Certificate of Commencement of Business

Prior to Companies Act, 2013, a private company or public company not having share capital was not required to obtain the certificate of commencement of business, only a public limited company having share capital was required to obtain the certificate of commencement of business. In 2013, MCA came up with a new amendment by inserting section 10A under CA, 2013, wherein a declaration and verification is required to be filed by the companies incorporated on/after 2nd November, 2018.

In this write up, we will discuss about Rule 10A of CA, 2013.

Two essentials when a company is incorporated after Companies (Amendment) Ordinance, 2019 and having a share capital:

DECLARATION, and

VERIFICATION

Section 10A says, that a company which is incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless—

  • A declaration is filed by a Director within 180 days from the date of incorporation with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
Rule 23A of The Companies (Incorporation) Rules, 2014 says,

– The declaration shall be in Form No, lNC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014.

– Company Secretary or a chartered Accountant or a cost Accountant in practice shall verify the contents of this form.

– But in case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.

Fee for filing e-form 20A:

In case of company have share capital

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

In case of company do not have share capital: Rupees 200

  • A verification of its registered office has been filed with the registrar by the company as per section 12(2).
Section 12(2) says,

The company shall furnish to the Registrar verification of its registered office within a period of 30 days of its incorporation in Form No. INC.22 with the following attachments:

(a) Registered document of the title of the premises of the registered office in the name of the company; or

(b) Notarized copy of lease or rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;

(c) Authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office; and

(d) Proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, as the case may be, which is not older than two months.

If no declaration has been filed with the Registrar within the stipulated time frame and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of verification requirement (as discussed above), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.

In order to support and enable companies in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, an additional period of 180 more days is allowed for this compliance.

Penal Provision

If any default is made in complying with these requirements, the company shall be liable to a penalty of 50,000 rupees and every officer who is in default shall be liable to a penalty of 1,000 rupees for each day during which such default continues but not exceeding an amount of 1,00,000 rupees.

References:
Section 10A of CA, 2013- Commencement of business etc.
Section 12(2) of CA, 2013- Registered Office of Company
Rule 23A of The Companies (Incorporation) Rules, 2014- Declaration at the time of commencement of business.
Rule 25 of The Companies (Incorporation) Rules, 2014 – Verification of Registered Office

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Disclaimer: The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. It doesn’t constitute professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.

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