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 (COB) 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.
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 has paid the value of the shares agreed to be taken by him/her on the date of the making of such declaration. If the declaration format is required please contact, it would be mailed.
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.
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).
Every Company incorporated after Nov 2018, has to mandatorily file this form within 180 days otherwise the Company will not be able to commence the Business and the ROC can even strike off the Company on suo moto basis.
Therefore be Compliant should that unnecessary penalty could be avoided.
The writer is a Practicing Chartered Accountant in Mumbai. The information shared is only for knowledge purpose.
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