Form INC-20A: ₹2.5 Lakh Penalty and ROC Strike-Off Trap Every Company Incorporated After November 2018 Must Close (2026 Guide)

Form INC-20A: ₹2.5 Lakh Penalty and ROC Strike-Off Trap Every Company Incorporated After November 2018 Must Close (2026 Guide)

By CS Sapna Malpani | Last updated: 18 June 2026 | Reading time: 12 minutes

In December 2025, the Registrar of Companies, Pune imposed a combined penalty of ₹2,50,000 on a freight company and its two directors for starting business without filing Form INC-20A. The company, incorporated in April 2025, began operations within weeks. By November 2025, the ROC had opened adjudication proceedings. The company filed a suo motu application. The adjudicating officer was unmoved — ₹50,000 on the company, ₹1,00,000 on each director (Order ID: PO/ADJ/12-2025/PU/01223). Three months of hurried operations. ₹2.5 lakh in penalties. All for skipping a one-time, 15-minute online filing.

Form INC-20A is not a periodic form. You file it once. Most founders either file it promptly and forget it, or they forget to file it and spend years operating a technically non-compliant company — one that the ROC can strike off at any time. Given that roughly 7–8 lakh companies have been incorporated since November 2018 in India, the scale of this exposure is significant.

This guide covers everything you need to know: what INC-20A is, who must file it, how to file it correctly, what happens if you filed it wrongly, and how to fix a default before the ROC finds you.

What Is Form INC-20A?

Form INC-20A is the Declaration for Commencement of Business prescribed under Section 10A of the Companies Act, 2013, and Rule 23A of the Companies (Incorporation) Rules, 2014.

Section 10A was inserted into the Act through the Companies (Amendment) Ordinance, 2018, which came into effect on 2 November 2018. The intent was straightforward: stop shell companies from being formed without any real capital. Before this provision existed, promoters would incorporate companies, subscribe to shares on paper, and then never actually bring the money in. Companies were signing contracts and borrowing from banks with zero actual capital received.

Section 10A fixed this by requiring a director to formally declare — on pain of penalty — that share subscription money has actually been received before the company does anything at all.

The declaration has two components:

1. Every subscriber to the memorandum has paid the value of shares agreed to be taken by them (i.e., the subscription money is in the company’s bank account)
2. The registered office address has been verified (which also overlaps with Section 12 requirements — but for INC-20A purposes, proof of registered office must accompany the filing)

Who Must File INC-20A?

Every company that meets all three of these conditions is required to file:

1. The company has share capital (equity or preference shares)
2. The company was incorporated on or after 2 November 2018
3. The company is not exempted under any specific government notification

Section 8 companies (not-for-profit) and companies that do not have share capital are exempt. One Person Companies (OPCs) with share capital incorporated after 2 November 2018 are NOT exempt — they must also file INC-20A.

Companies incorporated before 2 November 2018 need not file — the provision applies only from the effective date of the amendment ordinance.

If your company was incorporated any time between November 2018 and now and you have share capital, the question is binary: either you have filed INC-20A, or you are in default.

The 180-Day Deadline

Under Section 10A(1), the director’s declaration must be filed within 180 days from the date of incorporation. This is counted from the date on the certificate of incorporation, not the date of the first board meeting or the date of opening the bank account.

There is no extension mechanism in the statute. The ROC cannot grant an extension. There is no amnesty scheme currently covering this specific default (the CCFS 2026 scheme covers annual filing defaults under Sections 92 and 137, not Section 10A defaults). Once day 181 arrives without a valid INC-20A on file, the per-day penalty begins to run.

Penalty Structure Under Section 10A(2)

The per-day penalty starts on day 181 and accumulates until the default is rectified. In practice, the ROC adjudicating officer calculates the penalty based on the number of days from the end of the 180-day window to the date of the adjudication order. The maximum for each individual officer is capped at ₹1 lakh — once the total days of default reach 100, the per-officer cap is hit.

