Certificate of Commencement of Business, Companies Act 2013, Private Limited Company

Certificate of Commencement of Business

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Certificate of Commencement of Business

The Companies (Amendment) Ordinance 2018

The Companies (Amendment) Ordinance 2018 has reintroduced the concept of Certificate of Commencement of Business. Under the new Ordinance, no company will be entitled to commence its operations except by filing a declaration within 180 days of its incorporation stating that the subscribers to the Memorandum of the company has paid the value of shares so agreed by them, and files a verification of its registered office address with the Registrar of Companies (ROC) within 30 days of its incorporation. Non-compliance with this provision will result in the removal of the company’s name from the Registrar of Companies.

Read about the Commencement of Business Certificate 2019 Requirements.

Commencement of Business under Companies Act, 2013 – Old Act & Procedure

Please refer to the above article for the new procedure. The following is a summary of old procedure for reference.

Under Companies Act 2013, the date of incorporation of a company cannot be the date of commencement of business (COB). From the point of commencement of Business companies may be divided into 2 categories:

  1. Public and Private Companies not having Share Capital
    A public company or a private limited company not having share capital are not required to comply with any other formalities and may commence its business activities immediately after obtaining the certificate of incorporation from the concerned Registrar of Companies.
  2. Public and Private Companies having Share Capital
    As per section 11 of Companies Act, 2013, now all newly incorporated Public and Private Companies having Share Capital would be required to obtain certificate of commencement of business from concerned Registrar of Companies before commencing the business or exercise of borrowing powers.

Through this article we discuss the procedure for obtaining certificate of commencement of Business under Companies Act, 2013. For statutory provisions related to commencement of Business one can refer to the following sources:

Position under Erstwhile Companies Act, 1956

Under the erstwhile Companies Act, 1956, a private company could start its business immediately upon receiving certificate of incorporation. Private companies were not required to obtain a certificate of commencement of business from concerned Registrar of Companies under section 149 of Companies Act, 1956.

Certificate of Commencement of Business under Companies Act, 2013

A Public and Private Limited company having share capital cannot commence business until it has obtained the certificate of commencement of business (COB) from the concerned Registrar of Companies. Normally a new company will comply with the required formalities and obtain the certificate of commencement of business (COB) from the Registrar as soon as possible after formation because it cannot commence any business activities or exercise its borrowing powers without it.

Now under Section 11 of the Companies Act, 2013, a company cannot commence business or exercise any borrowing powers, unless

  1. A declaration is filed by a director with the Registrar, to the effect that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration; and
  2. The company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

COB Formats

A Board resolution and Director’s declaration must be prepared and filed for obtaining Certificate of Commencement of Business. The following are formats of the board resolution and Director’s declaration:

Commencement of Business Board Resolution Format

Commencement of Business Certificate Director Declaration

Consequences of Not Filing Certificate of Commencement of Business

  1. Penal Provision: As per section 11(2), if any default is made in complying with the requirements of this section, the company shall be liable to a penalty which may extend to five thousand rupees and every officer who is in default shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.
  1. Removal of name from register of companies: As per section 11(3) where no declaration has been filed with the Registrar within a period of 180 days of the date of incorporation of the company 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 section 11(2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.
To obtain Certificate of Commencement of Business or start a new company, visit IndiaFilings.com

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Comments (19)

Durga

Oct 10, 2014 at 5:31 PM

Hi Nishant,

We recently incorporated our company as Private limited company on August 14th, and our directors are the share holders of 1Lakh authorised capital.

It took 40days for us to change registered address(correction in address) and get the PAN, TAN and current account.

Recently, our directors has wire transferred the capital money (shares value) to our company account and we issued the share certificates for the same. Still we need to get some other licenses such as IEC, VAT registration to start the actual business.

You have mentioned as, we need to get the certificate of commencement of business for private limited company.

If this is not true, can you please tell us, how to file (any specific form?) to RoC to get the certificate.

Looking forward to your help.

Thanks for your time.

Regards,
Durga G

Reply

SUSMITA

Feb 03, 2015 at 12:44 PM

Within 180 days of incorporation Commencement of Business as to be filed with the ROC .

Reply

Durga

Oct 10, 2014 at 5:45 PM

Hi Nishant,

Is there a time limit to file the declaration of commencement of business? i.e after starting the actual business? or after incorporation of the company?

Regards,
Durga G

Reply

Nishant

Oct 11, 2014 at 5:04 PM

Hello Durga,

Yes, you need to fill e-form INC 21 within 180 days. Since your company incorporation was completed on Aug. 14, you have time before the 6 months deadline, but we recommend you get started right away. Also, note that there is a small fee increase (the base fee is Rs. 300 for share capital between 1 and 5 lakh) for every month that it is delayed.

Please feel free to contact India Filings for any assistance you may require and we will be happy to quickly complete the process for your benefit. Please find the form for commencement of business downloadable below along with a help file from the MCA website. An excerpt explaining the requirement and penalty below,

“Purpose of the eForm
Company having share capital can commence the business and exercise its borrowing powers only
after filing a declaration in eForm INC-21 and particulars of the registered office address with the
concerned RoC.

