• Purpose:

The section requires a company to file a declaration of the commencement of business with the Registrar of Companies (RoC) before starting any business or exercising any borrowing powers.

• Timeline:

The declaration must be filed within 180 days of incorporation of the company.

• Form:

The declaration must be filed in Form INC-20A.

• Penalty:

Non-compliance with this section can result in penalties ranging from INR

50,000 to INR 5 lakh for the company and INR 1,000 per day of default for the

officers in default, subject to a maximum of INR 1 lakh. Additionally, the company may be barred from making certain filings and the directors may face disqualification.

• Reporting

authority: The declaration must be filed with the Registrar of Companies (RoC).

• Other:

This requirement was introduced in 2019 to curb the practice of shell companies

that were incorporated but never started any business operations.