Private Limited Company · Chapter 10
The first 180 days
In short
In its first 180 days a new PVT. LTD. must hold its first board meeting and appoint its first auditor within 30 days, issue share certificates within 60 days, and file Form INC-20A within 180 days.
In its first 180 days, a new Private Limited Company must hold its first board meeting and appoint its first auditor within 30 days, issue share certificates within 60 days, and file Form INC-20A (commencement of business) within 180 days of incorporation — before it starts business or borrows.
The certificate of incorporation is the beginning, not the end. The first six months have their own deadlines, and missing them carries real penalties.
What must a new company do after incorporation? (timeline)
| Deadline (from incorporation) | Task |
|---|---|
| 30 days | First board meeting; appoint first statutory auditor |
| As early as possible | Open or activate the bank account; subscribers deposit share money |
| 60 days | Issue share certificates, with stamp duty paid |
| 180 days | File Form INC-20A (commencement of business) |
Within 30 days
- First board meeting — must be held within 30 days of incorporation.
- First auditor — the board appoints the first statutory auditor within 30 days. If the board does not, the shareholders appoint one within 90 days at an extraordinary general meeting. The first auditor holds office until the first AGM.
- Bank account — open it, so shareholders can deposit their subscription money.
Within 60 days
- Share certificates — issue share certificates to the first shareholders within two months of incorporation, with the proper stamp duty paid. Since July 2020, stamp duty on the issue of shares is charged at 0.005% under the Indian Stamp Act and paid to the state where the registered office is; the way of paying differs by state.
Within 180 days
- Commencement of business (Form INC-20A) — a company with share capital must file a declaration that every subscriber has paid for their shares, with proof (usually a bank statement). The company should not start business or borrow before filing it.
What happens if INC-20A is missed?
The company can be fined ₹50,000, and each officer in default ₹1,000 per day, up to ₹1 lakh. The Registrar can also start action to remove the company's name from the register.
What other set-up work should a new company do?
- Display the company name and CIN at the registered office.
- Put the name, CIN, address, email and phone on letterheads, invoices and the website.
- Set up statutory registers (members, directors, charges and others).
- Take GST, profession tax or other licences needed for your business — for example, GST Registration once turnover crosses ₹40 lakh for goods or ₹20 lakh for services (lower in some states), or earlier where the law requires it.
- Consider Udyam Registration if the company qualifies as a micro, small or medium enterprise.
- Start proper bookkeeping from day one.
- Note the first annual deadlines: the first AGM within nine months of the end of the first financial year.
What are the common mistakes in the first 180 days?
- Subscribers pay their share money late, or from someone else's account, so the INC-20A proof does not match.
- The first board meeting is held but no minutes are written and signed.
- The first auditor is appointed without first taking the auditor's written consent and eligibility certificate.
- Business starts, or a loan is taken, before INC-20A is filed.
- Invoices are issued without the company name and CIN, or before GST Registration where it is needed.
Key takeaways
- 30 days: first board meeting and first auditor.
- 60 days: share certificates.
- 180 days: INC-20A — before you start business.
Frequently asked questions
What is Form INC-20A and when is it due?
Form INC-20A is the declaration for commencement of business. A company with share capital must file it within 180 days of incorporation, confirming that every subscriber has paid the value of the shares they agreed to take, with proof such as a bank statement. The company should not start business or borrow money until the form is filed.
What is the penalty for not filing INC-20A?
If INC-20A is not filed within 180 days, the company can be fined ₹50,000, and every officer in default can be fined ₹1,000 for each day of default, up to ₹1 lakh. The Registrar can also start action to remove the company's name from the register of companies if it believes the company is not carrying on business.
Within how many days must the first board meeting be held?
A new company must hold its first board meeting within 30 days of the date of incorporation. At this meeting the board usually appoints the first auditor, approves opening or operating the bank account, adopts the common seal if any, and records other initial decisions. Minutes of the meeting must be prepared and kept.
Who appoints the first auditor of a new company?
The board of directors appoints the first statutory auditor within 30 days of incorporation. If the board fails to do so, it must inform the members, who then appoint the auditor within 90 days at an extraordinary general meeting. The first auditor holds office until the end of the first Annual General Meeting.
Is stamp duty payable on share certificates?
Yes. Share certificates must be issued within two months of incorporation, and stamp duty is payable on the issue of shares. Since July 2020 the rate is 0.005% of the issue value under the Indian Stamp Act, paid to the state where the registered office is, and the method of payment differs by state. Companies that must hold shares in demat form issue them through a depository instead of paper certificates.
