Commencement of Business Certificate in Bangalore

What is a commencement of business certificate?

It is not a certificate the ROC issues to you — it is a declaration you file. The phrase survives from the older Companies Act, when the Registrar issued a separate certificate of commencement. Under the current law the company files Form INC-20A, the filing is taken on record, and that record is what proves the company is entitled to trade.

The substance of the declaration is simple: a director confirms that each subscriber has paid the value of the shares they subscribed for in the memorandum, and that the company has filed verification of its registered office. The point of the provision is to stop shell companies being incorporated with capital that exists only on paper.

It is the second of two filings that define a new company’s first months, alongside the first auditor appointment in ADT-1. Both flow directly from company registration and both are commonly forgotten by founders who think the Certificate of Incorporation was the finish line.

Which companies must file INC-20A?

Every company with share capital incorporated on or after the commencement of the Companies (Amendment) Ordinance, 2018 — that is, incorporated on or after 2 November 2018 — must file the declaration. There is no exemption for size, sector, or level of activity.

• Private limited companies, however small the capital
• One Person Companies with share capital
• Public limited companies
• Section 8 companies that have share capital
• Wholly owned Indian subsidiaries of foreign parents
• Producer companies

Two categories fall outside it. A company incorporated without share capital — a Section 8 company limited by guarantee, for example — has no subscription money to declare. And an LLP is governed by the LLP Act, which has no equivalent filing; LLP obligations begin with Form 11 and the annual statement of accounts.

What is the time limit for filing INC-20A?

The declaration must be filed within 180 days of the date of incorporation. This is a fixed statutory period in Section 10A, not a rule-level deadline, so it does not shift with portal changes or fee notifications. The count runs from the incorporation date on the Certificate of Incorporation.

There is a second and stricter timing point that founders miss. Section 10A does not merely require the filing within 180 days — it says the company shall not commence business or exercise borrowing powers until the declaration is filed. So if you start invoicing in month two and file in month five, you were inside the 180 days but you still commenced business before the declaration. Adjudication orders have penalised exactly this pattern.

The practical conclusion is to treat INC-20A as a day-30 task rather than a day-170 one: get the bank account opened, get the subscription money in, file the declaration, then trade.

What does "subscription money paid" mean in practice?

Each subscriber must have paid into the company the full value of the shares recorded against their name in the subscriber sheet of the memorandum. If a founder subscribed to 5,000 shares of ₹10 each, ₹50,000 has to reach the company from that founder.

1. 1.The money must come from the subscriber’s own bank account, not from a third party or another founder
2. 2.It must land in the company’s own current account, not in a director’s personal account
3. 3.Partial payment does not satisfy the section — the full subscribed amount is required
4. 4.Cash deposits are a weak trail; bank transfers that name the subscriber are what the ROC can verify
5. 5.Where a subscriber is a body corporate, the payment comes from the company’s account with a board resolution on record
6. 6.Foreign subscribers should remit through banking channels with the inward remittance advice retained for FEMA reporting

This is why the current account has to be opened early. A company that cannot open its bank account cannot receive subscription money, and a company that has not received subscription money cannot truthfully make the declaration. Note also that Section 448 and Section 449 make a false declaration a punishable offence, so this is not a form to sign on an assumption.

What documents are required for INC-20A?

• Bank statement of the company’s current account showing receipt of subscription money from each subscriber
• Proof of each individual credit — transfer advice or deposit slip identifying the subscriber
• Board resolution authorising a director to sign and file the declaration
• Details of the subscriber sheet against which the payments are being reconciled
• Verification of the registered office, where it was not already established at incorporation
• Registration or approval certificate from the sectoral regulator where the business needs one — for example RBI, SEBI or IRDAI approval for a regulated activity
• DSC of the director making the declaration

Where your registered office was declared in the incorporation application itself, no separate office verification is needed for this filing. Where you incorporated with a correspondence address and settled the registered office afterwards, the office filing has to be on record first — see registered office.

Some versions of the form call for certification by a practising chartered accountant, company secretary or cost accountant in addition to the director’s signature. This has varied across portal releases, so we confirm the current certification field on the live form before preparing the filing.

How to file the commencement of business declaration?

1. 1.Open the company current account using the incorporation certificate, MOA, AOA, PAN and board resolution
2. 2.Ask every subscriber to transfer their full subscribed amount from their own account
3. 3.Reconcile each credit against the subscriber sheet and confirm no shortfall
4. 4.Download the bank statement covering all the credits and mark up each entry
5. 5.Pass a board resolution authorising a director to make and file the declaration
6. 6.Confirm the registered office verification is on record
7. 7.Obtain any sectoral regulator approval the business requires
8. 8.Log in to MCA V3, open Form INC-20A, and enter the declaration and payment details
9. 9.Attach the bank statement and supporting proofs
10. 10.Sign with the director’s DSC, add professional certification where the form requires it
11. 11.Pay the filing fee and submit, then save the SRN and challan
12. 12.Only then begin trading and exercise borrowing powers

How much does INC-20A filing cost?

The government fee is the ordinary MCA form fee, slabbed by the company’s nominal share capital, so it is a small amount for a typical startup. The figures below are indicative and confirmed on the portal at the time of filing.

