# Section 10A - Commencement of Business
## Applicability
Applies to companies having share capital only.
## Two Mandatory Conditions Before Commencing Business or Exercising Borrowing Powers
A company having share capital shall NOT:
- Commence any business, OR
- Exercise any borrowing powers
UNLESS both conditions are satisfied:
### Condition 1: Declaration by Director (Form INC-20A)
- To be filed with RoC within 180 days of incorporation
- Filed by a Director
- States that every subscriber has paid the value of shares agreed to be taken (as on declaration date)
### Condition 2: Verification of Registered Office
- Company has filed with RoC a verification of Registered Office provided u/s 12(2)
## Form INC-20A - Additional Requirements (Rule 23A)
1. The declaration must be in Form INC-20A
2. Contents must be verified by:
- Chartered Accountant (CA), OR
- Company Secretary (CS), OR
- Cost Accountant
(All must be in practice)
3. For companies in regulated sectors (RBI, SEBI, etc.): Approval/registration from the sectoral regulator must be obtained and attached.
## Penalty for Default
| Defaulter | Penalty |
|---|---|
| Company | Rs. 50,000 |
| Every Officer in Default (OID) | Rs. 1,000 per day (max Rs. 1 lakh) |
## Consequence of Non-filing - Strike Off Action
If:
- No declaration is filed within 180 days, AND
- RoC has reasonable grounds to believe (RGTB) that company is not carrying on business
Then RoC may initiate action for removal of name of company from the register of companies.
## Quick Summary Flow
```
Incorporation Date
↓
180 days window
↓
File INC-20A + RO verification
↓
[Permitted to commence business & borrow]
```