MCA Imposes ₹2.5 Lakh Penalty for Failing to File Business Commencement Declaration

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In a recent adjudication order passed by the Registrar of Companies, Telangana, under the Ministry of Corporate Affairs (MCA), a penalty of Rs. 2.5 lakh was imposed on a private limited company and its directors for failure to file the declaration of commencement of business as required under Section 10A of the Companies Act, 2013.

The company in question was incorporated in November 2019 with a nominal paid-up capital of Rs. 1,00,000. It did not file the declaration for commencement of business within the statutory period of 180 days from the date of incorporation, as mandated by Section 10A(1)(a) of the Act.

The Registrar of Companies issued a notice in February 2023 to show cause why action should not be taken under Section 454 of the Act for this non-compliance.

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Upon examination of the company’s records and after considering the submissions made, the adjudicating officer observed that the company failed to comply with the requirements of Section 10A(1)(a), which states that a company having share capital must file a declaration with the Registrar confirming receipt of the subscription money for shares and commencement of business within 180 days of incorporation.

The adjudicating officer held that the company was liable for penalty under Section 10A(2), which provides for a penalty of Rs. 50,000 on the company and Rs. 1,000 per day on each officer in default, subject to a maximum of Rs. 1 lakh. In this case, the officer in default was identified, and appropriate penalties were levied accordingly.

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The order also specified that the penalty amount must be paid individually through e-payment on the MCA portal under the “Pay Miscellaneous Fees” section within 90 days from the receipt of the order.