A company incorporated with share capital must not commence any business or exercise any borrowing powers until two things exist: a director's declaration, filed with the Registrar within 180 days of incorporation, that every subscriber to the memorandum has paid the value of the shares agreed to be taken, and the company's verification of its registered office under Section 12(2) (Companies Act, 2013, Section 10A(1)(a) and (b)). The declaration is filed in Form INC-20A (Companies (Incorporation) Rules, 2014, Rule 23A).
The gate most founders miss
Incorporation is not a licence to trade. The certificate of incorporation creates the company; Section 10A(1) of the Companies Act, 2013 decides when it may commence business or borrow. A founder who signs customer contracts, raises invoices or draws a loan in week three, before the declaration is filed, is acting before the section allows.
The rule covers a company "incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital" (Companies Act, 2013, Section 10A(1)). The section's words reach only companies having a share capital. For a company that has one, the 180 days run from the date of incorporation shown on its certificate.
Check your position first
Two conditions, not one
The declaration and the office verification are cumulative: Section 10A(1) joins clauses (a) and (b) with "and". A company that collects all subscription money but has not filed its registered-office verification has not satisfied the section; neither has a company with a verified office but unpaid subscriber shares.
The office verification has its own clock and its own penalty. It must be furnished to the Registrar within thirty days of incorporation (Companies Act, 2013, Section 12(2)), and a default under Section 12 makes the company and every officer in default liable to a penalty of ₹1,000 for every day the default continues, up to ₹1 lakh (Section 12(8)). Keep the SRNs of both filings together as the launch-gate evidence.
What counts as commencing business
The Act text does not define "commence any business". Our cautious reading: treat any external commercial commitment (signing customer contracts, raising sales invoices, putting subscription money to work in operations) as commencement until the declaration is on record. Internal steps that create no third-party rights or obligations, such as Board organisation and professional appointments, are less likely to be caught, but that is a judgement, not a statutory carve-out.
Borrowing needs special care because founders reach for working capital first. Section 10A(1) bars the company from exercising "any borrowing powers" until both conditions are met, so a loan drawn earlier is an exercise of a power the section has not yet released.
Do it in order
- Collect subscription money first. The declaration must state that every subscriber has paid the value of the shares agreed to be taken "on the date of making of such declaration" (Companies Act, 2013, Section 10A(1)(a)). Banked, traceable credits are the practical proof.
- Verify the registered office within thirty days of incorporation and keep the acknowledgement (Companies Act, 2013, Section 12(2)).
- Prepare the director's declaration in Form INC-20A. Its contents must be verified by a Company Secretary, Chartered Accountant or Cost Accountant in practice. If the company's objects need registration or approval from a sectoral regulator, such as the Reserve Bank of India or SEBI, that registration or approval must be obtained and attached to the declaration (Companies (Incorporation) Rules, 2014, Rule 23A and its proviso).
- File INC-20A within 180 days of incorporation (Companies Act, 2013, Section 10A(1)(a)), and keep the SRN with the subscription proofs.
- Commence business or borrow only after both conditions are met.
Worked example: incorporated 10 April
Take a private company incorporated on 10 April 2026 with two subscribers agreeing ₹5 lakh each, ₹10 lakh subscribed in all. The 180th day after 10 April 2026 is 7 October 2026 (20 days left in April after the 10th, then May 31, June 30, July 31, August 31, September 30 and 7 days of October = 180). The thirtieth day after incorporation, for the office verification, is 10 May 2026.
Day-counting conventions differ by a day; file well inside the period rather than on the last day.
Had the founders signed a customer contract on 20 April and filed INC-20A on 15 May, the contract would, on the cautious reading above, be business commenced before the declaration.
Diary the endpoints on day one
Put both computed endpoints in the compliance calendar at incorporation. Day 30 is the office-verification deadline (Section 12(2)); use it also to confirm subscription collection is underway. Day 90 confirms every subscriber has paid. Day 150 forces the declaration's preparation, including the practising professional's verification under Rule 23A, while bank proofs can still be chased without panic.
If you miss it
A default under Section 10A makes the company liable to a penalty of ₹50,000, and every officer in default liable to ₹1,000 for each day the default continues, up to ₹1 lakh (Companies Act, 2013, Section 10A(2)).
Beyond the penalty, where no declaration has been filed within 180 days and the Registrar has reasonable cause to believe the company is not carrying on any business or operations, the Registrar may initiate action to remove the company's name from the register under Chapter XVIII (Section 10A(3)). Section 248(1)(d) separately lists, as a ground for the Registrar's removal notice, subscribers not having paid the subscription they undertook at incorporation together with no declaration filed within 180 days under Section 10A(1).
FAQ
Does Section 10A apply to a company without share capital?
Section 10A(1) of the Companies Act, 2013 is written for a company "having a share capital". A company without share capital is outside those words; confirm your own position before relying on that.
Can we trade before filing INC-20A?
No. Commencing business or exercising borrowing powers before both conditions in Section 10A(1) are met breaches the section, even if the 180 days have not yet run out.
Who verifies the INC-20A?
A Company Secretary, Chartered Accountant or Cost Accountant in practice verifies its contents (Companies (Incorporation) Rules, 2014, Rule 23A).
What proves subscription payment?
Bank credits matching each subscriber's agreed value on or before the declaration date. The director declares a fact (Section 10A(1)(a)); the statements must support it.
Is office verification part of INC-20A?
No. It is a separate filing with its own thirty-day period under Section 12(2) of the Companies Act, 2013, and a separate condition under Section 10A(1)(b). Both must be met before business commences.
We are past 180 days with no filing. What now?
Stop any new business or borrowing and take advice before acting. Section 10A(1)(a) speaks of a declaration filed within 180 days; the Act text does not say whether a declaration filed later lifts the bar. The Section 10A(2) penalty and the removal exposure under Sections 10A(3) and 248(1)(d) apply to the default either way.
What exactly does a missed INC-20A cost?
₹50,000 on the company, plus ₹1,000 per day of continuing default on every officer in default, capped at ₹1 lakh (Section 10A(2), Companies Act, 2013), with the Registrar's removal action as the further exposure.
Can the Registrar strike us off for this alone?
The Registrar may initiate removal where no declaration is filed within 180 days and there is reasonable cause to believe the company carries on no business or operations (Section 10A(3)), or where subscribers have not paid and no declaration is filed within 180 days (Section 248(1)(d)). Either way the Registrar first sends a notice to the company and its directors inviting representations within thirty days (Section 248(1)).
Sources
- Companies Act, 2013, Section 10A(1)–(3): commencement conditions, 180-day declaration, penalty, removal
- Companies Act, 2013, Section 12(2) and 12(8): registered-office verification within thirty days; penalty
- Companies Act, 2013, Section 248(1)(d): removal ground linked to the Section 10A declaration
- Companies (Incorporation) Rules, 2014, Rule 23A (inserted by the Companies (Incorporation) Fourth Amendment Rules, 2018, G.S.R. 1219(E)): Form INC-20A, verification by a practising CS, CA or Cost Accountant, sectoral-regulator proviso
- The company's certificate of incorporation, subscription bank proofs, office-verification SRN and INC-20A SRN
What to send for a review
Send your incorporation date, subscriber list with agreed values, subscription bank proofs, and the office-verification filing status. The review returns your 180-day endpoint with the commencement evidence pack.
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