Skipping INC-20A Filing? The Price of Non-Compliance Unfolds

Skipping INC-20A Filing? The Price of Non-Compliance Unfolds. In this article we will take you through the Adjudication order in the matter of Logtech Informatics Private Limited incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under 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.
Applicable Provision – Section 10A of the Companies Act, 2013
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration
Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:
• A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.
• The company has filed verification of its registered office with the ROC.
Non-compliance with this provision results in penalties imposed on the company and its officers in default.
Facts of the Case
Logtech Informatics Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation.
Accordingly, appeal is filled under section 454(5) of the Companies Act, 2013 by the above applicants in Form ADJ vide SRN No. R48354674, dated 03.08.2020 against the Adjudication Order No. ROC/ 5-454/10A/ 461/ 2020 dated 07.02.2020. 
An opportunity of being heard was given to the Appellants on 30.12.2020, the authorised representative on the behalf of the company while reiterating the submissions made in the application requested to allow the appellant to withdraw the appeal on the ground that the Appellant intends to avail the benefits of Companies Fresh Start Scheme,2020.
Accordingly, this appeal is dismissed as withdrawn with liberty to refile, if necessary. ROC, Kerala is directed to file prosecution in terms of Sec. 454(8)(ii) of the Companies Act, 2013, if the company fails to pay the penalty or obtain the immunity certificate
Exemption to Startups, Small Companies, and OPCs Under Section 446B
Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal.
Conclusion
In this case, the appeal was withdrawn to avail the benefits of the Companies Fresh Start Scheme, 2020, but the ROC retains the authority to initiate prosecution if the penalty remains unpaid or immunity is not secured. This case highlights the necessity for companies to diligently fulfil statutory obligations to avoid financial and legal repercussions.
Download MCA Adjudication Order

In this article we will take you through the Adjudication order in the matter of Logtech Informatics Private Limited incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under 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.

Applicable Provision – Section 10A of the Companies Act, 2013

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration

Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:

• A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.

• The company has filed verification of its registered office with the ROC.

Non-compliance with this provision results in penalties imposed on the company and its officers in default.

Facts of the Case

Logtech Informatics Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation.

Accordingly, appeal is filled under section 454(5) of the Companies Act, 2013 by the above applicants in Form ADJ vide SRN No. R48354674, dated 03.08.2020 against the Adjudication Order No. ROC/ 5-454/10A/ 461/ 2020 dated 07.02.2020.

An opportunity of being heard was given to the Appellants on 30.12.2020, the authorised representative on the behalf of the company while reiterating the submissions made in the application requested to allow the appellant to withdraw the appeal on the ground that the Appellant intends to avail the benefits of Companies Fresh Start Scheme,2020.

Accordingly, this appeal is dismissed as withdrawn with liberty to refile, if necessary. ROC, Kerala is directed to file prosecution in terms of Sec. 454(8)(ii) of the Companies Act, 2013, if the company fails to pay the penalty or obtain the immunity certificate

Exemption to Startups, Small Companies, and OPCs Under Section 446B

Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal.

Conclusion

In this case, the appeal was withdrawn to avail the benefits of the Companies Fresh Start Scheme, 2020, but the ROC retains the authority to initiate prosecution if the penalty remains unpaid or immunity is not secured. This case highlights the necessity for companies to diligently fulfil statutory obligations to avoid financial and legal repercussions.