Form INC-20A is the mandatory declaration a company with share capital must file within 180 days of incorporation, confirming that subscribers have paid for their shares and that the company can now legally commence business. Until this declaration is filed, an Indian company, including a foreign-owned wholly owned subsidiary, cannot commence any business or exercise borrowing powers.
For a foreign-owned subsidiary, INC-20A is often the first real deadline pressure point after incorporation, since it depends on the foreign parent actually remitting share capital into the Indian bank account, a step that involves cross-border banking timelines outside the company’s direct control.
Key Facts Table
Table 1: INC-20A commencement of business — key parameters
| Parameter | Position | Source |
|---|---|---|
| Applicable form | Form INC-20A | Section 10A, Companies Act, 2013 |
| Filing deadline | Within 180 days of incorporation | Section 10A(1), Companies Act, 2013 |
| Precondition to filing | Subscribers must have paid for shares subscribed in MOA; funds credited to company bank account | Section 10A(1)(a), Companies Act, 2013 |
| Additional precondition | Verification of registered office (Form INC-22, if not filed at incorporation) | Section 10A(1)(b), Companies Act, 2013 |
| Applicability | Every company incorporated with share capital, on or after 2 November 2018 | Section 10A, Companies Act, 2013 |
| Penalty for non-filing | Penalty on company and every officer in default | Section 10A(2), Companies Act, 2013 |
| Consequence of continued non-filing | RoC may initiate action for removal of company name from register | Section 10A(3), Companies Act, 2013 |
| Certification requirement | Declaration must be verified by a practising professional (Company Secretary/Chartered Accountant/Cost Accountant) | Companies (Incorporation) Rules, 2014 |
What Changed for INC-20A Filings
- The 180-day deadline under Section 10A of the Companies Act, 2013 has remained unchanged since its introduction and continues to apply to every company incorporated with share capital on or after 2 November 2018.
- No recent change has been made to the professional certification requirement for INC-20A filings.
Why Does INC-20A Matter So Much for a Foreign-Owned Subsidiary?
A foreign-owned subsidiary cannot legally commence any business activity, open certain categories of accounts, or exercise borrowing powers until INC-20A is filed, which means the entire timeline for share capital remittance from abroad must be planned around the 180-day deadline. This makes INC-20A one of the few post-incorporation compliances where a delay by the foreign parent’s own banking process can directly cause the Indian subsidiary to breach a statutory deadline.
Since the precondition to filing INC-20A is that subscribers have actually paid for the shares they subscribed to in the Memorandum of Association, the foreign parent must complete its remittance well before the 180-day mark, factoring in the time needed for outward remittance approvals in its home country, correspondent banking delays, and the Indian bank’s own credit and reconciliation process.
What Is the Step-by-Step Process to File INC-20A?
The company must first open a bank account, receive the subscribed share capital from all subscribers, obtain a bank statement evidencing the credit, and then file INC-20A certified by a practising professional, along with the registered office proof if not already filed. The process is procedurally simple but entirely dependent on the capital actually landing in the account.
Table 2: Step-by-step INC-20A filing process
| Step | Action | Responsible party | Statutory deadline | Form/Portal | Typical TAT |
|---|---|---|---|---|---|
| 1 | Open company bank account | Company | As soon as possible after incorporation | AD Category-I Bank/any bank | 5–10 working days |
| 2 | Foreign subscriber remits share capital | Foreign shareholder | Before 180-day INC-20A deadline | Banking channel via AD Category-I Bank | Varies by home country bank |
| 3 | Obtain bank statement evidencing capital credit | Company | Not applicable | Bank | 1–2 working days |
| 4 | Confirm registered office proof filed (Form INC-22, if not filed at incorporation) | Company | Within 30 days of incorporation (separate deadline) | MCA portal | 1 working day |
| 5 | Obtain certification from practising professional | Company Secretary/CA/Cost Accountant | Not applicable | Not applicable | 1–2 working days |
| 6 | File Form INC-20A | Company (director) | Within 180 days of incorporation | MCA portal | Same day filing once documents ready |
What If the Foreign Parent’s Remittance Is Delayed?
If share capital remittance is delayed and the 180-day deadline is at risk, the company should escalate the remittance internally and, where the deadline is missed, file INC-20A as soon as capital is received along with the applicable additional fee, since continued non-filing risks the Registrar of Companies initiating action to strike the company off the register. There is no general extension mechanism for the 180-day deadline itself, so the practical remedy is expedited remittance followed by prompt late filing.
Common reasons for remittance delay include outward remittance approval processes in the foreign parent’s home country, correspondent bank compliance holds linked to anti-money-laundering checks, and delays in the foreign parent’s own internal treasury approval for the investment. Foreign promoters should build in a buffer of at least four to six weeks before the 180-day deadline to account for these possibilities.
Costs Section
Table 3: Indicative costs for INC-20A compliance
| Head | Statutory fee (₹) | Indicative professional fee | Frequency | Notes |
|---|---|---|---|---|
| INC-20A filing (within deadline) | Nominal filing fee as per MCA schedule | Indicative range, confirm with service provider | One-time | Linked to authorised capital slab |
| INC-20A filing (delayed, with additional fee) | Additional fee per day of delay, as per MCA schedule | Indicative range, confirm with service provider | One-time | Additional fee escalates with delay period |
| Professional certification (CS/CA/Cost Accountant) | Not applicable | Indicative range, confirm with service provider | One-time | Mandatory certification cost |
Key Insights on INC-20A Compliance
- The 180-day clock starts from the date of incorporation shown on the Certificate of Incorporation, not from the date the company opens its bank account or begins operations.
