Last updated: November 14th, 2019 3:15 AM

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, 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.

Time Limit for Obtaining Commencement of Business Certificate

The commencement of business certificate must be obtained within 180 days of incorporation of the company. 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.

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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

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Penalty for Not Obtaining Commencement of Business Certificate

The penalty for non-compliance is very high as under:

Penalty Levied on Company

Any company that does not obtain commencement of business certificate within 180 days of incorporation will be liable for payment of a penalty of Rs.50,000.

Penalty Levied on Directors

Each of the Directors who have defaulted would be liable for payment of a penalty of Rs.1000 per day of default upto a maximum of Rs.1 lakh.

Company Strike-Off

Also, after 180 days of incorporation, if the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he/she may initiate action for the removal of the name of the company from the register of companies (i.e. Company Strike-off).

Fee for Obtaining Commencement of Business Certificate

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

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

If a company does not have share capital, a fee of Rs.200 would be applicable. Further, in case of late filing of application for Commencement of Business certificate, additional or higher Government fee as mentioned below would be applicable on top of the penalty payable.

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. The detailed help document for Form INC-20A is reproduced below: