Declaration of commencement of business in Form 20A

Declaration of commencement of business in Form 20A- Introduction

The Companies (Amendment) Bill, 2019 was passed with the aim to ensure more accountability and better enforcement in order to strengthen the norms of corporate governance and management of compliance in the corporate sector. This bill comprises of various new insertions and amendments. Amongst these, Section 10A is the latest addition to the Companies Act, 2013. This article talks about the essentials of the Section 10A of Companies Act in detail.


Section 10A of the Companies Act is a reinstatement of the provisions under Section 149 of the same Act. However, Section 149 was only applicable to public companies. The latest amendments have restricted every company having a share capital and incorporated post the commencement of the Ordinance, not to commence its businesses or exercise its borrowing powers unless the directors of the entity file a declaration within 180 days from the date of incorporation. It has to be filed in a prescribed form and requires every subscriber of the memorandum to pay the value of the shares as agreed for. Additionally, the registered office of the entity should be verified by filing all the necessary returns with the Registrar.Failure to comply with Section 10A may be an additional ground for the Registrar of Companies to strike off of the company’s name.

Essentials for Filing Form INC 20A

The following are the essentials required to file Form INR 20A.

  •  The Subscriber is required to pay the share subscription amount to the Company.
  •  The Company is required to obtain all the needed regulatory approval before the commencement of business. This goes out for business activities which are exclusively regulated by other sectoral regulators like the SEBI and IRDA as well.
Form INC-20A & Form INC-22

The following is a part of Section 10A of the Companies Act:After section 10 of the principal Act, the following section shall be inserted, namely:—
Section 10A (1): A company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless:

  •  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
  •  The company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

The new Section 10A of the Companies Act has been introduced through the Companies (Amendment) Bill, 2019 and prescribes that every company is now required to file e-Form INC 20A with the Registrar of Companies.The section states that any company incorporated after the commencement of the Companies (Amendment) Bill, 2019 will be required to file the e-Form INC-20A with the Registrar of Companies within 180 days from the date of incorporation or commencement of its business. The form will comprise of the declaration by the director of the Company that all the subscribers to the memorandum have paid up the value of the shares agreed to be taken by the Director. It also declares that the company has filed and verified its registered office with the Registrar through Form INC-22 according to Section 12(2) of the Companies Act of 2013.