Exemptions from Form INC-20A Filing: Which Companies Are Not Required to Obtain a Certificate of Commencement of Business?

The Certificate of Commencement of Business is a mandatory compliance requirement under the Companies Act, 2013, for companies having share capital. This is filed using Form INC-20A and must be submitted within 180 days from the date of incorporation. However, not all companies are mandated to file Form INC-20A. There are specific exemptions provided under the law, primarily based on the company's incorporation date and capital structure.

In this article, we will explore the exemptions from Form INC-20A filing and identify the categories of companies not required to obtain a Certificate of Commencement of Business.

What is Form INC-20A?

Form INC-20A is a declaration filed by the directors of a company confirming that every subscriber to the Memorandum of Association (MOA) has paid the value of the shares agreed to be taken by them. Once this form is verified and accepted by the Registrar of Companies (ROC), the company receives the Certificate of Commencement of Business.

Filing INC-20A is a prerequisite for companies to start operations, raise funds, or conduct any business activity post incorporation.

Exemptions from Form INC 20A Filing

As per the Companies (Amendment) Ordinance, 2018 and relevant rules, certain companies are exempted from filing Form 20A. These include:

1. Companies Incorporated Before November 2, 2018

Companies that were incorporated prior to November 2, 2018 are not required to file Form INC-20A. This date marks the enforcement of the Companies (Amendment) Ordinance, 2018, which introduced Section 10A of the Companies Act, making Form 20A mandatory for applicable companies.

Since the law was not in effect before this date, such companies are grandfathered from the requirement.

Example: A company registered on October 25, 2018, will not need to file Form 20A.

2. Companies Incorporated After November 2, 2018, Without Share Capital

Companies incorporated after November 2, 2018 that do not have share capital are also exempted from filing Form 20A. These companies operate without issuing shares and, hence, are not required to make a declaration of capital receipt.

This typically applies to:

Section 8 Companies (Non-profits)
Companies limited by guarantee without share capital

Example: A Section 8 company registered in 2019 without any share capital is not obligated to file INC-20A.

Who Still Needs to File Form 20A?

The following types of companies are required to file Form INC-20A:

Private Limited Companies with share capital
Public Limited Companies with share capital
One Person Companies (OPC) with share capital

Regardless of the business activity or size, if a company has issued share capital and was incorporated on or after November 2, 2018, it must file Form 20A to obtain the Certificate of Commencement of Business.

Consequences of Non-Filing

If a company fails to file Form INC-20A within 180 days:

A penalty of Rs. 50,000 is levied on the company
Directors are fined Rs. 1,000 per day of default (up to Rs. 1 lakh)
The Registrar may initiate action to strike off the company from the register

This makes it critical for companies to determine their applicability and file accordingly.

Key Takeaways

Form INC-20A is mandatory for companies with share capital incorporated on or after November 2, 2018.
Companies incorporated before November 2, 2018 are exempted.
Companies without share capital, even if incorporated after November 2, 2018, are also exempted.
Filing Form 20A ensures your company can legally commence business operations.
Non-compliance can result in penalties and company strike-off.

Need Help Determining Your Compliance Status?

At IndiaFilings, our experts are here to assist you in determining whether your company needs to file Form INC-20A. We help you avoid penalties by ensuring timely and accurate compliance with the Companies Act.

Get started with your Certificate of Commencement filing today!