Commencement of Business Certificate

The Ministry of Corporate Affairs has re-introduced the concept of commencement of business certificate. Under the newly introduced The Companies (Amendment) Ordinance 2018,

A company *incorporated on or after 02.11.2018* and having a share capital shall commence any business or exercise any borrowing powers only after complying the following requirements:

Filing a declaration with the Registrar of Companies that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of such declaration.

This declaration has to be filed by the company within a period of 180 days of the date of incorporation of the company in Form No. INC-20A.

AND

Filing of INC-22 for verification of its registered office if the company was registered with a temporary address while filing SPICe Form INC-32.

Time Limit for Obtaining Commencement of Business Certificate

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

Section 10 A- COMMENCEMENT OF BUSINESS

# IT IS MANDATORY TO OBTAIN A CERTIFICATE OF COMMENCEMENT OF BUSINESS FOR THOSE COMPANIES WHO ARE REGISTERED.

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

AND

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

While filing the application for commencement, each of the Directors of the company must declare that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him/her on the date of the making of such declaration.

Penalty for Not Obtaining Commencement of Business Certificate

Penalty Levied on Company

If a company makes any default in complying with the above requirements, the company shall be liable to a penalty of Fifty Thousand Rupees.

Penalty Levied on Directors

If a company makes any default in complying with the above requirements, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

Company Strike-Off

If the company has not filed the declaration within a period of 180 days of the date of incorporation of the company, the Registrar may initiate action for the removal of the name of the company from the register of companies on the reasonable belief that the company is not carrying on any business or operations.

Fee for Obtaining Commencement of Business Certificate

The Government fee for obtaining Commencement of Business Certificate is as below:

  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

 In case of company not have Share Capital

Period of delays All forms
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

Form INC-20A

The Commencement of Business certificate application must be made using Form INC-20A. If Company has not filled Form No.INC-20A with stipulated time then Company will not be able to file any other Forms require under the ACT on MCA Portal.

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Summary
Commencement of Business Certificate
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Commencement of Business Certificate
Description
A company *incorporated on or after 02.11.2018* and having a share capital shall commence any business or exercise any borrowing powers only after complying.
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