Commencement of Business Filing
The declaration a new company must file confirming subscribers have paid in their share capital.
A newly incorporated company cannot begin business or exercise borrowing powers until it files a declaration confirming that every subscriber has paid the amount they agreed to pay for their shares. The declaration is Form INC-20A, and it is due within one hundred and eighty days of incorporation.
It is a short filing that is missed with surprising regularity, usually because the founders are focused on operations. The consequences are disproportionate to the effort involved.
What this costs
What has to happen first
Before the declaration can be filed, the subscription money must actually be paid into the company’s bank account. The form requires proof — a bank statement showing the credit from each subscriber.
Money paid in cash, or transferred from an account that is not the subscriber’s own, does not establish the position. Each subscriber should transfer their subscription amount from their own account.
What happens if you do not file
- The company cannot lawfully commence business or exercise borrowing powers
- A penalty on the company, and a separate penalty on every officer in default
- The Registrar may initiate action to strike the company off the register
- Banks and investors conducting diligence will identify the omission
- Other filings requiring a compliant company can be held up
The related first-year items
INC-20A is one of three things a new company must do early, and the others carry their own deadlines.
- Appoint the first statutory auditor within thirty days of incorporation, and file ADT-1
- File INC-20A within one hundred and eighty days
- File INC-22 where the registered office was not specified at incorporation
- Hold the first board meeting within thirty days of incorporation
How we handle it
- 1 Checking the position We confirm the subscription money has been received from each subscriber in the manner the form requires.
- 2 Bank evidence The bank statement evidencing each credit is obtained and checked against the subscriber list.
- 3 Board resolution The board notes receipt of the subscription money and the minutes record it.
- 4 Filing INC-20A The declaration is filed within the one hundred and eighty day window, certified by a practising professional.
- 5 Related filings We confirm the auditor appointment and registered office filings are also complete.
Frequently asked questions
When is INC-20A due?
Within one hundred and eighty days of incorporation. The clock runs from the date on the certificate, not from when you start trading.
Can I trade before filing it?
No. A company cannot lawfully commence business or exercise borrowing powers until the declaration is filed.
What if the subscribers have not paid yet?
The declaration cannot be filed until they have. Each subscriber should transfer their subscription amount from their own bank account, so the credit is properly evidenced.
What is the penalty for missing it?
A penalty on the company and a separate penalty on every officer in default, and the Registrar may move to strike the company off the register.
Does this apply to an LLP?
No. It is a Companies Act requirement. LLPs have their own filings, principally the LLP agreement within thirty days of incorporation.
What is not included. Government fees, statutory charges, stamp duty, court and registry fees, digital signature costs and any third-party professional charges are separate and payable at actuals. GST applies on professional fees where indicated. Prices shown are indicative and may change without notice; we confirm the total in writing before any work begins — see our terms on pricing.
Talk to us about Commencement of Business Filing
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- Expert document checking before submission
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- Transparent professional charges
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