The penalty is a civil liability under Section 454 of the Companies Act and must be deposited via the e-Adjudication facility on the MCA21 portal. It cannot be paid from company funds for the directors’ personal share — the adjudication order specifically directs officers to pay from “personal sources/income.”

The ROC Pune December 2025 Case — What Went Wrong

The adjudication order from ROC Pune (Order ID: PO/ADJ/12-2025/PU/01223, dated 16 December 2025) in the matter of Stalwart Global Freight Private Limited (CIN: U52100PN2025PTC240302) is instructive because it captures a common real-world scenario:

1. The company was incorporated in April 2025
2. Business operations started promptly — bank transactions showed commercial activity well before any INC-20A was filed
3. The company eventually filed INC-20A, but filed it incorrectly — the bank statement did not show receipt of subscription money from subscribers prior to the declaration
4. The founders realised the problem and filed a suo motu application under Section 454 acknowledging the violation
5. The adjudicating officer imposed: ₹50,000 on the company, ₹1,00,000 on each of the two directors — total ₹2,50,000

The lesson the order makes explicit: the company had commenced its business without receipt of the value of shares agreed to be taken by subscribers, and the form filed was wrongly filed. Filing INC-20A with the wrong bank proof — or before subscription money actually appears in the account — is not treated as a good-faith compliance attempt. It is treated as a violation.

Two Violations, Not One

Founders often think there is one offence here: filing late. In fact there are two distinct violations under Section 10A:

Violation 1 — Not filing within 180 days (Section 10A(1) read with Section 10A(2)): This is the timing offence. The company and its directors are liable for the penalty described above.

Violation 2 — Commencing business or exercising borrowing powers before filing (Section 10A(1) itself): Every business activity undertaken — customer meetings that resulted in contracts, bank loans taken, employees hired, goods purchased — before a valid INC-20A was on record is technically done without authority. If the company entered into contracts during this period, those contracts may be voidable.

Most adjudication orders in practice focus on Violation 1 (the penalty under Section 10A(2)). But Violation 2 is the one that creates a deeper problem: if the company raised a bank loan without INC-20A on file, the bank’s charge registration may be questioned. If the company signed a multi-year service agreement, the counterparty could theoretically raise a legal challenge. This is not a theoretical risk — it becomes very real during due diligence for investor rounds or legal disputes.

The Strike-Off Risk Under Section 248

Section 10A(3) gives the ROC a direct power: if INC-20A has not been filed and the ROC has reasonable cause to believe the company is not carrying on any business or operations, the ROC may initiate action for removal of the company’s name under Section 248 of the Companies Act, 2013.

Strike-off means the company ceases to exist as a legal entity. Its assets vest in the Crown (Government of India). Its contracts become void. Its employees lose their legal employer. Any FSSAI, MSME, DPIIT, or other government registration tied to the CIN becomes invalid. The directors face DIN deactivation and potential disqualification under Section 164(2) — which prevents them from being a director in any company for five years.

The ROC conducts periodic strike-off drives. During these drives, ROC offices across India issue notices to companies that have defaulted on key filings including INC-20A. Companies that do not respond within the notice period are struck off en masse. There is no individual hearing in many cases — the notices go to the registered email on record, and if that email address is defunct or unmaintained, the company finds out only after the fact.

What You Must Do Now — Step-by-Step

Step 1: Confirm Your Incorporation Date

Log into MCA21 and check the Certificate of Incorporation. The date on the certificate is Day 1. Add 180 days. If today is before that date, file immediately. If today is after that date, you are already in default.

Step 2: Verify Filing Status on MCA Portal

On the MCA21 portal, search your company by CIN. Under “View Filing” or “Company Master Data,” check whether Form INC-20A appears as a filed document. If it shows as “Approved,” you are compliant. If it shows as “Resubmission Required” or is absent entirely, you have a problem.

