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Certificate of Commencement of Business

The concept of Declaration of Commencement of Business has been reintroduced in year 2018 with the Companies (Amendment) Ordinance 2018 which subsequently inserted in the Companies (Amendment) Act, 2019. According to which no company having share capital, and which has been incorporated on or after 2^nd November 2018 shall be entitled to commence its operations except after filing a declaration in form INC-20A to ROC stating that subscribers to the MOA have paid the total amount of subscription money as stated in Memorandum of Association’s subscription clause and files verification of Registered Office to ROC in form INC-22 within 30 days of incorporation.

Non-compliance of which results in removal of name of company from register of companies by Registrar of Companies (ROC).

Therefore, following are the list of Declaration of Commencement of Business:

Concept of Certificate of Commencement of Business was there in Companies Act, 1956. In Companies Act, 2013 there was section 11 which required every company to obtain certificate of commencement of business from ROC. However, such section has been omitted w.e.f. 29^th May 2015 by companies (Amendment) Act, 2015. Through Companies (Amendment) Ordinance 2018 w.e.f. 2^nd November 2018 this concept has been reintroduced.

Applicability of the provisions:

Every company which is having Share Capital and
Has been incorporated on or after 2^nd November 2018

Conditions for commencement of business:
1. Filing a declaration in form INC-20A to ROC within 180 days of incorporation stating that subscribers to the MOA have paid the total amount of subscription money as stated in Memorandum of Association subscription clause.
2. Such declaration is to be signed by any one of the directors and duly certified by CA/CS/CMA in Practice.
3. Filing Verification of Registered Office to ROC in form INC-22 within 30 days of incorporation.

Requirements & Procedure

A declaration under Section 10A from the directors has to be provided in the form of Board Resolution in e-form itself.
Declaration is to be filed within 180 days of incorporation.
The proof of deposit of Subscription Money such as bank statement or cash ledger is to be attached to such form.
If a company pursues objects which requires registration or approval of sectoral regulators such as RBI and SEBI then it shall obtain such registration or approval and shall also attach it with the declaration in form INC-20A.
It is to be noted that e-form is to be signed by at least one director and is to be verified by CA/CS/CMA in practice.

Penal Provisions for Default

Particulars	Penalty involved
On the company	A penalty of Rs. 50,000 will be levied on the company
On the officers	Every officer who is in default shall be liable to penalty of Rs. 1,000 each day during which the default continues subject to maximum of Rs. 1,00,000.
Company Strike-off	If the Registrar of Companies has reasonable ground to believe that company is not carrying any business or profession, then he shall conduct the visit and may conduct physical verification of registered office as per Rule 20B introduced under Company (Incorporation) Third Amendment Rules, 2022, after physical v3erfication he shall prepare a report and if it is found that company is not carrying on business or operation the registrar may remove the name of the company from the Registrar of Companies (ROC)

Fees Structure

Fees for filing declaration in Form INC-20A under Section 10A

Nominal Share Capital	Applicable Fees in (Rs.)
Less than Rs. 1,00,000	200
Rs.100000 or above but not exceeding 4,99,999	300
Rs.5,00,000 or above but not exceeding Rs.24,99,999	400
Rs. 25,00,000 or above but not exceeding Rs.99,99,999	500
Rs. 1,00,00,000 or above	600

Additional fees (in case the form is not filed within time)

Number of days of delay	Applicable additional fees (Rs.)
Up to 30 days	2 times of normal fees
Above 30 but not exceeding 60 days	4 times of normal fees
Above 60 days but not exceeding 90 days	6 times of normal fees
Above 90 days but not exceeding 180 days	10 times of normal fees
Above 180 days	12 times of normal fees

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Frequently Asked Questions

1. Whether ROC issues any certificate after filing of form INC-20A to ROC?

Under Companies Act, 1956 there was section which required Public Companies to obtain Certificate of Commencement of Business from ROC.

In Companies Act, 2013 there was Section 11 which required every company to obtain Certificate of Commencement of Business from ROC. But that section has been omitted w.e.f. 29^th May 2015 by Companies (Amendment) Act, 2015.

On 2^nd November 2018 new section has been introduced through Companies (Ordinance), 2018 and inserted Section 10A “Declaration of Commencement of Business”. According to which Form INC-20A is required to be filed to ROC i.e. “Declaration of Commencement of Business”

Therefore, after filing form INC-20A ROC will not issue certificate of commencement of business. It is just a declaration from the directors of the company.

Whether subscription money can be received in cash?

As per companies Act, 2013 there is no compulsion that subscription money is to be received in bank account of the company. Therefore, it can be concluded that subscription money can be received through cash also.

Whether company can accept loan without filing form INC-20A to Registrar of Companies?

As per section 10A a company cannot accept Loan or borrowing without filing declaration of commencement of business.

Whether company can file any other form to MCA without filing Form INC-20A to ROC?

As per the MCA system a company cannot file any other form to MCA without filing form INC-20A to ROC, except form STK-2 for striking off the name of the company from register of companies.

Whether a company can be strike off without filing form INC-20A to ROC?

As per MCA system no form can be submitted without filing form INC-20A except form STK-2 (application for strike off).

For strike off, approval of seventy five percent members is required which can be taken either by passing special resolution in its duly held General Meeting or by taking written consent of seventy-five percent members. In case special resolution is passed then form MGT-14 is required to be filed as per section 117, which can not be filed without filing form INC-20A. in that case company can not be strike off without filing form INC-20A.

However, in case of approval is taken through written consent there is no need to file form MGT-14, and company can be strike off without filing form INC-20A.