Section 10A to Companies Act – Declaration of Commencement of business

Section 10(A). (1) As per this section, a company incorporated after the commencement of Companies (Amendment) Act,2019 which is having a share capital, shall not commence any business or exercise any borrowing powers unless the following two conditions are satisfied:

• The Director of the Company has to filed a declaration with the Registrar in Form INC 20A within a period of 180 days from the date of incorporation of the company stating that shares are issued to every subscriber to the memorandum on the date of making such declaration; and
• The company has filed with the Registrar a verification of its registered office in Form INC 22 as provided in sub-section (2) of section 12. (which says “the company shall furnish to the Registrar verification of its registered office within a period of 30 days of its incorporation”.)
• If any default is made in complying with the requirements of this section, Company shall be liable to a penalty of Rs.50,000 and every officer who is in default shall be liable to a penalty of Rs.1000 for each day during which such default continues but not exceeding an amount of Rs.1,00,000.
• Where no declaration has been filed with the Registrar in sub-section (1) within a period of 180 days from 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.”.

Source: Notification no. 22 to Companies (Amendment) Act, 2019 dated 31st July, 2019