Mandatory Certificate of Commencement of Business for Companies

Mandatory Certificate of Commencement of Business for Companies

INTRODUCTION:                                                                       

The Ministry of Corporate Affairs has re-introduced the concept of commencement of business certificate. Under the newly introduced Companies (Amendment) Ordinance 2018, all companies registered in India after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital is required to obtain commencement of business certificate before commencing any business or exercising any borrowing powers. Since The Companies (Amendment) Ordinance 2018 was introduced in November 2nd 2018, any company incorporated after November 2018 would be required to obtain Commencement of Business Certificate.

CERTIFICATE FOR COMMENCEMENT OF BUSINESS

Under the Companies (Amendment) Ordinance, 2019, a new Section is introduced i.e. Section 10 A for Commencement of Business.

Section 10 A- COMMENCEMENT OF BUSINESS

MANDATORY TO OBTAIN CERTIFICATE OF COMMENCEMENT OF BUSINESS FOR REGISTERED COMPANIES:

Companies registered on or after November 02, 2018 are required to file the declaration for commencement of business with the Registar of companies

Time limit:

The declaration for commencement of business shall be filled within 180 days from the date of getting CERTIFICATE OF INCORPORATION.

  • Penalty for Not Obtaining Commencement of Business Certificate
  • Penalty Levied on Company

Company is liable to pay Rs 5000

  • Penalty Levied on Directors

Directors are liable to pay Rs 1000 per day and maximum 1 lacs after expiration of 180 days from the date of registration.

 

CONSEQUENCES IF FORM IS NOT FILED WITHIN TIME-

  • Company cannot start his business
  • Company cannot borrow money
  • Company will be closed by the Registrar of Companies.
  • Department will remove of name of the company from the Registrar of Companies. 

 

FORM FILED FOR COMMENCEMENT OF BUSINESS

  •  E-Form 20 A is required to be filed for Commencement of Business.
  •  Documents required for filing Form 20 A:
  • 1.Subscribers proof of payment for value of shares-
  • 2.Bank Statement and Board Resolution

 
IN CASE OF NON BANKING FINANCIAL COMPANIES/FROM OTHER REGULATORS:

  • Certificate of Registration issued by the RBI


Fee for filing e-Form 20A :

1. In case of company have share capital

Nominal Share Capital       Fee applicable
Less than 1,00,000 Rupees 200
1,00,000 to 4,99,999 Rupees 300
5,00,000 to 24,99,999 Rupees 400
25,00,000 to 99,99,999 Rupees 500
1,00,00,000 or more Rupees 600

 
2. In case of company not have share capital

Rupees 200  –Additional fee after 180 days from the date of Incorporation

Period of delays    Fees
Up to 30 days 2 times of normal fees
More than 30 days and up to 60 days 4 times of normal fees
More than 60 days and up to 90 days  6 times of normal fees
More than 90 days and up to 180 days 10 times of normal fees
More than 180 days 12 times of normal fees

Published by shivam jha
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