Section 10A: Commencement of business, etc

Companies Act, 2013 · Chapter II: Incorporation Of Company And Matters Incidental Thereto · In force

This section sets out the conditions under which a newly incorporated company with share capital can commence business.

Penalty

(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.

The section, clause by clause

What the section says

In plain terms

(1)A company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless—

A company with share capital incorporated after the commencement of the Companies (Amendment) Act, 2019 cannot start business or borrow unless a director files a declaration within 180 days of incorporation that all subscribers have paid for their shares and the company verifies its registered office.

(1)(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

(1)(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.

If a company fails to comply with these requirements it will be fined 50,000 rupees and each defaulting officer will be fined 1,000 rupees per day up to 1 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.]

If no declaration is filed within 180 days and the Registrar thinks the company is not operating, they may start proceedings to remove the company from the register.

The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.

Amendment notes

1. The words “and a common seal” omitted by Act 21 of 2015, s. 3 (w.e.f. 29-5-2015).
2. Ins. by Act 22 of 2019, s. 3 (w.e.f. 2-11-2018).
3. Subs. by Act 1 of 2018, s. 6, for “on and from the fifteenth day of its incorporation”(w.e.f. 27-7-2018).
4. Subs. by Act 21 of 2015, s. 5, for clause (b) (w.e.f. 29-5-2015).

This section refers to

s. 12 Registered office of company

Referred to by

s. 248 Power of Registrar to remove name of company from register of companies

Work with this section

ROC compliance calendar

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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.