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Commencement of Business

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The Commencement of Business Certificate is a mandatory MCA filing for new companies with share capital, completed via Form INC-20A. This crucial company compliance must be done within 180 days of incorporation to avoid significant penalties.

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Certificate of Commencement of Business

For all companies with share capital incorporated after November 2, 2018, obtaining the Certificate of Commencement of Business (COB) is a mandatory compliance requirement before starting business operations. This certificate, issued upon filing Form 20A with the Registrar of Companies (RoC), confirms that the company has received the agreed-upon share subscription money and is ready to legally commence business.

FileMyFirm provides expert guidance to ensure your company meets this crucial requirement seamlessly.

Who Needs to File Form 20A?

The Commencement of Business declaration is compulsory for:

  • All companies with share capital.
  • Companies incorporated on or after November 2, 2018.

Exemptions:

  • Companies incorporated before November 2, 2018.
  • Companies without share capital.

Deadline and Penalties for Non-Compliance

The Certificate of Commencement of Business must be obtained within 180 days of the company’s incorporation.

Failure to file Form 20A within this deadline leads to severe consequences:

  • Company Penalty: A fine of ₹50,000 is imposed on the company.
  • Director Penalty: Each defaulting director faces a daily fine of ₹1,000, with a maximum cap of ₹1,00,000.
  • Business Prohibition: The company is legally barred from commencing business or exercising its borrowing powers.

Company Strike-Off: The RoC may initiate action to strike the company’s name off the register.

Documents and Procedure for Filing

To file Form 20A, the following documents are required:

  • Proof of payment for share subscription (bank statement).
  • Proof of the company’s registered office address.
  • A board resolution confirming receipt of the share subscription money.
  • A declaration by the directors.

The procedure is as follows:

  1. Preparation: Collect all the required documents.
  2. Form Filing: A director files Form 20A on the Ministry of Corporate Affairs (MCA) portal, attaching the necessary documents.
  3. Professional Certification: A Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (CWA) must digitally verify and certify the form.
  4. Submission: The form is submitted with the applicable fees.
  5. COB Issuance: Upon successful verification, the ROC issues the Certificate of Commencement of Business.

Streamline Your Compliance with FileMyFirm

Navigating corporate compliance can be complex, but with FileMyFirm, obtaining your Certificate of Commencement of Business is straightforward. We handle the entire process, from document preparation to professional certification and final submission, ensuring your company meets the legal requirements and can start business legally without delay.

Frequestly asked questions ( FAQ )

What is the Certificate of Commencement of Business?

The Certificate of Commencement of Business is a mandatory compliance requirement for new companies in India, certifying that the company has met the necessary legal prerequisites to begin commercial operations or exercise its borrowing powers.

Which MCA form is mandatory for this filing?

The filing must be done through Form INC-20A on the Ministry of Corporate Affairs (MCA) portal.

Which companies are required to file Form INC-20A?

Every company having a share capital that was incorporated on or after November 2, 2018, is required to file Form INC-20A.

What is the deadline for filing the Commencement of Business form?

The form must be filed within 180 days of the company’s incorporation date.

What are the main conditions a company must meet before filing Form INC-20A?

To file the form, the directors must declare that two key conditions have been met:

  1. Share Subscription Money Received: Every subscriber to the company’s Memorandum has paid the full value of the shares they agreed to take. (Proof of payment, like a bank statement, is required.)

  2. Registered Office Verified: The company has filed the verification of its Registered Office address (which is typically done during the incorporation process).

What are the consequences and penalties for failing to file on time?

Failure to file Form INC-20A within the 180-day deadline results in severe penalties and restrictions:

  • Company Penalty: A fine of ₹50,000 is levied on the company.

  • Director Penalty: A fine of ₹1,000 per day is imposed on every officer in default, up to a maximum of ₹1,00,000.

  • Business Prohibition: The company is legally barred from commencing any business or exercising its borrowing powers until the certificate is obtained.

  • Strike-Off Risk: The Registrar of Companies (RoC) may initiate action to strike the company’s name off the register.