Commencement of Business (COB)

Is your company incorporated and having share capital? One crucial compliance that must be completed before starting business operations is the declaration of the Commencement of Business. Yes, obtaining the Certificate of Commencement of Business (COB) is mandatory for companies incorporated with share capital after November 2, 2018.

At IndiaFilings, we not only assist with company registration but also specialise in guiding businesses through various compliance requirements with ease and precision. From initial company registration to securing the COB Certificate and managing ongoing compliances, we provide a comprehensive range of services to ensure your business adheres to all statutory norms and regulations.

What is Commencement of Business?

The Commencement of Business is a formal declaration made by the directors of a company within 180 days of its incorporation. This declaration confirms that the subscribers to the Memorandum of Association (MOA) have paid the agreed value of shares, and it includes verification of the company’s registered office address. The declaration, along with proof of the subscription money received, must be filed using Form 20A with the Registrar of Companies (RoC) . Compliance with this requirement is essential for companies to legally commence their business operations.  All this critical information constitutes the commencement of business meaning. 

Verification of  Form 20A is conducted by authorised professionals such as Chartered Accountants (CA), Company Secretaries (CS), or Cost Accountants (CWA). Errors or discrepancies in the submitted commencement of business form can lead to accountability for these professionals, resulting in penalties under the Companies Act 2013.

Who needs to file a declaration for the Commencement of Business?

Under the Companies Act 2013, companies with a share capital structure must obtain the Commencement of Business (COB) Certificate before commencing business operations. This requirement is applicable to:

Companies Incorporated After November 2, 2018: All companies registered after this date must obtain the COB Certificate within 180 days of their incorporation.

Companies with Share Capital: Every company operating with a share capital structure, irrespective of business type, must apply for the COB Certificate.

Includes:

• Private Limited Companies
• Public Limited Companies
• Section 8 Companies (with share capital structure) 

Significance of the Certificate of Commencement of Business

The Commencement of Business Certificate holds considerable significance as it officially indicates a company’s readiness to begin operations.

• Operational Readiness Confirmation: This commencement of buinesscertificate serves as proof that the company has met all the legal prerequisites and is fully prepared to engage in business activities.
• Legitimacy Assurance: It assures stakeholders, investors, and regulatory authorities that the company is operating in accordance with established regulations, thereby reinforcing its legitimacy and accountability.

Due Date for Obtaining the Certificate of Commencement of Business (COB)

All companies with a share capital structure must obtain the Commencement of Business Certificate within 180 days of their incorporation. Adhering to this deadline is essential to avoid penalties and potential disqualification.  

Commencement of business Form 20A Filing Exemptions

Specific categories of companies are exempt from filing Form 20A, including:

• Companies Incorporated Before November 2, 2018: All companies formed prior to this date are exempt from filing the form.
• Companies Without Share Capital: Businesses that operate without a share capital structure do not need to submit Form 20A.

Consequences of Non-Compliance with Commencement of Business (COB)

Failure to file the Commencement of Business Certificate (COB) within the prescribed 180-day period can have severe repercussions:

• Prohibition on Business Operations: The company will be prohibited from commencing its business activities or accessing any borrowing facilities.
• Penalties on the Company: The company will incur a penalty of Rs. 50,000.
• Penalties on Directors: Each defaulting director will face a penalty of Rs. 1,000 per day, up to a maximum of Rs. 1,00,000.
• Potential Strike-Off: If no declaration is filed, and the Registrar of Companies (RoC) has reasonable grounds to believe the company is not conducting business or operations, the RoC may initiate action to remove the company’s name from its register, resulting in a company strike-off.

Documents Required for Filing Form 20A

To successfully file the Commencement of Business Form 20A, the following documents are required:

• Proof of Payment for Share Subscription: Bank statement showing receipt of subscription money from the subscribers.
• Registered Office Address Verification: Evidence of the company’s registered office address.
• Certificate of Registration from RBI (if applicable): Mandatory for Non-Banking Financial Companies (NBFCs) or entities regulated by other financial authorities.
• Directors’ Declaration and Board Resolution: Declaration by the directors affirming that the subscribers have paid the share value, along with a supporting board resolution.

Procedure for Obtaining the Commencement of Business Certificate

Follow these steps to obtain the Commencement of Business Certificate (COB) by filing Form 20A:

• Access the MCA Portal: Log in to the Ministry of Corporate Affairs (MCA) portal with your credentials.
• Download Form 20A: Go to “MCA Services” and select “Company Forms Download.” Choose Form 20A (Declaration of Commencement of Business). 
• Complete the Form: Enter the necessary company details such as the Corporate Identification Number (CIN) and other information. 
• Attach Required Documents: Attach the proof of payment for the shared subscription, the registered office address verification, and any applicable documents like the RBI registration certificate.
• Affix the Digital Signature Certificate (DSC): Ensure the form is signed using the Digital Signature Certificate (DSC) of an authorised director.
• Professional Certification: The commencement of business form must be verified and certified by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (CWA).
• Submit the Form and Pay Fees: Submit Form 20A along with the required attachments through the MCA portal. Pay the applicable fees based on the company’s share capital.
• Verification and Acknowledgment: Once submitted, a Service Request Number (SRN) will be generated. Upon verification, an acknowledgement email will be sent confirming the successful filing of Form 20A.

Why Choose IndiaFilings for Your Commencement of Business Certificate?

IndiaFilings is your trusted partner for ensuring smooth and hassle-free compliance with the Ministry of Corporate Affairs (MCA). Our expertise in company registration and ongoing compliance processes makes us the ideal choice for obtaining your Certificate of Commencement of Business (COB). Here’s why you should choose IndiaFilings:

• Expert Guidance: Our team of professionals is well-versed with the latest MCA regulations and requirements, providing you with accurate advice and assistance throughout the COB Certificate filing process.
• End-to-End Support: We handle every step, from document preparation and form submission to professional certification and payment of fees, ensuring that the entire procedure is completed seamlessly.
• Timely Compliance: We prioritize prompt filing and submission to help your company meet deadlines and avoid any penalties or compliance issues.
• Transparent Process: Our clear and straightforward approach ensures that you stay informed at every stage, giving you peace of mind and confidence in the process.
• Comprehensive Compliance Solutions: Beyond the COB Certificate, we offer a wide range of services, including annual filings, GST compliance, and other MCA-related services, making us a one-stop solution for all your business needs.

With IndiaFilings, you can focus on growing your business while we take care of all your compliance requirements. Contact us today to get started on obtaining your Commencement of Business Certificate!