Updated as on August 29, 2020
Congratulations! Now that you got the company registered, you need to ensure hygiene and care to be on the right side of the law. It makes a lot of economic sense to stay compliant. It helps in efficient and uninterrupted functioning of the Company. As someone rightly said, it takes less time to do things right than to explain why you did it wrong. Besides, there are consequences.
There are some crucial time bound actions and associated reporting, like appointment of Auditors, finalise registered office, receipt of FDI towards share subscription money, issue share certificates, file FC-GPR for issue of shares, file for Commencement of business (INC 20A) and IEC (Import Export Number) registrations, wherever required.
Company incorporation is now an integrated process which means it contains in itself many connected registrations. With incorporation, one must have already inherited a Bank Account, Permanent Account Number (PAN), Tax Deduction Account Number (TAN), Employee Provident Fund (EPFO) Registration, Employee State Insurance (ESIC) Registration, Professional Tax Registration (for the state of Maharashtra), and Goods and Service Tax (GST) Registration (if applied at the time of incorporation).
This blog will be of immense help to guide you through post-incorporation compliances.
MAINTAIN A REGISTERED OFFICE (MANDATORY): The Companies which have not finalised their registered office at the time of incorporation, they are required to establish it within 30 days of incorporation and file the form INC 22 (all within 30 days) with the Ministry (MCA).
1ST BOARD MEETING: The first Board meeting is required to be held within 30 days from the date of incorporation. Mainly, the Board of the company is required to consider the following matters in their first meeting:
LETTER HEADS: Letterheads of the company with registered office name & address, Corporate Identification Number (CIN), telephone number, fax number, if any, e-mail and website addresses, if any, shall be printed.
AFFIX A BOARD OUTSIDE REGISTERED OFFICE: Every Company shall affix a board outside the office stating its name and registered office address.
GST & IEC REGISTRATIONS: All the statutory registrations like GST, IEC (Import Export Code), etc. may be applied for, depending on the type of the Company. However, GST Registration shall become mandatory only if turnover from the business operation crosses the threshold limit (INR 4 million if dealing in goods, else INR 2 million) specified under the GST Act. Many companies choose to register for GST voluntarily as they can get credit on input GST. Else, it is not mandatorily required to apply for GST if it is not already voluntarily procured at the time of incorporation.
BANK ACCOUNT: In addition to mandatory Bank Account opened at the time of incorporation, the company may apply for another bank account. Not all the banks are linked with MCA at the moment.
INWARD REMITTANCES FROM NON-RESIDENTS: In case the subscribers are non-residents, the share subscription money shall come by way of inward remittance. It is suggested that the subscription money shall be remitted within 60 days from the date of incorporation.
FDI RELATED REGISTRATIONS AND FILINGS: In cases of companies promoted by non-residents, Foreign Direct Investment (FDI) towards share subscription money is required to be remitted into India. These companies have to additionally comply with registration and reporting requirement on FIRMS portal as specified under FDI laws.
Registration: The Company has to create its existence on the RBI FIRMS Portal :
Reporting: Once the Company is registered on the portal, the company shall report about receipt of inward remittance to RBI in form FC-GPR. This is to be done within 30 days from the date of issue of equity instruments (subscribed shares) through SMF Portal.
ISSUE OF SHARE CERTIFICATES: According to Section 56(4) of the Companies Act, 2013, every company shall issue Share Certificates to the subscribers of the Memorandum and Articles of the company within two months from the date of company incorporation.
STAMP DUTY: Stamp Duty is to be paid within 30 days of the Issue of Share Certificates.
MAINTAIN STATUTORY REGISTERS, MINUTE BOOKS: Company shall maintain all the statutory books, registers, and minute books as stated in the Companies Act, 2013. For example, Register of members, Directors, etc.
REGISTER OF MEMBERS: The name of the subscribers are to be entered in the Register of Members with date of incorporation of the company as the date when subscribers are deemed to have become members of the company.
COMMENCEMENT OF BUSINESS::A company having a share capital shall not commence any business or exercise any borrowing powers unless a Declaration is filed by the company, stating that every subscriber to the memorandum has paid the subscription amount and the registered office is duly established. This declaration is to be filed within a period of 180 days from the date of Incorporation. Due to the current pandemic situation, the Ministry (MCA) has provided relaxation to the Companies of additional 180 days in addition to above-mentioned timeline of 180 days for filing such a declaration.
The above list may not be comprehensive. Any registration requirement, as regards a specific industry, be consulted well in advance to enable timely and smooth commencement of operations.
I appreciate your insights on corporate secretarial compliance. It’s crucial for companies to stay up-to-date with the latest regulations to ensure they are operating within the legal framework.
When the subscribers have paid for the preliminary expenses, can this be taken as the subscription money received. If yes, what proof of payment do we need to attach in INC 20A
You can attach the Companies Bank Account Statement with credit entries for receipt of subscription money from subscribers. This serves as Subscribers’ proof of payment for the value of shares.
is it possible to consider pre-incorporation expenses paid by promoters as subscription money for the purpose of filing INC-20A
According to section 10A of the Companies Act, 2013 a company incorporated cannot commence its business or exercise business operation until they submit the e-form 20A with registrar confirming the receipt of subscription amount within 180 days of its incorporation. The amount of subscription needs to be received in the Bank Account opened in the name of the Company, and the Bank Statement needs to be attached in the said form having all credit entries for receipt of subscription money received from the account of the subscribers to MOA. Based on your comments we have understood that the amount incurred by the promoters termed as pre-incorporation expense is intended to be considered as the subscription money. Please note these expense have been incurred before the existence of the company and therefore it is prudent not to consider that expense and adjust the same with the subscription but to bring in fresh.
Any non-compliance to the above section will lead to the penalty provisions as prescribed under the Companies Act, 2013 and Registrar may also take steps and consider to remove the name of the company from the Register of companies.