Commencement of Business Certificate is the declaration that the Director of the Company needs to file with Registrar of Companies. Moreover this declaration is filed in Form INC-20A within 180 days of the incorporation of the Company.
Basically, this is a declaration filed before commencing the business and exercising borrowing powers by the Company. Company has to comply with Section 10A(1)(a) of Companies Act 2013 and Companies (Incorporation) Rules, 2014 while filing the Certificate of Commencement of Business.
Provisions related to Commencement of Business Certificate
Section 10A of Companies Act provides that all the Companies incorporated after Companies (Amendment) Ordinance 2018 and having Share capital shall not commence business or not exercise borrowing powers unless it complies with some conditions. Those conditions are:-
- The director of the Company has filed the declaration with Registrar that every subscriber to MoA has paid the amount for the shares held by them. He shall file such declaration within 180 days of Incorporation of Company.
- Secondly, Company has filed with Registrar the verification of Registered Office of the Company in Form INC-22 as provided in Section 12(2) of Companies Act 2013
Which Companies does not need to file Business Commencement Certificate?
Following Companies does not require to file the Business Commencement Certificate with Registrar:-
- Companies incorporated before 2nd November 2018
- Companies incorporated after 2nd November 2018 but is not having Share Capital.
Information and Documents required for the Form
- Corporate Identification Number of the Company
- Name of the Company
- Address of Registered Office
- Email address of Company
- Subscribers Proof of payment for value of shares
- Certificate of Registration issued by RBI or other Regulators (in case the company is regulated by a sectoral regulator)
- Other Attachments, if any
Certification of Form INC-20A
The Commencement of Business Certificate requires the certification by a Practicing Professional i.e. a Company Secretary in practice/Chartered Accountant in practice/ Cost Accountant in practice.
Procedure to file Commencement of Business Certificate
In case of Company filing the declaration for Commencement of Business, it needs to follow the following procedure:-
- Go to the MCA Portal.
Visit the MCA Portal.
- Company forms
Therefore, under MCA Services Tab, select Company forms download.
- Form INC-20A
A screen will appear with showing Company forms. Scroll down and you will see Form INC-20A for declaration of Commencement of Business.
- Download the form.
Hence, download the form. You can download form with or without Instruction Kit.
- Open the Form
After downloading the form, open it in PDF.
- Fill the form.
Start filling the Form.
Enter the following details:-
CIN of the Company
Name of Company
Address of Registered Office of Company
Email address of the Company
Select whether the affairs of the Company is regulated by any Sectoral Regulator.
Add the Attachments. You can see the attachments in the Box for list of Attachments.
- Declaration and Certification
Fill the Declaration and provide DIN.
Furthermore enter the details of the Practicing Professional who shall certify the Form.
- Check form
After filling the form, Click on Check.
As a result, the system will perform the form level validation.
After the check form is successful, click on Pre scrutiny.
- Digital Signature Certificate
Add the DSC of the Directors and Certifying Professional in the form.
- Upload Form
Again go to the MCA Portal. Login to MCA.
Under MCA Services tab, click on upload e-forms.
- Make payment
After successful upload, proceed to make payment of the fees.
On successful payment, SRN will get generated.
Consequences of non filing of the form
In case Company makes default in filing the form, it can lead to the following penalties:-
- Company shall be liable for penalty of Rupees Fifty Thousand.
- Furthermore every Officer in default shall be liable to penalty of Rupees One Thousand per day till the default continues. However the penalty shall not exceed the amount of One Lakh rupees.
- If Company fails to file the declaration and Registrar has reasonable cause to believe that company is not carrying on any business, he may initiate action for removal of name of the Company from Register of Companies.
Company needs to file the declaration for commencement of business within 180 days from the date of incorporation of the Company in e-form INC-20A.
The form INC-20A for declaration of commencement of business is an auto approved form (STP mode). Company does not get the Certificate for Commencement of Business from MCA by filing the form INC-20A.
A Company cannot commence the Business and also cannot exercise borrowing powers unless the declaration is filed with MCA for Commencement of Business.