The Origin and Mandate: When Did Form INC-20A Become Mandatory?
LegalGlobe 
INC-20A
If you are looking at the compliance roadmap for an Indian company, Form INC-20A stands as a non-negotiable gatekeeper. But this wasn’t always the case. There was a period when this requirement was abolished, only to be brought back with stricter teeth.
The Effective Date of the Mandate
The requirement to file a Declaration of Commencement of Business (Form INC-20A) became mandatory on November 2, 2018.
This was introduced through the Companies (Amendment) Ordinance, 2018, and later solidified by the Companies (Amendment) Act, 2019. This amendment inserted a new section—Section 10A—into the Companies Act, 2013.
Why was it introduced?
Before this mandate, many “shell companies” were being incorporated just on paper without any actual capital being infused. To curb money laundering and ensure transparency, the government made it mandatory for:
- Every company incorporated on or after November 2, 2018, having a share capital.
- Directors to declare that every subscriber has paid the value of the shares agreed to be taken by them.
Key Timelines to Remember
| Provision | Detail |
| Effective Date | November 2, 2018 |
| Applicability | All companies with share capital incorporated after the effective date. |
| Filing Window | Within 180 days of the date of incorporation. |
| Verification | Must be verified by a practicing CS, CA, or Cost Accountant. |
What if a Company Ignores this Mandate?
Since the 2018 ordinance, the consequences of not making this form “effective” within the timeframe are severe:
- Monetary Penalties: A fixed penalty of ₹50,000 on the company and ₹1,000 per day on defaulting directors.
- Removal of Name: If the form isn’t filed within 180 days, the Registrar of Companies (ROC) has the power to initiate the strike-off process, assuming the company is not carrying on any business.
Conclusion for Founders
If your company was registered after November 2, 2018, you cannot legally start business operations or borrow money until INC-20A is filed and approved. It is the bridge between “incorporation” and “operation.”
Avoid Penalties! File Your INC-20A on Time.
Still confused about the 180-day deadline? Let our experts handle your incorporation and commencement formalities. [legalglobe.in]
About the Author