Step 3: Verify That All Subscription Money Has Been Received

Before filing, confirm that the bank account statement shows credit entries for the exact rupee amount each subscriber was allotted. For example, if the company has two founders holding 5,000 shares each at ₹10 face value, the bank account must show ₹50,000 received from each subscriber — two separate credits of ₹50,000 each. If your founders contributed unequal amounts, or if one subscriber’s contribution is not reflected, do not file INC-20A until this is corrected. Filing with incomplete subscription money received is the mistake Stalwart Global Freight made — and it cost them ₹2.5 lakh.

Step 4: Prepare Your Documents

You will need:

• Bank statement of the company showing individual subscriber credits
• Proof of registered office: Rent agreement or NOC from owner + latest utility bill in the company’s name or owner’s name (not older than 2 months)
• DSC (Digital Signature Certificate) of the director filing the declaration
• CIN of the company (auto-fetched on MCA portal but confirm it is correct)

Step 5: File INC-20A on MCA21

Log into the MCA21 portal → Company Forms → INC-20A. Fill in the company CIN, attach the bank statement and office proof, apply the director’s DSC, and submit. Government filing fee under Rule 38 of the Companies (Registration Offices and Fees) Rules, 2014 is nominal (typically ₹200–500 depending on share capital). The SRN generated at submission is your confirmation. You will receive an acknowledgement email within 24–48 hours.

Step 6: For Defaulters — Filing GNL-1 and Paying the Penalty

If you are past the 180-day window, you cannot simply file INC-20A and walk away. The default period has already accumulated a penalty. The correct process for a voluntary default resolution:

1. File Form GNL-1 (General Notice) on MCA21 — a suo motu application acknowledging the default under Section 10A and requesting adjudication
2. Await a Show Cause Notice (SCN) from the ROC Adjudicating Officer
3. Respond to the SCN within the stated deadline with an explanation and evidence of the circumstances
4. After the adjudication order is passed, pay the penalty via the e-Adjudication portal on MCA21 within 90 days of the order
5. File INC-20A concurrently — the adjudication order will direct you to file the correct form within 30 days of the order

Approaching the ROC suo motu — as the Stalwart Global Freight directors did — is always better than waiting to be caught. Adjudicating officers have some discretion in how they calculate the penalty, and voluntary disclosure is viewed more favourably than discovered non-compliance.

Common Mistakes That Lead to Rejection or Penalty

1. Filing before all subscriber money is received. The declaration states that every subscriber has paid. If even one subscriber’s contribution is pending, the declaration is false. File only after the bank account shows 100% of subscribed capital received.

2. Using the wrong bank proof. Some founders upload a passbook photocopy instead of a full bank statement showing individual credits. The ROC requires a statement that clearly identifies the credit — amount, date, and narration (which should ideally reference the subscriber’s name or share allotment).

3. Confusing INC-20A with INC-22. INC-22 is the form for intimating the registered office address to the ROC. INC-20A is the commencement of business declaration. They are different forms. Some founders file INC-22 and assume they have covered INC-20A. They have not.

4. Not checking the filing status after submission. SRN generation at the MCA portal does not mean the form has been approved. Forms go through processing and may be sent back for resubmission due to document quality issues. Check the MCA portal 2–3 days after filing to confirm the form status shows “Approved.”

5. Thinking the 180-day window is measured from the first board meeting. It is not. The clock starts on the date of the certificate of incorporation.

How This Affects Your Startup’s Due Diligence

According to CS Sapna Malpani, practising Company Secretary in Bangalore: “INC-20A is one of the first items on my due diligence checklist for any startup seeking funding. Investors and their legal counsel check this during the data room review. If it is missing or was filed late without penalty being paid, the startup faces a disclosure obligation — and in some cases, investors have held up their tranches until the default is compounded or regularised.”

The implications go beyond the ₹2.5 lakh penalty. A startup that raised an angel round and commenced operations before filing INC-20A has technically operated without lawful commencement authority. During Series A due diligence, if the target startup’s post-incorporation compliance file is clean except for an INC-20A gap, the investor’s lawyer will flag it as a representation risk. The founders will be asked to make a specific representation in the shareholders’ agreement that no proceedings are pending. An unpaid INC-20A penalty breaks that representation.

