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Declaration of Commencement of Business by Company

The new Section 10A has been introduced through Companies Amendment Ordinance 2018 with effect from 2nd November , 2018 which provides that every company is now required to file e Form INC 20A with Registrar of Companies within 180 days of its Incorporation for commencement of its business.

Main Requirements for Filing Form INC 20A:

  • The Subscribers has paid the share subscription amount to the Company
  • That the Company has obtained the regulatory approval required to be obtained for commencement of business for business activities which are specially regulated by other sectoral regulators like SEBI, RBI, IRDA etc.. 

What is required to done now :

  • No waiting for Opening of Bank Account 
  • Deposit Share Subscription amount in Company Bank Account 
  • File Form INC-22 for verification of Registered office 
  • File Form INC-20A within ASAP, not later than 180 days of Incorporation of Company 

How to pay Share Subscription amount to Company :

As normal practice every company is registered with Rs. 1Lakh  paid up capital, now it is compulsory that Rs. 1Lakh should be compulsory deposited in Company Bank Account within 180 days of its registration, so it is advisable to avoid incorporating company with higher paid up amount and promoters should go with Rs. 1000/10000 like paid up amount that can easily be paid to company account and Authorized capital of the company should be made at higher limit , so to issue shares at the later stage if required capital is introduced afterwards. 

Lesser amount can also be paid to company by cash , so having lesser amount of paid up capital will help you to better comply with this section. It Is always advisable to deposit the subscription amount to company bank Account as soon as Bank Account of newly incorporated company is opened.  

Section 10A.Commencement of business etc.


(1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and 
(b) The company has filed with the Registrar a verification of its registered office as provided in sub-­section (2) of section 12.  

(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

 (3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.

How to Register Sole Proprietorship Firm Online in India

CS Sushil Choudhary

Sushil Founded @Fastlegal, which provides Online Business Registration and Legal Compliance Management Services to all types of Businesses. Sushil is a Fellow Member of Institute of Company Secretaries of India and Law Graduate from Jaipur, Rajasthan.