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As per the Ministry of Corporate Affairs, all companies registered in India after the start of the Companies (Amendment) Ordinance, 2018 that have a share capital are required to obtain a commencement of business certificate before starting any business or using any borrowing authority.
Any business formed after November 2018 must get a Commencement of Business Certificate according to The Companies (Amendment) Ordinance 2018's introduction on November 2nd. The phrase "Commencement of Business" was used in the previous Companies Act of 1956 and was also included in the Companies Act of 2013 under Section 11. However, as of May 29, 2015, the Companies (Amendment) Act, 2015 eliminated (omitted) section 11 from the law.
By adding a new Section 10A after Section 10 of the Companies Act of 2013, the Declaration for Commencement of Business is once again established.
After the firm is incorporated, the commencement of the business certificate must be received within 180 days. Each director of the company must certify, as part of the application for commencement, that each subscriber to the memorandum has paid the agreed-upon share value as of the date of the declaration.
A high penalty is imposed for non-compliance, which is described as follows:
The certificate of commencement of business is not required by the following companies that are:
Obtaining the Commencement of Business Certificate requires government charges, as described below:
If the Company has share capital
Share Capital |
Charges Applicable |
Lesser than 1,00,000 |
Rs. 200 |
1,00,000-4,99,999 |
Rs. 300 |
5,00,000-24,99,999 |
Rs. 400 |
25,00,000-99,99,999 |
Rs. 500 |
1,00,00,000-more |
Rs. 600 |
If the company does not have its share capital, a Government fee of Rs. 200 is levied. For a late filing of Commencement of Business certificate application, a higher Government fee in addition to the penalty would further apply as follows:
Delay Period |
Charges Applicable |
Lesser than or equal to 30 days |
2 X normal fees |
Greater than 30 but lesser than or equal to 60 days |
4 X normal fees |
Greater than 60 but lesser than or equal to 90 days |
6 X normal fees |
Greater than 90 but lesser than or equal to 180 days |
10 X normal fees |
Greater than 180 days |
12 X normal fees |
When the business is first launched, the directors of the company are required to submit Form 20A as a declaration. You should get it confirmed by a Chartered Accountant (CA), a Company Secretary (CS), or a Cost Accountant.
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