The gap between the filing fee and the penalty is the whole story: the form costs almost nothing to file on time and can cost lakhs to file late. Reduced penalties apply to small companies, OPCs and recognised startups where Section 446B is available — but note that a subsidiary cannot claim small-company status however small its numbers, which is exactly the point on which several published orders have gone against companies.

What is the penalty for not filing INC-20A?

Section 10A(2) prescribes a penalty of ₹50,000 on the company and ₹1,000 per day on every officer in default for each day the default continues, subject to a maximum of ₹1,00,000 per officer. The officer penalty accrues per person, so a company with three directors has three separate daily exposures running in parallel.

The penalty is imposed through adjudication by the ROC under Section 454. Published orders follow a consistent pattern: the company files a suo motu application admitting the default, the ROC counts the days, applies the formula, and directs payment within a fixed period with a right of appeal to the Regional Director. There is no discretion to waive on the ground that the delay was inadvertent.

• A fixed penalty on the company, independent of how long the delay was
• A daily penalty on each officer in default until the declaration is filed or the cap is reached
• The additional filing fee on the form itself, on top of the penalty
• Strike-off exposure — the ROC may act where it has reasonable cause to believe the company has not commenced business
• Borrowing taken before the declaration is a separate contravention, not cured by later filing
• A visible default on the MCA record, which surfaces in bank and investor diligence

Can a company borrow or raise funding before filing INC-20A?

No. Section 10A expressly bars the company from exercising any borrowing powers until the declaration is filed. A term loan, an overdraft facility, a director’s loan drawn as company borrowing, or a convertible debt instrument all sit inside that bar.

Equity is a different matter. Receiving subscription money from the founders is not borrowing — it is the very payment the declaration is about. A fresh equity round after incorporation is an allotment rather than a borrowing, but the sensible sequence is still to close INC-20A first, because any investor’s diligence will look for it and any lender in the round certainly will.

If you are planning a round, sort the declaration, the first auditor, and your authorised capital headroom before term sheets start moving.

What if the 180 days have already passed?

The form can still be filed — the portal does not block it — and filing is always better than waiting, because the officer penalty accrues daily until the default ends. Expect the additional fee on the form and expect the ROC to take up adjudication on the Section 10A(2) penalty.

1. 1.Get the subscription money in immediately if it has not been paid
2. 2.Reconcile the bank credits against the subscriber sheet and document the trail
3. 3.File INC-20A with the applicable additional fee without waiting for a notice
4. 4.Consider a suo motu adjudication application, which is how most of these defaults are regularised
5. 5.Check whether the company qualifies for the reduced penalty available to small companies, OPCs and recognised startups
6. 6.Pay the adjudicated penalty within the period directed in the order, or appeal to the Regional Director within the appeal window
7. 7.Bring the rest of the first-year compliance current at the same time — auditor, books and annual filing

If you are in this position, get the facts assembled before anything is filed. A CA consultation to fix the commencement date, the delay count and the small-company position usually changes the exposure materially.

How does INC-20A fit with the rest of the first-year compliance?

Set all of these on a calendar on the day the incorporation certificate arrives. The first year is where the cheapest compliance and the most expensive penalties live side by side.

What are the common reasons INC-20A gets resubmitted?

• Bank statement shows a total credit but not a traceable payment from each named subscriber
• Subscription money paid from a director’s personal account on behalf of another subscriber
• Amount received is less than the subscribed value in the memorandum
• Money received into a director’s account and later transferred to the company
• Registered office verification not on record where the office was not declared at incorporation
• Sectoral regulator approval missing for a business that needs one before commencing
• DSC not registered against the signing director’s DIN on the portal
• Illegible or unmarked bank statement that the officer cannot tie to the declaration

Almost every one of these is a documentation problem rather than a legal one, and every one of them is avoidable by reconciling the bank statement against the subscriber sheet before the form is opened.

What is changing in the incorporation rules?

MCA has published draft Companies (Incorporation) Amendment Rules, 2026 for public consultation. The headline proposal is the consolidation of a set of legacy incorporation, change and conversion forms into two comprehensive filings, provisionally called E-CHNG and E-CON, together with a wider set of procedural simplifications aimed at reducing duplicate disclosure.

One point is worth stating plainly to avoid confusion: the consolidation list includes Form INC-20, which is the intimation relating to revocation or surrender of a Section 8 licence. That is a different form from INC-20A. The draft does not propose removing the Section 10A declaration itself, and the 180-day statutory window sits in the Act rather than in the rules.

These are draft rules on which comments were invited — they are not notified law. Current filings continue on the existing INC-20A. We track the Gazette notification and will tell you if a pending filing is affected.

Why choose Arjun Filings for commencement of business certificate?

Arjun Filings runs commencement of business certificate as a checklist-first engagement: a qualified CA or CS scopes the work, tells you exactly which documents are needed, and reviews every form before it is signed and submitted. You get a named specialist, a status update at each stage, and a compliance calendar for whatever comes next.

• Specialist support for commencement of business certificate
• Due-date calendar and penalty awareness
• Form review before DSC signing
• Status updates until acknowledgement