Compliances

Form 20A – Purpose, Fees, and Penalties

calendar21 Mar, 2022
timeReading Time: 3 Minutes
Form 20A

Form 20A refers to a declaration required to be filed by the company’s director at the time of commencement of a company. It ought to be validated by a practising CA or CS or a Cost Accountant. 

Latest News regarding Form 20A

As per the latest notice released by MCA[1] on 11th January 2022, the additional fee structure for delayed filing of forms has been modified. The recent modification elevates the additional fee limit for forms like INC- 22 and PAS-3. 

As per the latest Notification dated 11th Jan 2022, the Ministry of Corporate Affairs has modified the additional fee payable on the delay of filing forms; furthermore, a higher additional fee is applicable on forms INC- 22 and PAS-3. However, for form INC-20A, an only additional fee is applicable.

Requirements of filing Form 20A

As per Companies (Amendment) Ordinance 2018, there is a provision that seeks companies (registered on or after 02/11/ 2018) to file a commencement certificate of business.

Form 20A is referred to as a declaration provided by the company’s directors within 180 days of the company’s incorporation date. The breach of such a condition could attract hefty penalties for the companies.

Who are not required to file Form 20A?

Form 20A is not mandatory for the following; 

  • Companies incorporated before 02/Nov/2018 (i.e. prior to the commencement of the Companies (Amendment) Ordinance, 2018).
  • Companies incorporated after 02/11/2018 without share capital. 

The Timespan for filing Form 20 A

Every company is liable to file Form 20A within 180 days of its incorporation.

Requirement and procedure for filing Form 20A

  • A certificate of commencement has to be secured within twenty days from the company incorporation date, and an electronic form has to be filed with the respective ROC regarding the same. 
  • A declaration u/s 10A from the company’s directors must be furnished in a Board resolution in the electronic form itself. Additionally, evidence of deposit of the paid-up share capital by the subscribers is also required to be annexed with the eform. 
  • If a company pursues an object that attracts registration or approval from any concerned regulators such as RBI, SEBI, etc., it shall secure such approval or registration along with the declaration attached thereto. 
  • The eForm has to be examined and validated by a professional in practice before filing with the RoC.  

Penalties Relating to the Non-Compliance

The penalties relating to the non-compliance are pretty high to curtail the number of shell entities incorporated. Following are the penalties relating to the non-compliance: 

Penalty to be imposed on the entity

A fine amounting to Rs 50,000 shall be imposed on the company if it fails to adhere to the mentioned conditions. 

Penalty to be imposed on the officers in default

Every defaulting officer shall be accountable for paying the penalty amounting to Rs 1,000/day for each day during which default prevails, subject to the maximum penalty of Rs 1 00,000.

Company strike-off

If the Registrar has viable reasons to believe that the entity is not undertaking any business affairs after 180 days of incorporation, the Registrar may discard the company’s name from the Register of companies.

Fee relating to the filing Form 20A

Fee for filing eForm for entities having a share capital:

Nominal Share Capital Applicable Fees in (Rs.)
Where share capital is lower than Rs 1,00,000 200
1,00,000 or higher but not surpassing Rs 4,99,999 300
Rs 5,00,000 or higher but not surpassing 24,99,999 400
25,00,000 or higher but not surpassing 99,99,999 500
1,00,00,000 or above 600

Fee for filing eForm for entities having nil share capital:

In this scenrio, the fee applicable is only Rs 200.

Additional fee (in case the form filing is not done in timely manner)

Nominal Share Capital* Applicable Fees in (Rs)
Up to 30 days 2 x of standard fees
Above 30 but not surpassing 60 days 4 x of standard fees
Above 60 days but not surpassing 90 days 6 x of standard fees
Above 90 days but not surpassing 180 days 10 x of standard fees
Above 180 days 12 x of standard fees

Nominal Share Capital*

Nominal share capital refers to the capital paid by the shareholders to purchase shares at face value. 

Conclusion 

Form 20A serves as an intimation application that is required to be filed with governing authority after setting up a new company. It is used to inform the governing authority about the commencement of the new company. The Director of the company is liable to file the same within the prescribed time frame to avoid underlying penalties. 

Read our Article:Types of companies under Companies Act, 2013

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