This section applies to every company (public and private) having a share capital. Companies without share capital (e.g., Section 8 guarantee companies without share capital) are outside its scope.
## The Two Bars
A company having a share capital shall not:
1. Commence any business, or
2. Exercise any borrowing powers,
— unless the following two filings are made with the Registrar.
## The Two Filings Required
### 1. Declaration by a Director (within 180 days of incorporation)
Who files: A director of the company.
What is declared: That every subscriber to the memorandum has paid the value of shares agreed to be taken.
Verification: The declaration (in the prescribed form, with prescribed fees) is to be verified by a CS, CA, or CMA in practice.
Timeline: Within 180 days from the date of incorporation.
### 2. Verification of the Registered Office
Filing of e-Form INC-22 for verifying the registered office address.
This is in addition to (or in tandem with) the registered-office requirement under Section 12.
## Penalty for Default
Defaulter
Penalty
Company
`₹50,000` (lump sum)
Every officer in default
`₹1,000 per day` of continuing default, max `₹1,00,000`
## Strike Off by Registrar
If no declaration is filed within 180 days of incorporation and the Registrar has reasonable cause to believe that the company is not carrying on business or operations, the Registrar may remove the name of the company from the register of companies.
## Why this section?
It was reintroduced (Companies (Amendment) Ordinance, 2018 / Act, 2019) to curb the problem of shell companies that were being incorporated but never actually started business. By requiring proof that subscribers have paid up their share capital, the law ensures there is genuine money behind the company before it begins trading or borrowing.
Worked example
### Example 1
Example — Premature Borrowing: Sunrise Pvt Ltd is incorporated on 1 January 2026 with a share capital of ₹10 lakh. On 1 February 2026, before the subscribers have paid for their shares and before any Section 10A filing, the company borrows ₹5 lakh from a bank. This is a violation of Section 10A — the company cannot exercise borrowing powers before the declaration of paid-up share capital is filed.
### Example 2
Example — Penalty Calculation: A small private company fails to file the Section 10A declaration. The default continues for 150 days before the company files. (a) Company penalty = ₹50,000 (lump sum). (b) Officer-in-default penalty = ₹1,000 × 150 = ₹1,50,000 — but capped at ₹1,00,000. Therefore, the officer pays ₹1,00,000.
### Example 3
Example — Strike-Off: Falcon Ltd was incorporated on 1 March 2026. By 27 August 2026 (after 180 days), no declaration under Section 10A has been filed and the Registrar finds no evidence of any business activity. The Registrar may proceed to remove Falcon Ltd's name from the register of companies.
⚠️ Common exam mistakes
Applying Section 10A to companies without share capital. It applies only to companies having a share capital.
Thinking only the company can be penalised. Every officer in default is also separately liable (per-day penalty, capped).
Forgetting the 180-day time limit for the declaration.
Believing strike-off is automatic. It is discretionary — Registrar must have reasonable cause to believe no business is being carried on.
Assuming a director can self-verify the declaration. It must be verified by a CS / CA / CMA in practice.
Treating the verification of registered office (INC-22) as optional. It is mandatory under Section 10A in addition to filing the declaration.
Bare-Act text Section 10A · Companies Act, 2013 · click to expand
(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.