The Company (Incorporation) Amendments Rules, 2022, have been further notified by the Ministry of Corporate Affairs to amend the Companies (Incorporation) Rules, 2014. With this notification, MCA modifies the Nidhi Company incorporation applications provision and introduces Form INC 20A.
Rule 12 – Application for Company Incorporation
Rule 12 of Companies (Incorporation) Rules, 2014, is amended by the Company (Incorporation) Amendments Rules, 2022. Rule 12 (Application for incorporation of companies) has been amended to include the following provision:
“Provided further that, if a company is being incorporated as a Nidhi, the Central Government’s declaration under sec 406, shall be obtained by the Nidhi before commencing business, and a declaration in this regard shall be submitted at the time of incorporation by the company.”
Companies desiring to function as Nidhi are required by the Company (Incorporation) Amendments Rules, 2022, to get a prior declaration from the Central Government before accepting deposits.
Declaration of Business Incorporation
The Company (Incorporation) Amendments Rules, 2022, are informed of the INC 20A form. It is a declaration that must be filed by the company’s directors when the business begins operations. And it must be confirmed by a Company Secretary, Chartered Accountant or Cost Accountant.
This is one of the most important regulations to adhere to, as the penalties for failing to file are incredibly severe.
Statutes governing e-Form INC-20A
Under Sec 10A (1) (a) of the Companies Act, 2013 & Rule 23A of the Company (Incorporation) Amendments Rules, Form INC-20A must be filed.
Section 10A of the Companies Act, 2013
A company which has been formed after the commencement of the Companies (Amendment) Ordinance, 2018 & has a share capital can not commence any business or perform any borrowing powers Unless:
- Within 180 days of the company’s date of incorporation, a director must file with the Registrar a declaration that every subscriber of the memorandum has paid the amount of the shares promised to be taken by him on the date of such Declaration.
- The company has filed a verification of its registered office with the Registrar.
- In the event of noncompliance with the requirements of this section, the company shall be subject to a penalty of Rs.500,000, and each officer in default shall be subject to a fine of Rs.1,000 per day during which the noncompliance continues, not to exceed Rs.1,000,000.
- If no declaration is submitted to the Registrar within 180 days from the date of the company’s incorporation, & the Registrar will have a reasonable cause to assume that the company is not running any business or operations. In that case, he may initiate action to remove the company’s name from the company’s register.
Declaration at the Time of Business Commencement
- Under section 10 A, the Declaration by a director must be in Form No. NC-20A shall be filed under the Companies (Registration Offices & Fees) Rules, 2014, and a Company Secretary, a Chartered Accountant, Cost Accountant in practice shall verify its contents.
- Suppose a company is pursuing activities that require registration or approval from sectoral regulators like the Reserve Bank of India, Securities Exchange Board of India, etc. In that case, the registration or permission must also be obtained and attached to the Declaration.
The objective of the e-Form
Form INC-20A must be filed for Declaration before beginning business operations or exercising borrowing powers.
Companies that are exempt from filing Form NC-20A
The following companies are exempt from filing Form NC-20A:
- Companies incorporated before November 2, 2018 (i.e., before the Companies (Amendment) Ordinance, 2018 took effect).
- Companies formed after November 2, 2018, without capital stock.
Required Documents for Form NC-20A
- Payment proof for the value of shares by subscribers
- Registration certificate issued by the Reserve Bank of India (Only for Non-Banking Financial Companies) / from other regulators.
Period for filling Form NC-20A
Every company required to submit Form NC-20A must do so within 180 days of its formation.
Fees Applicable
According to the 2014 Companies (Registration Offices and Fees) Rules, the rates for form filing fees are specified.
Fee for submitting electronic forms or documents if the company has a share capital
| Nominal Share Capital | Fee applicable |
| Less than 1,00,000 | Rupees 200 |
| 1,00,000 to 4,99,999 | Rupees 300 |
| 5,00,000 to 24,99,999 | Rupees 400 |
| 25,00,000 to 99,99,999 | Rupees 500 |
| 1,00,00,000 or more | Rupees 600 |
Fee for filing electronic forms or documents if a company has no share capital
The company must submit Rs. 200 for filing e-Forms or documents if it has no share capital.
Additional fees
| Period of delays | All forms |
| Up to 30 days | Two times of standard fees |
| More than 30 days, up to 60 days | Four times the standard fees |
| More than 60 days and up to 90 days | Six times the standard fees |
| More than 90 days and up to 180 days | Ten times legal fees |
| More than 180 days | 12 times the legal fees |
Procedure for Submitting eForm INC-20A
The steps below can be used to submit Form INC-20A on the MCA portal[1].
To submit eForm INC-20A, the applicant must visit the Ministry of Corporate Affairs’ official website.
The applicant can complete Form INC-20A with the following details by logging into the portal.
- Corporate identification number (CIN) information
- Director identification number
- Name of the regulator
- Date of approval/registration
- Letter number/registration number
Uploading the Documents: After providing all the required information, the applicant must upload the required documents. By clicking the attachment button, the necessary file can be uploaded.
Declaration to be submitted: Enter the serial number and date of the board resolution that authorizes the signatory to sign, provide a declaration, and submit the form.
Electronically sign the Form: Only the company’s Director is permitted to sign this form. The individual must have registered their DSC with the MCA. Register before signing the form if you still need to do so.
Certification by a practising expert: This form must be reviewed by a licensed professional. The practitioner’s information is entered and digital signature is attached.
Form submission: Form INC 20A is submitted and will be auto-approved.
Generation of SRN: Upon successful submission of eForm INC-20A, an SRN will be generated and displayed to the user for future correspondence with the MCA.
Generation of Challan: Upon successfully submitting the form INC-20A, a challan detailing the user’s fees paid to the Ministry will be generated. It is confirmation to the user that the form has been submitted.
Email: When an eForm has been completely processed by the relevant authority, an email is sent to the company’s email address containing an acknowledgement of the form and any associated documents.
Conclusion
The Company (Incorporation) Amendments Rules, 2022, was notified by the MCA further to amend the Companies (Incorporation) Rules, 2014. With the notification, MCA amends the rules related to the application for the formation of Nidhi Companies and introduces Form INC 20A (Declaration for Commencement of Business).
Read Our Article:Nidhi Company Incorporation: A Step By Step Approach
