Commencement of Business: Section 10A & Rule 23A of the Companies (Incorporation) Rules, 2014

(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.

Documents Required form filing eForm INC-20A (Declaration for Commencement of Business)

• Copy of Bank statement of the company showing subscription money received from all subscribers.

• Proof of payment by each subscriber (like UTR or deposit slips etc)

• Digital Signature Certificate (DSC) of a authorized director

• Photographs of the registered office, including:

  • Outside view with company name board.

  • Inside view with one director present and nameplate showing as per section 12 compliance:

    • Company Name in English and one local vernacular language

    • Registered Office Address in English and one local vernacular language

    • CIN of the company 

    • Email ID, Contact No, GST if any

• Board Resolution (Certified Copy) approving commencement of business if any 

• Declaration by Director(s) if any 

• Certificate of registration/approval from sectoral regulator (like RBI/SEBI/IRDAI), if applicable.

• Optional attachments (like letterhead, utility bill, or any additional documents).

Filing Fees for e-Form INC-20A 

Based on Authorised Capital of the Company

Penalty for delay in filing INC-20A / Non compliance of Rule 10A

Restrictions Before Filing INC-20A (Declaration for Commencement of Business)

Until the company files Form INC-20A, it is restricted from the following:

1. Cannot Start Business Operations or Sale: The company cannot begin any commercial activities, including sales, services, or execution of business objects mentioned in the MoA (INC-33) filed at the time of company Registration as Private Limited. 

2. Cannot Exercise Borrowing Powers or Loan from Directors entry: The company cannot take loans from banks, financial institutions, or even from directors/shareholders until the declaration is filed.

3. Cannot Issue Invoices or Raise Revenue: No invoices should be raised or business transactions recorded in the books unless the form is duly filed and approved.

4. Cannot Open Full-Fledged Business Bank Accounts: Although companies can open a bank account post incorporation for making subscription money, transactional activity may be questioned by banks in the absence of INC-20A filing at MCA, hence its must to file in all manners.

5. Regulatory Approvals Delayed: Sectoral approvals (like from RBI, SEBI, etc.) may be kept on hold until the company is shown as "active" after INC-20A filing.

6. Not Eligible for Government Schemes / Start-up Benefits: Many compliance-based benefits (like Start-up India recognition or DPIIT/ MSME registration) require a company to be fully active and compliant, which includes filing INC-20A.

7. Not Allowed to Accept Shareholder Loans: Until the commencement declaration in form INC-20A is filed, the company cannot accept unsecured loans from shareholders or directors as it cannot exercise borrowing powers.

Therefore, INC-20A must be filed within 180 days from the date of incorporation and only after that, the company is legally allowed to commence business and access funding or credit facilities. 

INC-20A in case of Foreign Subsidiaries and Wholly Owned Subsidiaries (WOS)

In the case of Foreign Subsidiary Company Registration or Wholly Owned Subsidiary (WOS) incorporation in India, it is mandatory or important to file post incorporation compliance firstly eForm INC-20A within the prescribed time, preferably within 60 days from the date of incorporation for making FEMA Compliance and issue of Share Certificates, even though the legal deadline is 180 days.

Why Early Filing is mandatory?

1. For Issuance of Share Certificates on Time: Timely filing of INC-20A is required before issuing share certificates to foreign shareholders (first subscribers to MOA within 2 months from the date of Incorporation) after receiving of subscription money into the A/c of the company.

2. For Compliance with FDI Guidelines: RBI mandates filing of FDI reporting through Form FC-GPR within 30 days of share allotment and company cannot proceed unless subscription money is received and INC-20A is filed.

3. To Avoid LSF (Late Submission Fees) and Rejection by AD Bank: In case of delays:

-Late submission fees (LSF) under FEMA may be levied.

-Authorized Dealer (AD) Bank may reject the FC-GPR filing for non-compliance or late receipt of subscription funds.

-FDI Compliance reporting Depends on INC-20A

Without INC-20A, the company cannot legally use the foreign remittance and can not commence its business

CCL Recommendation: Foreign-invested companies must check that:

Subscription money is received into the company’s bank account as earliest possible within 2 months for issue of share certificates on time.

INC-20A is filed immediately thereafter (preferably within 60 days).

enabling smooth FEMA reporting through FC-GPR filing with RBI without any rejections.

Registered Office Compliance (Section 12) & Filing of INC-20A

1. Registered Office Compliance is a Precondition for Filing INC-20A

Under Section 12(1) and 12(2) of the Companies Act, every company is required to establish and verify its registered office within 30 days of incorporation. Without the registered office verification in form INC-22, Form INC-20A cannot be filed as the MCA system mandates address verification before commencement declaration.

2. Section 12 Requirements for Registered Office Compliance:

Timeline Within 30 days of incorporation (Section 12(2))

Purpose Office must be capable of receiving all communications and legal notices Verification Done by filing Form INC-22 (if not filed with SPICe+) along with lease deed, utility bill, NOC, etc.

