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 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.

Time Limit for Obtaining 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 to the memorandum has paid the value of the shares agreed to be taken by him/her on the date of the making of such declaration.

ISSUES IN FILING CONDONATION OF DELAY FOR E-FORM INC-20A: (OLD PROCESS)

1. Form INC-20A is required to be filed within 180 days of the date of incorporation of the Company;

2. If you try to file the form after the above mentioned period then it gives the error “Please file form INC-28 for condonation of delay and then proceed to file form INC-20A”

3. Form INC-28 is an eform to be filed for filing of “Notice of Order of the Court or any other competent authority”. So the process of condonation can not be completed with the said eform;

4. As per Section 460 of the Companies Act the applications which could not be filed within the time specified therein than CG may for the reasons record in writing can condone the delay;

5. An application under the said Section shall be filed in E-form CG-1; but for the application of condonation of delay for delay in filing the form INC-20A the form CG-1 is giving the error “Form Filing is not allowed since Declaration for Commencement of Business is not filed in form INC-20A. Please file form INC-28 for condonation of delay and proceed to file form INC-20A”;

RESOLUTION: INC 20A CAN NOW BE FILED ALONG WITH LATE FEES.

Fee for Obtaining Commencement of Business Certificate

The Government fee for obtaining Commencement of Business Certificate is as below:

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

If a company does not have share capital, a fee of Rs.200 would be applicable. Further, in case of late filing of application for Commencement of Business certificate, additional or higher Government fee as mentioned below would be applicable on top of the penalty payable.

Period of delays All forms
Up to 30 days 2 times of normal fees
More than 30 days and up to 60 days 4 times of normal fees
More than 60 days and up to 90 days 6 times of normal fees
More than 90 days and up to 180 days 10 times of normal fees
More than 180 days 12 times of normal fees

You may contact the author for further information at 9899595719 or taxwizersconsultant@gmail.com

Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.

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