The Government of India has implemented various measures to increase corporate governance transparency and accountability in business operations and their execution. One such regulatory requirement is Form 20A, a declaration for the commencement of business, introduced under the Companies Act 2013. This form is an essential compliance document that newly incorporated companies must file before the Registrar of Companies (ROC) before the commencement of any business operations. The introduction of this requirement aims to prevent the existence of shell companies and ensure that businesses are operating within legal frameworks and also aware of the details of the business and the other essential data so that accountability can be maintained.
This article will discuss the comprehensive guide on Form 20A and also cover its applicability, filing procedure, legal provisions, consequences of non-compliance, and other essential aspects.
What is Form 20A?
Form 20A is a statutory declaration that companies registered in India must file with the ROC before commencing their business activities. The primary objective of this form is to confirm that the company has received its subscribed share capital from shareholders and is ready to start business operations.
The filing of Form 20A is a mandatory compliance requirement under Section 10A of the Companies Act 2013. The form serves as proof that a company is legitimate and financially prepared to conduct business.
Applicability of Form 20A
Form 20A is applicable to all public and private companies incorporated in India on or after November 2, 2018, with share capital. However, the following entities are exempt from filing Form 20A:
- Companies incorporated before November 2, 2018.
- Companies not having a share capital, such as non-profit organizations or companies limited by guarantee.
- One Person Companies (OPCs).
Legal Provisions Related to Form 20A
The filing of Form 20A is governed by Section 10A of the Companies Act, 2013, and Rule 23A of the Companies (Incorporation) Rules, 2014. These provisions state that:
- A company with a share capital must file Form 20A with the ROC within 180 days from the date of incorporation.
- The company must attach a declaration stating that it has received the subscription amount from its shareholders.
- The form must be verified by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant.
- Failure to comply with the requirements will invite penalties and legal consequences.
Documents Required for Filing Form 20A
To successfully file Form 20A, companies need to attach the following documents:
- Bank Statement of the Company’s Current Account – To prove the receipt of share capital from the subscribers.
- Certificate of Incorporation (COI) – To establish that the company is legally incorporated.
- Declaration by Directors – A self-attested declaration confirming the receipt of the subscription amount.
- Proof of Registered Office Address (if applicable).
- Digital Signature Certificate (DSC) and Director Identification Number (DIN) of the authorized director signing the form.
Step-by-Step Procedure to File MCA Form 20A
Filing Form 20A is an online process conducted on the Ministry of Corporate Affairs (MCA) portal. Below are the step-by-step instructions:
Step 1: Start with Log in to the MCA Portal
Firstly, you need to visit the website of MCA (www.mca.gov.in) and log in with the help of the credentials of an authorized person of the company so that further process can be done.
Step 2: Navigate to the E-Forms Section
Go to the “MCA Services” tab select “E-Forms” and then download Form 20A from the portal of MCA.
Step 3: Fill in the Required Details
Provide the following information in Form 20A:
- Corporate Identification Number (CIN)
- Company Name
- Date of Company Incorporation
- Data of the Directors
- Declaration of receipt of share capital
Step 4: Attach the Necessary Documents as per the guidelines
Upload the required supporting documents mentioned earlier.
Step 5: Verification and Certification
The form must be verified and digitally signed by a CA, CS, or Cost Accountant.
Step 6: Submit the Form and Pay Fees
Submit the form 20A online and pay the required fees as per company capital.
Fees for Filing Form 20A
The fees for filing Form 20A depend on the company’s authorized share capital:
| Authorized Share Capital (INR) | Fee (INR) |
| Up to 1,00,000 | 200 |
| 1,00,001 – 4,99,999 | 300 |
| 5,00,000 – 24,99,999 | 400 |
| 25,00,000 – 99,99,999 | 500 |
| 1,00,00,000 and above | 600 |
Consequences of Non-Compliance
Failure to file Form 20A within the stipulated 180 days can lead to serious penalties and legal actions, including:
- Company Penalty – The company may be liable to pay a penalty of INR 50,000.
- Director Penalty – Every officer in default (directors) may be fined INR 1,000 per day of delay, up to a maximum of INR 1,00,000.
- Company Striking Off – The ROC has the authority to remove the company’s name from the register if the form is not filed within the prescribed time.
- Legal Proceedings – The company may be deemed non-compliant, restricting its ability to raise funds or conduct business.
Benefits of Filing Form 20A
- Legal Compliance – Ensures the company is operating within the legal framework of the Companies Act 2013.
- Avoids Penalties – Filing Form 20A at a time will help avoid heavy penalties and legal consequences.
- Enhances Credibility – The credibility and transparency of a company by fulfilling compliance requirements builds a strong reputation among investors, banks, and regulatory authorities.
- Smooth Business Operations – Filing Form 20A allows companies to legally start operations, enter into business transactions, and apply for loans.
Conclusion
Form 20A is a vital compliance requirement for newly incorporated companies in India. It ensures that businesses are legitimate, credible, and financially ready to commence operations and execute their work in a legal compliance manner. Filing Form 20A on time helps companies avoid penalties, legal consequences, and other complexities while building credibility in the business ecosystem. Companies must follow the stipulated guidelines and regulations to maintain regulatory compliance and start their business journey in a smooth and hassle-free manner.
For seamless compliance, it is always advisable to get professional assistance from Company Secretaries, Chartered Accountants, or legal experts so that you can make a wise decision.
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Frequently Asked Questions
1. Is Form 20A mandatory for all companies?
No, Form 20A is mandatory only for companies incorporated on or after November 2, 2018, with share capital.
2. Can a company commence business before filing Form 20A?
No, a company cannot start business activities before filing Form 20A and receiving approval from the ROC.
3. What happens if Form 20A is rejected?
If, in any case, Form 20A is rejected due to incorrect or incomplete details or any technical error, the company must rectify the errors and re-file the form within the prescribed time.
4. Can a company file Form 20A after 180 days?
Yes, but the company will have to pay late filing penalties, and continued delay may result in legal action.
5. Is there any exemption from filing Form 20A?
Yes, companies incorporated before November 2, 2018, companies without share capital, and One Person Companies (OPCs) are exempt.
