Certificate of Commencement of Business

Certificate of Commencement of Business

Online Legal India LogoBy Online Legal India Published On 28 Jul 2022 Category Certificate of Commencement

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.

Time Limit for Filing the Declaration of Commencement of Business

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.

Is there any Penalty for Non-Compliance?

A high penalty is imposed for non-compliance, which is described as follows:

  • Penalty levied on the company: A company which does not receive its commencement of business certificate within the stipulated 180 days or 3 months of incorporation is liable to pay a fine of Rs. 50,000.
  • Penalty levied on the directors: The defaulter directors are liable to pay a hefty fine of Rs. 1000 for each day of default to a maximum amount of Rs. 100000.
  • Company strike-off: Additionally, if the Registrar suspects that the company is not conducting any operations or business within 180 days after incorporation, he or she may take action to have the company's name removed from the register of companies (which means Company Strike-off).

Which Company does not require to file a Certificate of Commencement of Business?

The certificate of commencement of business is not required by the following companies that are:

  • Incorporated before November 2, 2018.
  • Incorporated after November 2, 2018 but does not have share capital.

Fee for Filing Form 20A and Receiving Commencement of Business Certificate

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

 

Form INC 20A

 

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.

 


Share With :