INC-20A - Commencement of Business Certificate has been reintroduced by the MCA
The concept of Commencement of Business Certificate has been reintroduced by the MCA (Ministry of Corporate Affairs). As per recently introduced, The Companies (Amendment) Ordinance 2018, every company which gets registered after the Companies (Amendment) Ordinance 2018 and is having share capital, have to obtain a Commencement of Business Certificate before commencing its business or to use its power of borrowing. As the Companies (Amendment) Ordinance 2018 was introduced on November 2nd, 2018, every company incorporated on or after November 2nd, 2018 is required to obtain the Commencement of Business Certificate. The main objective of this form is to obtain information from company regarding the receipt of value of shares agreed to be taken by them at the time of incorporation of company.
Hence, company is required to give proof of receipt of such payment from its subscribers and detail of its regulator like SEBI, IRDA, RBI (if applicable).
Time Limit for obtaining Commencement of Business Certificate:
It is must for every company to obtain its Commencement of Business Certificate within the 180 days of the date of the incorporation of the company. Any violation of the time limit may bring company in the list of defaulter Companies.
Penalties on violation of compliance or Non-Compliances:
The penalty for the violation of compliances or any non-compliances will be levied in the following manner:
On Company: Any company which fails to obtain its Commencement of Business Certificate with in the specified 180 days from its incorporation will attract a penalty of Rs 50,000.
On Officers / Directors: Each Director / Officer of the company who is declared defaultee by the ROC for the non-compliance of INC 20A will be liable to pay a penalty of Rs 1,000 per day of default up to a maximum cap of Rs 1,00,000.
Company Strike Off: Where no declaration is filed within the stipulated time i.e. 180 days and the Registrar has reasonable reason to believe that the company is not carrying any business then the registrar may proceed with the action for removal of name of company from the register of Companies under Chapter XVIII i.e. Strike off by Registrar.
Attachments to the form INC-20A:
INC-20A require only one mandatory attachment in the form of Subscribers proof of payment for value of shares. One can attach the bank statement of company having all credit entries for receipt of subscription money received from all subscribers to MOA. In case Bank statement is not available then one can attach the valid payment proof like NEFT / IMPS receipts.
Certificate of registration issued by RBI is also mandatory for those companies which are considered as NBFC and require approval of RBI for its operation.
Fee for Filing INC – 20A (Commencement of Business Certificate):
Additional fee (if form not filed within the specified time):