MCA INC-20A Commencement of Business

A MCA INC-20A Commencement of Business in India establishes the terms governing the arrangement it covers, giving the parties a clear written record to rely on.

Section 10A of the Companies Act 2013 prohibits a company from commencing business or exercising borrowing powers — availing loans, overdrafts, or any credit facility from a bank or financial institution — until the company has filed INC-20A and the MCA21 system has acknowledged the filing. The central purpose of INC-20A is to prevent the misuse of freshly incorporated shell companies for business activities or borrowing before the promoters have actually invested their subscription money. The Reserve Bank of India (RBI) and banking regulators observed that companies were being incorporated, obtaining Company Identification Numbers (CINs), and immediately approaching banks for overdraft facilities without the promoters having contributed a single rupee of their subscribed capital.

The practical consequence of INC-20A is that every startup company incorporated after 2 November 2018 as a private limited company — whether technology companies in Bengaluru's Electronic City, fintech startups in Mumbai's BKC, e-commerce ventures, manufacturing businesses, or trading companies — must open a company current account immediately after incorporation, receive the subscription money from all subscribers (typically founders/promoters) into the account, obtain a bank statement or bank certificate confirming receipt of the subscription, and file INC-20A with this bank proof within 180 days.

One Person Companies (OPCs) incorporated under Section 2(62) of the Companies Act 2013 — a structure popular among solo entrepreneurs — must also file INC-20A. With a single subscriber and a single director (often the same person), the OPC needs to deposit its subscription money into its company bank account and attach the bank statement to INC-20A before commencing business.

The Companies (Amendment) Act 2020 revised the penalty structure under Section 10A(2) — the company faces a penalty of ₹50,000 and every officer in default faces ₹1,000 per day of default up to ₹1,00,000. Beyond penalties, Section 10A(4) empowers the ROC to initiate strike-off proceedings under Section 248 if the company fails to file INC-20A within 180 days of incorporation, treating non-filing as evidence that the company is not carrying on business. Late filing with additional fees of ₹100 per day is available, but the ROC may initiate strike-off proceedings independently of the late filing option.

Form INC-20A must be filed once by every company incorporated on or after 2 November 2018 that has a share capital, within 180 days of incorporation — before commencing any business or exercising any borrowing powers.

Startup companies incorporated as private limited companies through the Ministry of Corporate Affairs (MCA21) SPICE+ (Simplified Proforma for Incorporating Company Electronically Plus) process must file INC-20A as the first post-incorporation compliance step after receiving their Certificate of Incorporation. Startups in Bengaluru tech corridor, Hyderabad's HITEC City, Pune's Hinjewadi, and Delhi NCR's Gurugram are typically incorporated through SPICE+ by CA firms or legal advisors. Once the CIN is received, the founders must transfer their subscription money — typically ₹10,000 to ₹1,00,000 for a standard startup — into the company's freshly opened current account at a scheduled commercial bank (State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, or any other RBI-scheduled bank).

Venture capital and angel investor-backed companies that complete their seed funding rounds immediately after incorporation must file INC-20A before drawing down the investor's funds as a loan or advance. Many term sheets from angel investors and early-stage venture capital funds include a condition requiring INC-20A filing as a condition precedent to disbursement.

Subsidiaries of foreign companies — wholly-owned subsidiaries (WOS) incorporated in India by multinational corporations — must comply with INC-20A. The foreign parent company, acting as the sole or majority subscriber to the Memorandum of Association, must remit the subscription amount through banking channels under the Foreign Exchange Management Act 1999 (FEMA) and RBI's Foreign Direct Investment (FDI) reporting requirements. The inward remittance FIRC (Foreign Inward Remittance Certificate) or bank credit confirmation serves as the bank proof for INC-20A.

Section 8 companies (not-for-profit companies registered under Section 8 of the Companies Act 2013) that have a share capital — some Section 8 companies are incorporated with nominal share capital — must also file INC-20A if incorporated on or after 2 November 2018.

Companies that have missed the 180-day window must still file INC-20A with the applicable additional fees before attempting any business activity or ROC filing that implies active business operations. The MCA's strike-off mechanism under Section 10A(4) is regularly invoked for companies that have never filed INC-20A — any company in this situation should file immediately.

Form INC-20A filed on the MCA21 portal must contain the following particulars to be accepted by the Registrar of Companies and to authorise the company to commence business and exercise borrowing powers under Section 10A of the Companies Act 2013.

The company identification section records the Corporate Identification Number (CIN), the full company name as per the Certificate of Incorporation, the date of incorporation (in DD/MM/YYYY format), and the registered office address. The CIN links the INC-20A filing to the company's master data on MCA21, where the subsequent INC-22A, DIR-12, AOC-4, and MGT-7 filings will also be associated.

The share capital section records the authorised share capital as stated in the Memorandum of Association (MOA) — the total capital the company is authorised to issue — and the subscribed share capital — the number and value of shares taken up by the subscribers at the time of incorporation. For most startup private limited companies incorporated through SPICE+, the authorised capital is ₹1,00,000 (1,00,000 shares of ₹1 each or 10,000 shares of ₹10 each) and the subscribed capital matches the amount each founder/subscriber has committed to pay.

The subscriber details section lists each subscriber to the Memorandum of Association: full name as per PAN records, address, PAN number, number of shares subscribed, and the subscription amount (in Indian Rupees). For a two-founder startup with equal equity, each founder's PAN and subscription amount — typically ₹5,000 each for a ₹10,000 subscribed capital — is recorded. For foreign subscribers (foreign parent companies contributing to the WOS), the subscriber's registration details and country of incorporation are provided.

The bank account proof — the most critical attachment — must be a bank statement or a bank certificate from a scheduled commercial bank in India confirming receipt of subscription money. The bank statement must show: the account opening date; credits from each subscriber in amounts matching the subscription figures; the NEFT/RTGS/IMPS UTR reference numbers where money was transferred electronically; the bank account number and IFSC code of the company's current account. For OPCs with a single subscriber, a bank statement showing one credit equal to the subscription amount is sufficient. The MCA's verification of INC-20A primarily focuses on the bank proof — inadequate or ambiguous bank statements are the most common reason for INC-20A processing delays or rejections.

The professional certification requirement mandates that INC-20A be certified by a practising Chartered Accountant (CA), practising Company Secretary (CS), or practising Cost Accountant (CMA) using their DSC registered on MCA21. The certifying professional confirms that the subscription money has been received into the company's bank account as per the attached proof. The director of the company also digitally signs the form using their DIN-linked Class 3 DSC.

The additional fees for late filing accrue at ₹100 per day from the 181st day after incorporation. The MCA21 portal automatically calculates the total fee payable based on the incorporation date and the filing date. Standard ROC filing fees under the Companies (Registration Offices and Fees) Rules 2014 apply in addition to any additional fees for delay. The forms-legal.com MCA INC-20A Commencement of Business template covers the mandatory elements under Companies Act, 2013.