Section 10A of Companies Act, 2013 – Commencement of Business, etc

SECTION 10A

COMMENCEMENT OF BUSINESS, ETC.

(Effective from 2nd November, 2018)

[(1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless—

(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

(b) the company has filed with the Registrar a verification of its registered office as provided in sub-­section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.][3]

Applicable Rules

Companies (Incorporation) Rules, 2014

Effective from 18th December, 2018

[Rule 23A. Declaration at the time of commencement of business: The declaration under section 10A by a director shall be in Form No.INC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the contents of the said form shall be verified by a Company Secretary or a Chartered Accountant or a Cost Accountant, in practice.

Provided that in the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.][4]

SECTION 11. [***][1]

COMMENCEMENT OF BUSINESS, ETC

Applicable Rules

Companies (Incorporation) Rules, 2014

Rule 24: [***][2]

 

[1] Section 11 omitted by the Companies (Amendment) Act, 2015 vide Notification No. S.O. 1440(E) dated 29th May 2015. Prior to omission it read as under:

“11. Commencement of business etc.

(1) A company having a share capital shall not commence any business or exercise any borrowing powers unless—

(a) a declaration is filed by a director in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration; and

(b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty which may extend to five thousand rupees and every officer who is in default shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.”

[2] Rule 24 omitted by the Companies (Incorporation) Second Amendment Rules vide Notification No. G.S.R 442(E) dated 29th May 2015. Prior to omission it read as under:

“Rule 24. Declaration at the time of commencement of business.—The declaration filed by a director shall be in Form No. INC.21 along with the fee as and the contents of the form shall be verified by a Company Secretary in practice or a Chartered Accountant or a Cost Accountant in practice:

Provided that in the case of a company requiring registration from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board of India etc, the approval from such regulator shall be required.”

[3] Inserted by The Companies (Amendment) Ordinance , 2018 dated 2nd November, 2018.

[4] Inserted by Companies (Incorporation)Fourth Amendment Rules, 2018 vide Notification No. F. No. 1/13/2013 CL-V, Part-I, Vol.II dated 18^th December, 2018.