On 02.11.2018, Government issued The Companies (Amendment) Ordinance, 2018 which amended various provisions under the companies act, 2013. One of the major amendments was the reintroduction of Commencement of Business Certificate. S. 10A was inserted which provides for the requirement of taking commencement of business certificate by the companies which are incorporated after the commencement of the above-said ordinance. So, the following are the two pre-conditions:
• That the company is incorporated after 02.11.2018, and
• That the company is having share capital.
When above 2 pre-conditions are satisfied, companies are required to obtain commencement of business certificate before commencing any business or exercising borrowing power.
Companies incorporated after 02.11.2018 is required to file a declaration for commencing the business within a period of 180 days from the date of its incorporation. It is to be filed by the director with the registrar in the form prescribed. The importance of the declaration lies in the fact that through this declaration registrar is informed that every subscriber to the MOA has paid the value of shares agreed to be taken by him on the date of such declaration.
Director’s declaration format
The format prescribed for the declaration to be filed by the director is as follows:
Director’s Declaration Format
I am authorized by the Board of Directors of the Company vide resolution number ______ dated________ to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. I further declare that:
1. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the company.
2. All the required attachments have been completely and legibly attached to this form.
3. Every subscriber to the MOA has paid the value for shares agreed to be taken by him.
4. The company has filed with the registrar a verification of its registered office as provided in subsection (2) of section 12.
Consequences of non-compliance
S. 10A provides that in case of default, Company shall be liable to pay penalty of Rs. 50,000. Also, every defaulting officer shall be liable to pay penalty of Rs. 1,000 for each day during the period of default but the maximum penalty that can be levied is upto Rs. 1L.
Removal of Name
The registrar is given the power to initiate action for removal of company’s name from the register of companies if the declaration is not filed within the period of 180 days from the date of its incorporation & the registrar has reasonable cause to believe that no business is been carried on by the company.
Other consequences includes that the company cannot start its business without obtaining commencement of business certificate & it also cannot borrow money.
FORM INC 20A
An application in From INC – 20A is to be filed for obtaining commencement of business certificate. Following information is to be provided in the form:
• CIN Number of the company
• Whether the affairs of the company is regulated by any sectoral regulator like RBI in case of NBFI activities.
• Name of regulator
• Letter number/registration number
• Date of approval/registration.
Following documents are to be attached with the application:
• Subscribers proof of payment for value of shares
• Certificate of registration issued by the RBI only in the case of Non-banking financial companies
The form must be digitally signed by the director of the company & the eform needs to be verified by the practicing professional.
FEES for obtaining commencement of business certificate
Following is the prescribed fee structure for obtaining commencement of business certificate:
After submitting eform INC-20A, SRN will be generated which can be used further for future correspondences with MCA. Also, a challan will be generated giving the details of payment of fees. After the e-form is completely processed, authority concerned will provide an acknowledgment to the registered e-mail of the company.
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