. Form INC-20A is filed – Confirms receipt of full share subscription money.

2. Registered office verification is completed.

4. Purpose of These Restrictions

• Promoting Genuine Businesses: Ensures companies are operationally and financially ready.

• Protecting Stakeholders: Safeguards creditors, investors, and the public.

• Preventing Misuse: Stops creation of shell companies and fraudulent entities.

5. Other Consequences of Non-Compliance

• Invalid Borrowings: Loans taken before filing INC-20A may be challenged in court.

• Funding Challenges: Banks and investors will avoid dealing with non-compliant companies.

• Ongoing Penalties & Strike-Off: Non-compliance can lead to continuous fines and eventual removal from the company register.

Board Resolution for Filing Form INC-20A

A Board Resolution is a vital corporate governance document required when filing Form INC-20A — the Declaration for Commencement of Business — with the Ministry of Corporate Affairs (MCA).

Why It Matters

While the Companies Act, 2013 does not explicitly mandate attaching a Board Resolution to INC-20A, in practice, CA/CS/CMA professionals certifying the form insist on it as part of due diligence.

Its importance lies in:

• Legal Authorization: Empowers a director to sign and submit Form INC-20A on behalf of the company.

• Confirmation of Compliance: Serves as proof that:

  • All share subscription money from MoA subscribers has been received.

  • The registered office has been verified.

  • The company is ready to commence operations.

• Evidence for Regulators: Protects against future MCA or RoC scrutiny by showing documented board approval.

• Internal Record Keeping: Maintains a clear paper trail of the company’s corporate decisions.

Key Elements of a Board Resolution for INC-20A

A well-drafted resolution should include:

1. Meeting Details: Date, time, and venue of the Board Meeting.

2. Quorum Confirmation: Statement confirming proper quorum was present.

3. Agenda Purpose: Filing of Form INC-20A for commencement of business.

4. Share Subscription Confirmation: Declaration that all subscribers have paid the agreed value of shares.

5. Registered Office Confirmation: Statement that the company’s registered office has been verified as per Section 12(2) of the Companies Act, 2013.

6. Regulatory Approvals (if applicable): Confirmation that any sector-specific approvals (RBI, SEBI, etc.) have been obtained.

7. Commencement Declaration: Board’s formal statement that the company is ready to begin operations.

8. Authorization for Filing: Nomination of a director to sign and file INC-20A with the RoC.

9. Ancillary Powers: Permission for the authorized director to take any necessary steps to give effect to the resolution.