INTRODUCTION
Companies that have been incorporated in India are governed and regulated by the Ministry of Corporate Affairs. To be properly formed, a corporation must follow certain guidelines and requirements set forth by the ministry of corporate affairs, or MCA. Companies must comply with a number of post-incorporation requirements in order to run their activities smoothly, as well as to avoid fines and other penalties.
WHAT IS FORM INC-20A?
One of the many regulations that businesses must follow after acquiring their certificate of incorporation is Form INC-20. This form is submitted to the Registrar of Companies as a declaration prior to the start of the company's operations and to provide further information on bank statements and the location of the registered office. Before starting a business and in order to be able to borrow money from other entities, registered companies must submit this form.
In accordance with Section 12(2) of the Companies Act of 2013, the declaration must also mention that the company has submitted a proof of verification of its registered office to the registrar of companies. Within 180 days of the company's incorporation date, the declaration is required to be submitted.
WHO SHOULD FILE FORM INC-20A?
Companies that were incorporated on or after November 2, 2018, and have a share capital, are required to file Form INC-20A within 180 days of the company's incorporation date. Companies that were formed before November 2, 2018, or after November 2, 2018, but did not have any shares or capital, are not obliged to file Form INC-20A and indicate the start of their operations.
PENALTIES FOR NON-COMPLIANCE
It is required to file Form INC-20A, and failure to do so might result in severe fines. To decrease the amount of fictitious businesses formed, fines have been placed in place. Only after filing Form INC-20A are businesses allowed to start operating or borrow money. The following penalties may apply if this requirement is not followed:
Businesses must file a penalty of 50,000 rupees if they fail to file Form INC-20A as required.
For every day the form is not filed by the deadline, the firm official in charge of filing it will be penalized 1000 per day. The maximum fine they might be charged is one thousand dollars.
In addition, the registrar of companies has the authority to withdraw the name of the company from the register of companies if it hasn't engaged in any business operations or transactions for 180 days following its incorporation.
FEES TO FILE FORM INC-20A
The mandated charge for submitting Form INC-20A is determined by the company's share capital. The following information outlines the pricing schedule for completing the form:
If the share capital is less than 100,000, the relevant fees are 200.
The applicable fees are 300 if the share capital exceeds 1,00,000 but does not exceed 4,99,999.
If the form is not submitted by the specified time, it may still be filed by paying the necessary late fees in the manner described below:
If the delay lasts up to 30 days, there will be a two-fold increase in late costs.
If the delay lasts longer than 30 days but less than 60 days, there will be a four-fold increase in late fees.
The late costs shall be six times the standard fee if the length of delay is greater than 60 days but less than 90 days.
If the delay is more than 90 days but less than 180 days, the late costs must be 10 times the regular fees.
DOCUMENTS REQUIRED TO FILE FORM INC-20A
The directors' Digital Signature Certificate.
Confirming the company's registration address.
The directors' affirmation of the board resolution.
Evidence that there have been no transactions in the company's bank account besides the shareholders' capital deposits.
Making the required payments to file Form INC-20.
A certificate from an active company secretary, cost accountant, or chartered accountant attesting to the accuracy of the information on the form.
Bank statements that display the company's total capital.
Documentation that the business is not operating.
Evidence of such authorization or registration from regulators, such as the Securities and Exchange Board of India or the Reserve Bank of India, is required if the company is engaged in the promotion of objects and needs their prior consent or registration.
PROCESS FOR FILING FORM INC-20A
• Open a business bank account.
For business-related transactions, a current account or bank account must be opened. The following documents are required to open a business bank account: the company's certificate of incorporation, its articles of association, its memorandum of association, its permanent account number, and the directors' KYC information.
• Getting money from shareholders
According to the company's memorandum of organization, which also includes a list of shareholders and their respective investments, the companies are required to collect the capital invested from the shareholders of the company.
• Stock capital deposited in the business's bank account
Once the company has gathered the investment funds from the shareholders, they must be put into the company's bank account. The business must obtain a true certified copy of the bank statement to serve as proof of the deposit.
• Filling out Form INC-20A online
The directors of the firm must complete this form to declare the start of business once all the aforementioned submissions have been made and the necessary documents have been gathered. Let's say the business is engaged in advancing objectives that call for prior approval or registration from authorities, the Securities and Exchange Board of India or the Reserve Bank of India.
The form must include all of the aforementioned required attachments and be digitally signed by including the DSCs of the company's directors. The form must then be verified and approved by a practicing company secretary, cost accountant, or chartered accountant.
CONCLUSION
The procedure could appear difficult in the beginning, but it is essential to guarantee compliance with the rules governing Ministry of Company Affairs. Companies can obtain the form quite easily and start activities with serenity by following the above-described processes.
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