Has your company filed Form INC-20A before starting business?

Your company has just been incorporated by the Registrar of Companies and you have been issued a certificate of incorporation. So you’re ready to launch your business. Right? Unfortunately, that’s not entirely true. One more task remains.

Compliance before you begin your business

Those companies incorporated after November 2, 2018 and having a share capital of more than $250,000 are subject to the Companies (Amendment) Ordinance, 2019.

#1 – Ministry of Corporate Affairs must receive a declaration before:

  • Starting a business or
  • Taking out a loan

#2 – Registrar of Companies must be contacted to verify registered office

In the event that your company is formed after November 2, 2018 and has share capital of Rs. 25 lakhs, you are required to file this declaration before beginning business.

You would not have been subject to this compliance if the company was limited by guarantee and had no share capital.

“Where and how should this declaration be filed?” 

Form INC-20A must be used for the declaration

The e-form INC–20A Incorporation can be used to file the declaration with MCA. It must be completed to declare the following:

#1 – Verification of the registered office of the company

A company needs to establish its registered office, before starting operations, by filing e-form INC-22 with MCA. In your case, we was able to establish the office upon incorporation, so we don’t have to file any form.

#2 – Subscribing shareholders have paid for the value of their shares –

It is mandatory that you attach proof of receipt of subscription money in e-form INC-20A. Please make sure that all subscribers have paid the amount they promised for subscription of shares. I suggest you submit a copy of the bank statement showing the receipt of Rs. 25 lakh.

#3 – SEBI / RBI / IRDA is / is not authorized to regulate the company –

Before filing the form, make sure the approvals are in place if the company is regulated (by any regulator). Since your company is involved in investment advisory, it will be regulated by SEBI. Before the form can be filed, the company needs to register as an Investment Adviser with SEBI. Please attach the registration certificate received from SEBI.

Note: It is necessary to file form INC-22, for verification of registered office, before filing form INC-20A. The registration number, along with the date of approval, has to be in place before filing form INC-20A. If any regulatory approvals are required, those approvals must also be in place before filing form INC-20A.

Filling out the form

Digital signatures are required by all forms filed with MCA by the authorised director of the company. We passed a resolution in the first board meeting allowing you to sign all forms filed with MCA. That is why you can sign the form.

A CA, CS or ICWA practicing in the field must certify the form. As a Company Secretary (CS) practicing in the field, I am qualified to certify the form.

Filling out the form within the time limit

If your company was incorporated on February 25, 2019, you have until August 24, 2019 to complete this form. Your company was incorporated on February 25, 2019.

A late filing fee is required if the form is submitted after the due date.

Fees associated with filing

Fees are listed below.

commencement of business

The filing fee will be Rs. 500 for companies with authorized capital of Rs. 25 lakhs.

Default penalty

In the event the company fails to comply with the requirements, it may be fined Rs. 50,000, and each officer may be fined Rs. 1,000 for every day the default continues, but not more than Rs. 1 lakh.

Note: Registrar of Companies may initiate the process to strike off a company if no declaration is filed within due date and the Registrar has reasons to believe the company is not conducting any business.

MCA will approve the form and you can begin doing business as soon as possible.

In order to avoid penalties and filing fees, let’s fill out the form on time.

“Sure, let’s do it”

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MCA has taken yet another measure to identify shell companies. MCA is ensuring that the companies begin doing business only after:

  1. Establishment and verification of a registered office
  2. A subscription fee is collected from the subscribers
  3. The regulator must approve

 

The companies have six months from the date of incorporation to complete the above requirements

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