- Partial receipt of subscribed capital from some subscribers but not others can delay INC-20A filing, since the declaration confirms that all subscribers have paid for their shares, not just some of them.
- Foreign remittance for share capital should be initiated with enough lead time to absorb correspondent banking delays, which are common even where the underlying transaction is fully compliant and non-controversial.
- INC-20A is distinct from and filed before Form FC-GPR; INC-20A confirms domestic commencement of business readiness, while FC-GPR separately reports the foreign investment to the RBI within 30 days of share allotment.
- Companies that fail to file INC-20A within 180 days and do not commence business within one year of incorporation face a distinct risk under the Companies Act, 2013 of the Registrar treating the company as a candidate for removal from the register, so this deadline should never be allowed to lapse silently.
- The professional certifying INC-20A is personally responsible for verifying that capital has genuinely been received, so companies should provide clean, reconciled bank statements rather than relying on informal confirmation.
Penalties and Cure
Table 4: Penalties for INC-20A non-compliance
| Default | Provision | Exposure | Regularisation route |
|---|---|---|---|
| Failure to file INC-20A within 180 days | Section 10A(2), Companies Act, 2013 | Penalty on company and every officer in default | File INC-20A with applicable additional fee as soon as possible |
| Company commences business before filing INC-20A | Section 10A(1), Companies Act, 2013 | Business activity technically unauthorised; penalty exposure | File INC-20A immediately; cease any premature business activity pending filing |
| Continued non-filing beyond reasonable period | Section 10A(3), Companies Act, 2013 | Registrar may initiate removal of company name from register | Respond to RoC notice and file INC-20A with regularisation before strike-off is finalised |
Illustrative Example
A French cosmetics group, “Belrose Cosmetiques SAS”, incorporates an Indian subsidiary in early January to start distributing products through Indian e-commerce platforms. The Certificate of Incorporation is dated 5 January, giving the company until roughly early July to file INC-20A.
The company opens its bank account in the third week of January, but the French parent’s internal treasury approval for the outward remittance takes longer than expected, and funds are only credited to the Indian account in late April. The company promptly obtains a bank statement, secures certification from a practising Company Secretary, and files INC-20A in the first week of May, comfortably within the 180-day window despite the earlier delay. This is a hypothetical scenario for illustration only.
Frequently Asked Questions
What is Form INC-20A used for?
Form INC-20A is a declaration confirming that a company’s subscribers have paid for their shares and that the company is ready to commence business, filed within 180 days of incorporation. Without it, the company cannot legally start business operations or exercise borrowing powers.
What happens if INC-20A is not filed within 180 days?
If INC-20A is not filed within 180 days, the company and every officer in default face a penalty under Section 10A of the Companies Act, 2013, and continued non-filing can lead the Registrar of Companies to initiate action to strike the company off the register. The company should file as soon as capital is received, along with the applicable additional fee.
Can a company start operations before filing INC-20A?
No, a company cannot legally commence business or exercise borrowing powers until it has filed INC-20A confirming receipt of subscribed share capital. Operating before filing exposes the company to compliance risk under Section 10A of the Companies Act, 2013.
Is there a way to extend the 180-day INC-20A deadline?
No, there is no general extension mechanism for the 180-day deadline under Section 10A of the Companies Act, 2013. If the deadline is missed, the correct approach is to file INC-20A as soon as capital is received, along with the applicable additional fee for delayed filing.
Does INC-20A apply to companies without share capital?
No, Section 10A of the Companies Act, 2013 applies specifically to companies incorporated with share capital. Companies limited by guarantee without share capital are not subject to this particular declaration requirement.
Who certifies the INC-20A filing?
A practising Company Secretary, Chartered Accountant, or Cost Accountant must certify Form INC-20A, confirming that the subscribers have paid for their shares based on verified bank records. This certification is a mandatory part of the filing.
How is INC-20A different from FC-GPR for a foreign-owned company?
INC-20A confirms under Indian company law that the company has received its subscribed capital and can commence business, while FC-GPR separately reports the foreign investment to the Reserve Bank of India through the FIRMS portal within 30 days of share allotment. Both filings are required, address different regulators, and run on different timelines.
What documents are needed to file INC-20A?
A bank statement evidencing receipt of the subscribed share capital, confirmation of registered office (if not already filed through Form INC-22), and certification from a practising professional are the core documents needed for INC-20A. No separate government-issued certificate is required beyond these supporting documents.
Can INC-20A be filed if only some subscribers have paid for their shares?
Generally, INC-20A should be filed once all subscribers named in the Memorandum of Association have paid for their subscribed shares, since the declaration confirms full receipt of subscription capital. Partial payment by some subscribers can delay the filing until the remaining amount is received.
What is the cost of filing INC-20A late?
Late filing of INC-20A attracts an additional fee that increases with the length of delay, calculated as per the Ministry of Corporate Affairs’ fee schedule, on top of any indicative professional certification fee. The exact additional fee should be checked on the MCA portal at the time of filing.
Does a foreign-owned subsidiary need a separate RBI approval before filing INC-20A?
No, INC-20A itself does not require RBI approval, since it is a Companies Act filing confirming domestic capital receipt. The separate FC-GPR filing on the RBI’s FIRMS portal, required within 30 days of share allotment, is the relevant foreign exchange compliance step.
Sources
- Companies Act, 2013, Ministry of Corporate Affairs — mca.gov.in
- Companies (Incorporation) Rules, 2014, Ministry of Corporate Affairs — mca.gov.in
Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Laws and regulations referenced are subject to change, and readers should verify the current position with the relevant government authority or a qualified professional before acting on any information herein. CompanyIN accepts no liability for any loss arising from reliance on this content.