The forward implication: as more ROC offices digitise their adjudication systems and MCA conducts periodic non-filer strikes, the risk of an enforcement action reaching companies that have long since fixed the underlying filing (but never paid the penalty) is rising. The safer path is to regularise now.

INC-20A vs. Other Post-Incorporation Filings — Quick Comparison

Sources and References

• Section 10A, Companies Act 2013 — India Code (Gold source)
• ROC Pune Order PO/ADJ/12-2025/PU/01223 (December 2025) — TaxGuru (Silver source)
• Companies (Incorporation) Rules 2014, Rule 23A — MCA.gov.in (Gold source)
• MCA Penalty for Section 10A Violation — TaxGuru (Silver source)
• MCA21 Portal — Ministry of Corporate Affairs (Gold source)

Frequently Asked Questions

1. What is Form INC-20A and who must file it?

Form INC-20A is a declaration for commencement of business under Section 10A of the Companies Act, 2013. Every company having share capital that was incorporated on or after 2 November 2018 must file it. The declaration is made by a director and confirms that every subscriber to the memorandum has paid the full value of shares allotted to them, and that the registered office address is verified. OPCs, companies without share capital, and companies incorporated before 2 November 2018 are exempt.

2. What is the deadline for filing Form INC-20A?

Form INC-20A must be filed within 180 days from the date of incorporation of the company. This is a one-time filing — there is no annual renewal. If the company fails to file within 180 days, it is in default from day 181 onwards and the per-day penalty begins to accumulate on each officer in default at ₹1,000 per day, up to a maximum of ₹1 lakh per officer.

3. What is the penalty for not filing INC-20A?

Under Section 10A(2), the penalty is: Company — ₹50,000 (one-time flat). Each officer in default — ₹1,000 per day, maximum ₹1,00,000 per officer. For a typical startup with two directors, the maximum combined penalty is ₹2,50,000. ROC Pune imposed exactly this amount in December 2025 in the matter of Stalwart Global Freight Private Limited (Order ID: PO/ADJ/12-2025/PU/01223).

4. Can a company commence business without filing INC-20A?

No. Section 10A(1) explicitly prohibits a company from commencing any business activities or exercising any borrowing powers until INC-20A is filed and accepted. If a company starts operations or takes a bank loan before this filing, it violates Section 10A — which is a separate offence from the delay in filing. The ROC Pune December 2025 order penalised a company precisely because it commenced business and filed the form with incorrect bank proof, with bank transactions revealing operations had started before the declaration was properly made.

5. Can the ROC strike off a company for not filing INC-20A?

Yes. Under Section 10A(3) read with Section 248, if a company has not filed INC-20A and the ROC has reasonable cause to believe the company is not carrying on any business or operations, the ROC can initiate strike-off proceedings. This removes the company from the register, effectively killing the entity. All pending contracts and licences become void. Directors may face DIN deactivation and disqualification under Section 164(2) for five years.

6. What documents are needed to file Form INC-20A?

The key documents: (1) Bank statement showing receipt of subscription money from all subscribers — credits must match each subscriber’s allotted share value; (2) Proof of registered office — rent agreement or NOC from property owner, plus latest utility bill not older than 2 months; (3) DSC of the filing director; (4) CIN of the company. Filing fee on MCA21 is nominal (₹200–500 depending on share capital). A practising CS fee for verification and filing is typically ₹5,000–15,000 depending on complexity.

7. What happens if INC-20A was filed incorrectly?

Filing an incorrect INC-20A is treated as non-compliance. The ROC Pune December 2025 order is a clear precedent — the company filed the form but with a bank statement that did not correctly show receipt of subscription money from all subscribers. The adjudicating officer treated it as if the form had never been properly filed and imposed the full penalty. Companies must ensure the bank statement clearly reflects individual credits from each subscriber matching their share value before filing.