Section 10A – Commencement of Business (Declaration of Commencement)
## Section 10A – Commencement of Business
Applies to: A company having a share capital (incorporated on or after 2 November 2018).
### Pre-conditions to commence business or exercise borrowing powers
A company shall not commence business or exercise any borrowing powers unless:
#### (a) Declaration by a Director
Filed with RoC within 180 days of incorporation (in Form INC-20A).
Confirming that, as on date of declaration, every subscriber has paid the value of shares agreed to be taken by him.
#### (b) Verification of Registered Office
The company has filed with RoC a verification of its Registered Office under Section 12(2).
### Penalty for Default in filing declaration
Defaulter
Penalty
Company
₹50,000
Every Officer in Default (OID)
₹1,000 per day of default, subject to maximum ₹1 lakh
### Consequence if no declaration within 180 days
If the declaration is not filed within 180 days AND the RoC has reasonable ground to believe (RGTB) that the company is not carrying on any business → RoC may initiate action for removal of name of the company from the Register of Companies.
### Rule 23A of Companies (Incorporation) Rules, 2014
Declaration u/s 10A by a director shall be in Form INC-20A.
Contents of the form shall be verified by a CA/CS/Cost Accountant in practice.
If the company's objects require registration/approval from any sectoral regulator (e.g., RBI, SEBI), such approval shall also be obtained and attached with the declaration.
Worked example
### Example 1
Example (Timely filing): ABC Pvt. Ltd. was incorporated on 1 April 2026. All subscribers paid for their shares on 15 May 2026. Director files INC-20A on 30 May 2026 (well within 180 days). RoC also has verification of RO. Company can now commence business and borrow.
### Example 2
Example (Penalty): XYZ Pvt. Ltd. failed to file the declaration within 180 days. Company is liable for ₹50,000 penalty. Director-in-default faces ₹1,000/day, capped at ₹1 lakh. So if the default continues for 200 days, OID's penalty is capped at ₹1 lakh (not ₹2 lakh).
### Example 3
Example (Removal): ABC Pvt. Ltd. incorporated 1 January 2026 has not filed declaration by 30 June 2026 (180 days expired). RoC has reason to believe ABC isn't carrying on business. RoC may initiate removal of name under Chapter XVIII.
⚠️ Common exam mistakes
Confusing the 180-day rule with any 'minimum subscription' rule — Section 10A simply requires confirmation that subscribers have paid for the shares they agreed to take.
Believing Section 10A applies to all companies — it applies only to those having a share capital.
Forgetting that verification of registered office (Section 12(2)) must also be filed before commencement.
Missing that the OID penalty is capped at ₹1 lakh — students often compute it as ₹1,000 × days without applying the cap.
Forgetting that the INC-20A must be verified by a CA/CS/Cost Accountant in practice.
Bare-Act text Section 10A · Companies Act, 2013 · click to expand
Section 10A(1): A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless — (a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and (b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12. (2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees. (3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the 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.