EnglishStarting a business involves numerous legal formalities and compliance requirements. One such essential compliance in India is the filing of Form INC 20A. This form is a declaration for the commencement of business, which every company incorporated in India after November 2, 2018, must file. Understanding the importance, requirements, and process of filing INC 20A is crucial for ensuring your business adheres to legal standards and avoids penalties.
What is INC 20A?
INC 20A is a declaration form that confirms a company's commencement of business. This form must be filed with the Registrar of Companies (ROC) to declare that the company has received its subscribed share capital and is ready to start business operations.
Importance of Filing INC 20A
- Legal Compliance: Filing INC 20A is mandatory under the Companies (Amendment) Ordinance, 2018. Failure to comply can lead to penalties and complications in business operations.
- Operational Legitimacy: It officially declares that the company is operational and has met the initial financial requirements. This step is crucial to ensure that the company is not just a shell but a functioning entity ready to engage in business activities.
- Bank Account Activation: Many banks require the filing of INC 20A to activate the company's bank account fully. This ensures that the company can engage in financial transactions, pay bills, receive payments, and perform other essential banking operations.
- Investor Confidence: Filing INC 20A enhances investor confidence by demonstrating that the company is compliant with statutory requirements and is genuinely prepared to commence operations. This is particularly important for startups and new ventures seeking funding.
- Regulatory Clearances: Various regulatory bodies require proof of commencement of business for issuing licenses and permits. Filing INC 20A facilitates these processes, ensuring that the company can operate without legal hindrances.
Who Needs to File INC 20A?
Every company incorporated on or after November 2, 2018, must file Form INC 20A within 180 days from the date of incorporation. This requirement applies to all companies except those incorporated with charitable objectives under Section 8 of the Companies Act, 2013.
Due Date for Filing INC 20A
The form must be filed within 180 days from the date of incorporation of the company.
Consequences of Non-Compliance
- Penalties: Non-compliance can result in a penalty of INR 50,000 for the company and INR 1,000 per day for each defaulting officer, with a maximum of INR 1 lakh.
- Company Status: Failure to file can lead to the company being marked as 'inactive' and can eventually result in the company's name being struck off the register of companies.
Documents Required for Filing INC 20A
- Bank Statement of the Company: Proof of the deposit of the subscribed share capital.
- Certificate of Incorporation: A copy of the company's Certificate of Incorporation.
- Subscriber’s Proof: A declaration from the directors confirming receipt of the subscription money.
- Resolution of the Board: A board resolution authorizing a director to sign and submit the INC 20A form.
Steps to File INC 20A
- Login to MCA Portal: Access the Ministry of Corporate Affairs (MCA) portal and log in with your credentials.
- Download the Form: Download Form INC 20A from the MCA portal.
- Fill in the Details: Provide necessary details like CIN, date of incorporation, type of company, and details of the subscribers.
- Attach Documents: Attach the required documents, including the bank statement, Certificate of Incorporation, and subscriber's proof.
- Digital Signature: The form must be digitally signed by a director or an authorized signatory of the company.
- Certification by a Professional: The form must be certified by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant.
- Submit the Form: Upload the form on the MCA portal and pay the required fees.
Benefits of Filing INC 20A
- Regulatory Compliance: Ensures that your company meets the mandatory regulatory requirements.
- Operational Readiness: Officially declares that your company is ready to commence business operations.
- Banking Operations: Facilitates the activation of your company’s bank account for smooth financial transactions.
- Enhanced Credibility: Filing INC 20A enhances the credibility and transparency of your business operations.
Conclusion
Filing INC 20A is a crucial step for newly incorporated companies in India. It not only ensures legal compliance but also marks the official commencement of business operations. By understanding the requirements, process, and importance of INC 20A, companies can avoid penalties and operate smoothly. Staying compliant with regulatory norms is essential for the credibility and success of any business.
FAQs
What is the purpose of INC 20A?
- INC 20A is a declaration for the commencement of business, confirming that the company has received its subscribed share capital.
Who needs to file INC 20A?
- Every company incorporated in India on or after November 2, 2018, must file INC 20A within 180 days from the date of incorporation.
What are the consequences of not filing INC 20A?
- Non-compliance can lead to penalties and the company being marked as 'inactive', potentially resulting in the company's name being struck off the register.
What documents are required for filing INC 20A?
- Required documents include the company's bank statement, Certificate of Incorporation, subscriber's proof, and a board resolution.
Can a company be penalized for not filing INC 20A on time?
- Yes, the company and its officers can face penalties for failing to file INC 20A within the stipulated time.
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