In India, many businessmen start a business by setting up a Private Limited Company/Public company. What they don’t know is that there are some compliances which need to be done immediately once they set up their Company. One such compliance is Filing Form INC-20A online with the ROC.
In this article, we will tell you What is Form INC-20A, the due dates of filing it, Documents/Details to be furnished with this form, and the Penalty if this form is NOT filed in time.
If you need any assistance for Filing Form INC-20A then you can contact Business Guru here.
What is Form INC-20A?
Form INC-20A is a mandatory form and it needs to be filed by every Private Limited Company or Public company which is incorporated on or after 2nd November 2018. This is a form that contains a declaration that the amount which was agreed to be contributed as Capital at the time of setting up the company has been paid by the Shareholders to the Bank Account of the Company. In simple words, you need to inform the Government (ROC) that you have opened a Bank account and the shareholders of the Company have paid the amount due on shares issued to them.
Which Companies are liable to file this Form?
This Form should be filed by the below type of companies which are incorporated on or after 2nd November, 2018 : –
- All Private Limited Companies
- All Public Companies
- Companies limited by guarantee and HAVING Share Capital
Which Companies are NOT liable to file this Form?
- Any kind of Company which has been incorporated before 2nd November 2018.
- Companies limited by guarantee not having a share capital (For Eg. Section 8 Companies)
What is the Due date of Filing Form INC-20A?
The due date to File Form INC-20A is within 180 days from the date of incorporation of the Company.
What Details/documents are to be furnished in Form INC-20A?
- Bank Account statement of the Company showing receipt of subscription money from all subscribers/shareholders.
- If the bank statement is not available then you can attach valid payment proofs like NEFT / IMPS receipts. Note:- It is advisable to attach Bank Statements only.
- If the Company is doing any Business which is regulated by SEBI, RBI or IRDA, etc. then it has to also attach the letter of approval received from the regulator.
What is the Penalty if Form INC- 20A is not filed within the due date?
As an entrepreneur, you need to carefully read and understand this part. If you do not file Form INC 20-A within the due date;
- Your company is liable to pay Rs. 50,000 as penalty AND
- Every officer i.e. Director of the Company shall be liable to pay Rs. 1000/- per day till the default continues up to a maximum of Rs. 1,00,000/-
Thus, for a Company who has two Directors and does not file this form, the penalty can go upto Rs 2,50,000/-
Other Consequences if Form INC-20A is not Filed within the due date?
Apart from financial implications, there are other consequences which an entrepreneur would face if Form INC-20A is not filed within the due dates.
- The company cannot start its Business and Operations.
- The Registrar of Companies (i.e. the Government) may initiate action for dissolving/striking off the Company
- The company cannot borrow money.
It is important to note that a Company CANNOT start its Business till Form INC-20A has been filed. Thus, you cannot enter into contracts, start selling goods/services, recruit employees till you file this Form. Any such activities, if done would be illegal and can be challenged in the court of law. Further, you cannot borrow money as stated above till you have not filed the form.
This law was not there earlier and one could simply start a business by Opening a Company. But, post 2nd November 2018, the Government has made it compulsory to file this form, and only then a Company can commence business.
As a founder/entrepreneur, you need to be very particular about this compliance otherwise your Company and your Business can be shut down!
Thus, once you Form a Company, first open a Bank Account, take money from the shareholders, File Form INC-20A, and then Start your Business!