Incorporating a company under the Companies Act, 2013 establishes its legal existence. However, certain post-incorporation compliances must be completed before the company can fully commence its operations. Two critical requirements are filing Form INC-20A (Declaration of Commencement of Business) and appointment of the first auditor.

Form INC-20A – Declaration for Commencement of Business

Form INC-20A confirms that the subscribers to the Memorandum have paid the share capital they agreed to contribute.

Key points:

• Applicable to companies having share capital.

• Must be filed within 180 days from the date of incorporation.

• Requires proof that the share capital has been deposited in the company’s bank account.

  Need help with this? Talk to Chandwani & Company Chartered Accountants in Bhopal →

Consequences of non-compliance:

• Company penalty up to ₹50,000.

• Officers in default may be liable for ₹1,000 per day, subject to statutory limits.

  Need help with this? Talk to Chandwani & Company Chartered Accountants in Bhopal →

• The Registrar of Companies may initiate strike-off proceedings if the company fails to comply.

Relevant legal provisions:

• Section 10A of the Companies Act, 2013

• Companies (Incorporation) Rules, 2014

Appointment of First Auditor

Every company must appoint its first auditor soon after incorporation.

Key points:

• The Board of Directors must appoint the first auditor within 30 days of incorporation.

• If the Board fails, shareholders must appoint the auditor within 90 days in an Extraordinary General Meeting.

• The first auditor holds office until the first Annual General Meeting.

Relevant legal provisions:

• Section 139(6) of the Companies Act, 2013

• Companies (Audit and Auditors) Rules, 2014

Conclusion

While the Certificate of Incorporation establishes a company legally, filing INC-20A and appointing the first auditor are essential to ensure compliance and smooth business operations.

For expert guidance on this topic, contact your tax professional today.