Company Letter head and company board compliance as per section 12 shall be as follows:-

Name Board As per Section 12(3)(a), the company must affix a nameplate at the registered office in English and local language, displaying:

- Company Name
- Registered Office Address
- Corporate Identification Number (CIN)
- Email ID

Further, Company's Letterhead Compliance As per Section 12(3)(c), all business letters, invoices, letter pads must carry:

- Company Name
- Registered Office Address
- CIN
- Email ID, website, phone/fax (if available)

3. Challenges Commonly Faced Before Filing INC-20A

Challenge Impact on INC-20A Filing

• Challenge	Impact on INC-20A Filing
  Registered office address not properly verified	INC-20A filing will be rejected
  Office photos missing company name board or director's presence	Can lead to RoC objections or show cause
  Inconsistent address details between SPICe+ and MCA records	MCA system may not allow INC-20A filing
  Co-working/shared spaces without NOC or lease	Treated as non-compliance under Section 12(2)
  No letterhead compliance (no CIN/address/email)	RoC may ask for correction before approval
  Not maintaining registered office permanently	May lead to physical verification under Rule 25B

4. Why This is Critical for INC-20A & FDI Compliances

• For foreign subsidiary companies or WOS, timely verification of the registered office is crucial for issuing share certificates.

• INC-20A is a mandatory step before allotment of shares to foreign subscribers and filing of Form FC-GPR with RBI.

• Delay in compliance may result in:

  • Late submission fees (LSF) under FEMA.

  • Rejection of FC-GPR filing by AD Bank.

  • RoC initiating strike-off action if business activity is not evident.

• If default is made under Section 12 (like no name board, incorrect office address, etc.):Penalty of ?1,000 per day (up to ?1,00,000) for company and each officer in default.

• Under Section 12(9), if the RoC suspects the company is not operating:

  • Physical verification of registered office is allowed.

  • If the address is non-functional or vacant, strike-off proceedings under Chapter XVIII may begin.

Best Practices Before Filing INC-20A

• Must check Form INC-22 is filed (if required) for office verification post company registration if chosen correspondence address at the time of filing incorporation forms.

• Prepare proper name board at the registered office (with CIN and email) as per Section 12 compliance

• Capture photographs of as per Section 12 compliance:

  • External view with signage

  • Internal view with at least one director present

• Use updated letterhead in all documents with compliance of section 12:

  • Company Name, Address, CIN, Email, Contact No and website if any

• Keep lease deed/NOC/utility bill ready for RoC inspection, if needed.

Grounds for Non Compliance of INC-20A Filing

1. Registered Office Not Properly Verified

• If Form INC-22 for verification of the registered office is not filed (where required).

• Mismatch between the registered office address in MCA records and supporting documents.

• Absence of proper supporting documents like lease deed, utility bill, or NOC.

2. Defective or Incomplete Attachments

• Missing proof of receipt of subscription money from all subscribers.

• Bank statement not reflecting the subscription amount properly.

• Missing or inadequate photograph evidence of the registered office.

• Sectoral regulator’s certificate (RBI, SEBI, IRDAI) not attached when required.

3. Photograph Issues

• No external or internal photograph of the registered office.

• No director visible in the internal office photograph.

• Nameplate missing essential details like:

  • Company Name

  • Registered Address

  • Corporate Identity Number (CIN)

  • Email ID& Contact No

  • Website if any

4. Incorrect Details in the Form

• Errors in filling DIN/PAN numbers of directors.

• Wrong or incomplete share capital details.

• Wrong date of subscription payment mentioned.

• Mismatch between subscriber’s name and payment evidence.

5. Delay in Filing Beyond Prescribed Timeline

• Filing beyond 180 days without proper payment of additional fees.

• Significant delay causing complications like initiation of strike-off by RoC.

6. Non-Compliance with Section 12 Requirements

• No proper office setup capable of receiving communication.

• Physical verification (under Rule 25B) reveals the office is not functional.

• Non-compliance with Section 12(3) requirements (missing name board, wrong format).

7. Non-Payment of Correct Statutory Fees

• Underpayment of the prescribed government fees based on authorized share capital.

• Non-payment of applicable additional fees for late filing.

8. Non-Availability of Digital Signature

• Director’s DSC Class -3 expired, revoked, or mismatch in signature validation during filing.

Steps for Filing Form INC-20A (Declaration for Commencement of Business)

Gather Documents

• Bank statement showing subscription money received.

• Proof of payment by subscribers (UTR/receipts).

• Photographs of registered office (external + internal with director present and name board).

• Certificate from sectoral regulator (if applicable, like RBI/SEBI/IRDAI).

• Board Resolution (CTC) approving commencement of business.

• Director’s Declaration with company stamp.

• Updated letterhead showing Company Name, Address, CIN, and Email ID.

Login to MCA Portal

• Visit www.mca.gov.in.

• Login using your MCA account credentials.

Download Form INC-20A

• Go to MCA Services → Company Forms Download → Download eForm INC-20A.

Fill the Form INC-20A

• Enter CIN (Corporate Identification Number).

• Pre-fill company details automatically fetched.

• Confirm date of incorporation.

• Attach proof of subscription money received.

• Attach sectoral approval, if applicable.

• Add optional attachments like photographs and board resolution.

Attach Digital Signature

• Affix DSC of a Director (who is authorized to sign).

• Ensure the DSC is active and registered on the MCA portal.

Upload the Form

• Go to MCA Portal → Upload eForms.

• Upload the signed INC-20A form.

Pay the Filing Fees

• System will generate a Service Request Number (SRN).

• Pay government filing fee based on authorized capital.

Acknowledgment

• After successful payment, you will get an acknowledgment.

• Track the SRN until the form is approved.