Note: If a company does not file the declaration in form INC-21 within 180 days of its
incorporation then the status of the company shall be changed to “Struck Off(Defunct)”. In case
the company files an order of Tribunal and the status of the company is revived to “Active”.”

http://www.mca.gov.in/DCAPortalWeb/dca/jsp/mydca/home/StaticFramePage.jsp?para1=/MCA21/dca_html/downloadeforms/Download_eForm_choose.html
http://www.mca.gov.in/MCA21/dca/help/instructionkit/NCA/Form_INC-21_help.pdf

Regards.

Reply

Durga

Oct 12, 2014 at 7:37 AM

Hi Nishant,

Thank you very much the reply. I will contact your team, before filing the form.

Regards,
Durga G

Reply

D Vipul

Dec 04, 2014 at 2:39 PM

We have to change the name of company and the registered company is at Calcutta. The Calcutta has given the following remark
“Attached certificate of Chartered Accountant regarding turnover achieved from the new business is NIL. As per MCA guidelines the company has to commence business first and then apply for change of name. Thus this form is liable to be rejected. Form 67 (Addendum) should be filed by 12/12/2014 failing which the eForm shall be treated as invalid and shall not be taken on record. (Please refer Regulation 17 of the Companies Regulation, 1956)”
What shall we do ? The Company was 27/11/2010. Shall we file INC-21 or not ?

D Vipul

Reply

Vivek Shrestha

Dec 25, 2014 at 6:21 PM

Dear Nishant,
I have incorporated a company on 27th November, 2013 but have not filed the Certificate of Commencement of Business and started the business. Now what can be done to receive the certificate of commencement of business, any specific form to be filed to ROC, anything to do with Company Law Settlement Scheme,2014?

Thanking You in advance.

Reply

cs manish kumar

Feb 02, 2015 at 4:02 PM

is there requirement for obtain cob for sec -8 companies under companies act 2013 if yes so what is the processure

Reply

pawan

Feb 04, 2015 at 8:26 PM

Hello , We incorporated our company on september,30 2014 and need to apply for COB. can you please tell me the fee for COB certificate and if there are any panulty involved since it has been 90 days to us not applying for it.

thanks

Reply

Rohit

Feb 24, 2015 at 1:02 PM

Dear All,
I have incorporated a Pvt Ltd Company and now I want to know whether the Amount recd as Share capital has to be deposited in Bank Account or the same can be retained by the company in Cash.

Reply

kishore

Mar 12, 2015 at 9:31 PM

HI All,

When am filling INC 21 its asking about stamp duty after selecting state(Telangana), i don`t know how much stamp duty to be paid for the state of telangana,

Please help me any one how much i need to pay.

Thanks in advance.

Reply

Arjun Menon

Mar 18, 2015 at 6:54 PM

As of today, and recent MCA circular, Filing of INC 21 is not necessary.
There was an articles to this extent in Economic TImes.

Reply

Tapish

Apr 02, 2015 at 12:05 PM

Hi All ,

Need little guidance over commencement of business . On the MCA site its mentioned to fill INC 21 for the commencement of business. I have issue on paying stamp duty. I would like to know how much stamp duty to be paid on 100000 capital amount and secondary how to pay , is there any online option for that.

Reply

anuj kumar singh

Apr 17, 2015 at 7:53 PM

sir/madam before starting my own company i was having a company with same concept of business in Tamil Nadu namely as Swarnalakshmi Chit Funds P LTD. But due to some differences between rest of the directors i opted to resigned and came out on 02-05-14. Since then i had been requesting rest of the directors to file form 32 or form DIR 12 which has not been filed till date with ROC—Chennai.
Knowing the sequences i had sent my resignation to ROC under a cc to The rest of the Directors of the company and even got a letter from ROC in which they have asked the board of directors to file it immediately but it is not done.

Now The company is in financially bankrupt condition and the rest of the directors are threatening me that since i was the Managing Director of the company and due to non submission of form 32 by the company i shall only be held responsible for their wrong doings.

Pls let me know is it so…….and what should i do further.

Regards…….Anuj / 8903645981

Reply

Nagaraj

Jun 12, 2015 at 3:09 PM

Is it compulsory to file CCOB for all private companies? I have red an article which was published on 2nd February stating to ease the business in India CCOB is not mandatory to private company also. But effective date was not mentioned. So here my question is do we need to file for CCOB for the FY 2014-15.

Reply

IndiaFilings

Jun 17, 2015 at 2:15 PM

Dear Sir,

Greetings from IndiaFilings.com, India’s premier online consulting co!!
As per the companies amendment act 2015, Certificate of commencement of Business and Paid up capital is not mandatory.
Looking forward to work with you in the near future. Have a great day.

Thanks & Regards,
IndiaFilings Team

Reply

Nagaraj

Jun 12, 2015 at 3:11 PM

Adding to my question is there any circular stating the same?

Reply

niraj bari

Apr 22, 2017 at 11:21 PM

thanks for sharing. it contains a lot of information. we need to learn new thing from these website.

Reply

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