No, it is not legally safe to deliberately delay MCA Form INC-20A filing. A company can file it late with additional fees, but once the 180-day deadline is missed, the company is already in default under the Companies Act.
For a new company in India, incorporation is only the first step. Many founders think that after getting the Certificate of Incorporation, they can immediately start billing clients, taking loans, signing commercial contracts, or running business operations. But for companies having share capital, there is one important post-incorporation compliance: Form INC-20A, also called the declaration for commencement of business.
This form tells the Registrar of Companies that the subscribers have paid the share capital they agreed to take, and the company is ready to legally start business. Delaying it may look like a small filing issue, but it can create real problems: penalties, restriction on borrowing, investor due diligence issues, and even possible strike-off action by the ROC in serious cases.
What is Form INC-20A Filing?
Form INC-20A is the declaration for commencement of business. It is filed with the Ministry of Corporate Affairs by a company having share capital.
The purpose is simple. The company confirms that every subscriber to the memorandum has paid the value of shares agreed to be taken by them. In practical words, the shareholders who promised to bring capital into the company must actually deposit that money into the company’s bank account.
Only after this declaration is filed, the company can properly commence business and exercise borrowing powers under Section 10A of the Companies Act, 2013. Section 10A says a company having share capital shall not commence business or exercise borrowing powers unless this declaration is filed within 180 days from incorporation and the registered office verification requirement is also met.
What is the Due Date for Filing INC-20A?
The due date is within 180 days from the date of incorporation.
For example, if a private limited company was incorporated on 1 January, the company should file Form INC-20A within 180 days from that date. The counting starts from the incorporation date, not from the date of opening the bank account, first sale, GST registration, or first invoice.
This is where many new founders make mistakes. They delay opening the current account, the subscribers delay depositing share capital, or the company remains inactive for a few months. But the legal timeline still runs from the date of incorporation.
Is Late Filing of INC-20A Allowed?
Late filing is possible, but it is not the same as saying delay is fully legal.
The MCA system may allow the company to file Form INC-20A after the due date by paying additional filing fees. However, the delay still remains a statutory default. The company and its officers may still face penalties under Section 10A.
So, the correct practical answer is:
Yes, delayed filing can usually be completed on the MCA portal with additional fees, but no, the delay itself is not legally risk-free.
The form instruction kit also mentions additional fees for delayed filing, including higher multiples of normal fee depending on the period of delay. For delay beyond 180 days, the additional fee can go up to 12 times the normal fee.
What Happens If INC-20A is Delayed?
If the company misses the 180-day deadline, it may face the following consequences.
Penalty on the Company
The company can be liable to a penalty of ₹50,000 for default under Section 10A. This is not a small issue for a newly incorporated startup or small private company.
Penalty on Directors and Officers
Every officer in default may be liable to a penalty of ₹1,000 per day for the period of default, subject to a maximum of ₹1,00,000. This can become costly if the delay continues for many months.
Restriction on Starting Business
A company should not commence business before filing INC-20A. This means the company should avoid starting active commercial operations, raising invoices, entering major business transactions, or exercising borrowing powers before completing this filing.
Restriction on Borrowing
The company should not exercise borrowing powers before filing the declaration. So, if the company wants to take a business loan, director loan, bank facility, or other borrowing, INC-20A compliance becomes important.
Risk of ROC Strike-Off Action
If no declaration is filed within 180 days and the Registrar has reasonable cause to believe that the company is not carrying on business or operations, the ROC may initiate action for removal of the company’s name from the register of companies.
Why Companies Commonly Delay INC-20A
Most delays happen because of practical reasons, not because the founder wants to break the law.
Sometimes the company’s current account is not opened on time. Sometimes the subscribers do not transfer the share capital quickly. In some cases, founders are busy with GST registration, website launch, client work, or licensing formalities and forget this filing. In other cases, the company is incorporated but the business idea is still not active.
But these reasons do not automatically remove the compliance requirement. If the company has share capital and falls under Section 10A, it should complete the filing within time.
What Documents Are Usually Needed?
For filing INC-20A, the company generally needs proof that subscribers have paid their share capital. In practice, this is usually supported by the company’s bank statement showing receipt of subscription money.
The form also requires certification by a practising professional such as a Chartered Accountant, Company Secretary, or Cost Accountant. The MCA instruction material states that the webform is to be certified by a CA, CS, or cost accountant in whole-time practice.
If the company is regulated by a sectoral regulator, such as RBI, SEBI, IRDAI, or any other authority, the required approval or registration may also be relevant before commencement of business.
What Should You Do If INC-20A is Already Delayed?
If the deadline has already passed, the company should not ignore the issue. The best practical step is to complete the filing as early as possible.
First, check whether all subscribers have paid the agreed share capital into the company’s bank account. If not, collect the amount properly through banking channels.
Second, keep proper proof of payment. The bank statement should clearly show the amount received from subscribers.
Third, ask a practising CA, CS, or CMA to review the documents and certify the form.
Fourth, file INC-20A on the MCA portal with the applicable normal and additional fees.
Fifth, if the ROC later issues a notice or penalty order, reply properly and take professional help for adjudication or payment of penalty.
The important thing is not to continue the default. A delay of 10 or 20 days is easier to handle than a delay of one or two years.
Can Business Transactions Done Before INC-20A Create Problems?
Yes, they can create practical and legal complications.
If a company has already started business before filing INC-20A, the ROC may treat it as a violation of Section 10A. During investor due diligence, the legal team may also ask why the company started operations before filing the commencement declaration.
This may not always destroy the company’s business, but it creates a compliance red flag. For a startup planning fundraising, loan approval, acquisition, or government tender participation, such red flags should be avoided.
FAQs
Q: Can I file INC-20A after 180 days?
A: Yes, the form can generally be filed late with additional fees, but the company will still be in default for missing the deadline. Late filing does not automatically remove the penalty risk.
Q: Can a company issue invoices before filing INC-20A?
A: It is not advisable. A company having share capital should file INC-20A before commencing business. If invoices were already issued before filing, the company should regularise the filing quickly and take professional advice.
Q: What if the company has not opened a bank account within 180 days?
A: That is a serious practical problem because proof of subscription money is usually needed. The company should open its bank account as early as possible, collect the share capital from subscribers, and complete the filing without further delay.
Q: Are directors personally liable for delay in INC-20A?
A: Yes, officers in default can face penalty. Under Section 10A, every officer in default may be liable to ₹1,000 per day during the default period, subject to a maximum of ₹1,00,000.
