India: Declaration of commencement of business becomes mandatory for new companies

India is a country of great opportunities which has set itself the ambitious goal of increasing its importance among the main global players of the 21st century. However, despite the strong economic growth and the rapid and profound changes that are going through the country, it is a market that is not easy to understand: for this reason, before you can access it is it is necessary to have close knowledge of local business dynamics.

A important and recent news it concerns the reintroduction of the obligation to declare the beginning of activity for businesses: if at first, in 2015, the so-called Declaration of Commencement had been repealed, through the Companies Amendment Ordinance this declaration is reintroduced again by the Ministry of Corporate Affairs local. Pushing the Indian Government to retrace its steps was the trend of non-payments of incorporation contributions on company current accounts by shareholders, which has been recorded since the abolition of the obligation in 2015.

The Companies Amendment Ordinance requests, to companies that were incorporated after November 2, 2018, to submit a declaration of commencement of activities through the digital form INC 20A at the Registrar of Companies within 180 days of the date of incorporation, and prohibits any activity before this obligation has been fulfilled.

To fill out the digital form you must submit:

• there proof of payment to the company's current account incorporation fees by the partners;
• there proof of approval by industry regulators.

There failure to submit this form, within the fixed limit of 180 days from the date of incorporation, entails the following penalties:

• fine to the company of INR 50,000 (about €620);
• fine for each individual member of INR 1,000 per day (approximately €13) for each day of delay in fulfilling the payment, up to a maximum of INR 100,000 (approximately €1240);
• removal from Registrar of Companies, in the event that, after 180 days, there is a "reasonable doubt" that the company is not carrying out any activity.

For companies that want to approach the Indian market it is advisable to rely on experts who know it thoroughly: Octagona, thanks to its 17-year experience in the market, its direct offices in New Delhi, Pune and Bangalore and its team of Italian and Indian experts, is able to support your company for the realization of successful projects in the Subcontinent.

For more information contact us on the telephone number 059.9770184 or send an email to [email protected]: you will receive all the information you need.

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