“Consequences of Delaying the Filing of Form INC-20A: What Every Business Needs to Know”

What is Form INC-20A?

In India, many entrepreneurs start a business by setting up a Private Limited Company/Public Company. They don’t know that there are certain compliances that need to be done immediately after 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, due dates to file it, documents/details to be provided with this form and penalty if this form is not filed on time.

What is Form INC-20A?

Form INC-20A is a mandatory form and must be filed by every private limited company or public company incorporated on or after November 2, 2018. It is a form in which capital is paid into the bank account of the company by the shareholders while establishing the company. In simple words, you have to inform the Government (ROC) that you have opened a bank account and the shareholders of the company have paid the amount due on the shares issued to them.

Which companies need to file this form?

This form is required to be filed by the following categories of companies incorporated on or after November 2, 2018: –

• All private limited companies
• All Public Institutions
• There are companies and share capital limited by guarantee

Which companies cannot file this form?

• Any type of company incorporated before November 2, 2018.
• Companies limited by guarantee without share capital (eg for Section 8 companies)

What is the due date for filing Form INC-20A?

The due date for Form INC-20A is within 180 days from the date of incorporation of the company.

What details/documents should be furnished in Form INC-20A?

1. Bank account statement of the company showing receipt of subscription payments from all subscribers/shareholders.
2. If bank statement is not available then valid proof of payment like NEFT / IMPS receipts can be attached. Note:- It is advisable to attach only bank statements.
3. If the company carries on any business regulated by SEBI, RBI or IRDA, it should also attach approval letter obtained from the regulator.

What is the penalty if Form INC-20A is not filed by due date?

As an entrepreneur, you should read and understand this section carefully. If you have not filed INC Form 20-A by the due date;

1. Your company has Rs. 50,000 fine and
2. Each officer i.e. director of the company Rs. 1000/- per day with a maximum of Rs. 1,00,000/-

Therefore, if a company having two directors does not file this form, the penalty will be Rs. 2,50,000/- upto.

Other consequences if Form INC-20A is not filed by due date?

Apart from the financial implications, there are other consequences that entrepreneurs face if Form INC-20A is not filed by the due dates.

1. The company cannot start its business and operations.
2. The Registrar of Companies (i.e. Government) can initiate proceedings for winding up/winding up the company.
3. The company cannot borrow.

It should be noted that a company cannot start its business until the INC-20A form is filed. Therefore, you cannot enter into contracts, sell goods/services or hire employees until you file this form. Such actions, if any, are illegal and can be challenged in court. Also, you cannot avail the loan as mentioned above unless you file the form.

Earlier this law did not exist, one could start a business by opening a company. But, after November 2, 2018, the government has made it mandatory to file this form, after which a company can start business.

As a founder/entrepreneur, you must be very careful about this compliance otherwise your company and your business may be shut down!

So, once you have formed a company, first open a bank account, receive money from shareholders, file Form INC-20A, and then start your business